August 7, 2018

Best Trading Platform

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Successful trading requires quick action and in-depth analysis. Using the wrong platform could leave you in financial ruin. But the right one can enhance your trading efforts.

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Keep reading to learn about the top trading platforms in the industry.

What Is Day Trading?

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An investor isn't a day trader and vice versa. Day traders are a unique bunch with unique needs. They don't hold onto "investments" for a long period. Instead, they trade them on the same day. Their positions change on a daily basis. This lets them start from scratch with each new day.

Day traders have unique strategies that must work out within one day's time. If it doesn't, it's null and void. Because of this, day traders have unique needs. They make multiple trades each day, sometimes even hundreds of trades. Because of this, they need unique platforms that can handle the frequency of their trades. But they also need fees that make this way of trading affordable.

Why the Platform Matters in Day Trading

Day traders need sophisticated platforms if they want to be successful at day trading. You might not be as concerned about cost as you are features. Unlike investors in it for the long run, you don't need historical charts or predictions for the future.

Instead, you need strategies you can implement today, in the moment. Of utmost concern is the speed of execution of the trades. Even a few seconds delay in processing your request can ruin your strategy. It can even cause you to lose money.

One last factor day traders need to worry about is the level of customer service. Again, because time is so crucial in day trading, one mistake can cost thousands of dollars. Because you rely on the internet and the stability of a platform, you need lightening quick customer service. This way, if something goes wrong, you can have a solution instantly.

What to Look for in a Day Trading Platform

Your day trading software needs a few highly sophisticated features in order for your trades to go off without a hitch. Being able to input a strategy along with order placement instructions and have them implemented is the key to success.

Here's what we suggest you look for in your day trading platform:

  • Independence: Think of your trading habits. Do you trade on-the-go or do you sit at a PC all day? If you are the type who will trade throughout the day no matter where you are, web-based software is the best option. Look for programs you can install on any device, including tablets, smartphones, and your PC. If, however, you will sit at your PC and execute highly complex trades, a more costly computer-based program may be warranted.

  • Hot Key: Being able to click one key and execute an order is a must for serious day traders. Creating your own hot keys—keys that you will remember and execute on demand—is crucial to a day trader's success.

  • Fast Order Execution: Time is of the essence in day trading. Even a few seconds difference could leave you without a viable trade. Understanding a broker's trade execution speed is crucial to your success.

Best Day Trading Platform

We reviewed several day trading platforms in order to provide you with detailed information to help you make a decision.

Best Overall Day Trading Platform

TradeStation:
Day traders who love tools will love TradeStation. Traders on this platform don't have to wish for any extra features. This platform provides more than they know how to handle at their disposal. Included in their software is the ability to integrate third-party tools, providing access to numerous functions other programs do not offer. They also offer user programming, called EasyLanguage. This enables users to customize their own trading strategies and save them as a tool.

TradeStation offers both a web-based and PC platform. This gives you the best of both worlds. The web-based platform lacks the sophistication of the PC platform, but is perfect when traders are on-the-go but still want to trade.

TradeStation enables automatic execution of orders and works great with multi-screen users. It offers the ability to backtest and allows customization of the platform for ease of use, especially when using multiple screens and tools. The ability to color code certain areas helps traders stay on track.

Best Low-Cost Day Trading Platform

Interactive Brokers:
Interactive Brokers is one of the largest brokers today. Because of that, they are able to offer a less confusing and more affordable pricing structure that is attractive to many traders. Just because they offer the lowest prices, though, doesn't mean you must sacrifice sophistication. They still pack quite a punch in that department.

IB offers an online program with a wide array of day trading tools that are also available as a desktop application. Users can utilize the traditional "mosaic" screen showing just stock quotes. They can also make the screen as complex as they want with charts, news, and real-time quotes.

Users also have the unique ability to create not only hot keys (one keystroke for a specific trade), but are also able to create custom noises when a trade, be it a buy or sell, occurs. This frees up a trader's ability to focus on what is going on in real-time while knowing when their trades are taking place or being canceled.

Because IB is strictly a professional's platform, it is not rich in hand holding and education. It's best suited for active day traders who have experience but want to save money on their trades.

One thing to note, though, is that IB's customer service is lacking compared to other brokers. If you have the experience and know-how to handle your trades, it might not be an issue.

Best Personalized Day Trading Platform

Lightspeed:
As their name suggests, Lightspeed offers some of the fastest trades on the market. More importantly, though, they offer the most personalized platform. It's not a platform created for beginners. However, it is the most customizable program available. Once you create your custom settings, they are saved on the server, allowing you to access them on any device.

Users can create hotkeys, arrange charts, move windows, and create customized modules to suit their trading needs. Its advanced features do come at a price though—you don't get any assistance, whether automated or human. It's strictly a program for those who truly know what they are doing and want to customize their platform to suit their needs.

Another strong suit of Lightspeed is the breadth of their technical analysis. This is their main focus, leaving little room for fundamental analysis (that's unnecessary for day traders anyhow). They offer in-depth analyses that enable traders to seize opportunities quickly, making trades at lightning speed.

Other Trading Platforms to Consider

Along with the top trading platforms, there are a few other brokers you may want to consider:

  • TD Ameritrade: With two powerful trading platforms, extensive research, and 24/7 customer service, TD Ameritrade is a great option for day traders.

  • Charles Schwab: One of the oldest names in trading, Charles Schwab provides stability and reliability. They tend to charge more than others, but they offer extensive research with their own professionals providing commentary, as well as exemplary customer service.

  • Ally Invest: Provides a basic platform. Ally Invest offers plenty of options for charting and research.

  • eOption: Traders who prioritize cost over sophistication do well with this broker. Traders with their own research tools and analyses relish the lower costs of this broker.

  • Fidelity: Customer service and exemplary research are Fidelity's strong suits. Catering to active traders, Fidelity offers the Active Trader Pro to traders who make at least 36 trades in 12 months.

Common Questions

  • What constitutes a pattern day trader?
    Most brokers view a pattern day trader as anyone who executes 4 trades within a 5-day period. However, the FINRA defines it further as traders who execute more than 4 trades in 5 days AND if those trades comprise more than 6% of the total trades made from that account.

  • How much money is required for day trading?
    Occasional day traders typically need an account balance of $2,000.

  • How much money is required for pattern day traders?
    Per FINRA rules, any pattern day trader must have a margin account of at least $25,000. Traders must maintain this balance at all times in order to trade.

  • How does FINRA calculate the $25,000?
    Your account can be comprised of both cash and securities, as long as the total is $25,000 at all times. If your account falls below $25,000, you will not be able to day trade until the account reaches the appropriate balance.

  • How are large day trades executed?
    Any day trades ordered in large quantities may be executed in batches. In other words, you may see several transactions for your one order. This occurs most often on thinly-traded stocks or very large quantity orders.

Bottom Line

Day trading can be a lucrative hobby or a way to make a living. Choosing the right platform is a crucial part of your success. Evaluate your options carefully before choosing the one that is right for you.

Disclaimer: Opinions expressed here are those of the author's alone. Please support CreditDonkey on our mission to help you make savvy financial decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

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