The search for the best day trading platforms and brokers is an important part of any serious trader’s process. Speed, reliability, costs, customer service, and charting tools are all key elements of day trading platforms that these highly active investors tend to value the most. Moreover, for traders who implement systematic strategies, backtesting capabilities have gained greater importance as well.
As day traders allocate more time and capital to their endeavors, it is important for online brokerages to provide them with the tools that they need, at a cost that doesn’t eat into their profits. Additionally, the reliability of data is paramount, as is the ability to test trading ideas prior to deployment. We’ll look at several brokers who strike the right balance between day trading tools and competitive pricing.
Best Day Trading Platforms of 2023:
Interactive Brokers: Best Online Broker for Day Trading, Best Broker for Advanced Day Traders, & Best Charting Platform for Day Traders
- Account Minimum: $0.00
- Fees: $0.00 commissions for equities/ETFs available on IBKR’s TWS Lite, or low costs scaled by volume for active traders that want access to advanced functionality such as order routing. $0.65 per contract for options on TWS Lite; that is also the base rate for TWS Pro users, with scaled rates based on volume. $0.85 per contract for futures.
Interactive Brokers: Best Online Broker for Day Trading
Why We Chose It
Interactive Brokers (IBKR) remains firmly entrenched as our overall pick as Best Online Broker for Day Trading because it offers among the widest ranges of assets available to trade while charging some of the lowest commissions and margin rates in the industry.
Pros & Cons
Wide range and depth of supported assets
Low commissions and margin interest rates
Multiple scanners across asset classes
Education portal within platform
Intraday news updates within the platform
Founded in 1978, Interactive Brokers holds $12.2 billion in equity capital. Headquartered in Greenwich, CT, IBKR has over 2,850 employees across the globe and has offices in Europe as well as Asia. In 2021, IBKR added support for U.S. spot gold trading. In 2022, Interactive Brokers expanded its cryptocurrency trading offered through Paxos Trust Company.
The strength of IBKR’s platform in terms of day trading has a lot to do with its Trader Workstation (TWS) platform. Giving access to a wide selection of assets, TWS offers reliable pricing, fast order flow, sophisticated charting tools, and automation capabilities. Moreover, users are able to customize their TWS workstation to their liking while also monitoring newsflow. Traders on the go will be able to access IBKR via its mobile app, which is available for both Android and iPhone users. You’ll find many of the same capabilities on the app as you will on the desktop, particularly as it relates to setting up watchlists and placing orders. Charting capabilities, however, are more robust on the desktop platform.
While IBKR can work for both the casual and the more serious trader, TWS has a professional feel that seasoned traders will appreciate. The options analytics tool allows users to view how shifts in the options Greeks will impact the options pricing for the asset in question. The reach of Interactive Brokers in terms of markets and assets also allows traders to set up direct trades playing off global market dynamics.
For order flow, IBKR Pro users’ orders are submitted to IBKR’s high-speed, best execution order routing system, SmartRouter. This enables traders to receive optimized pricing and transaction speed. Users of IBKR Lite are routed to select market makers with whom IBKR may have payment for order flow agreements. The impact of this is that IBKR Lite users may be subject to a reduction in price improvement on trade executions.
Although IBKR Pro has upfront costs, it will likely be the choice of most day traders looking for fine control over order execution. Whether Lite or Pro, Interactive Brokers also gives traders access to the industry’s lowest margin rates to leverage up and amplify the returns on positions.
Interactive Brokers: Best Broker for Advanced Day Traders
Why We Chose It
Interactive Brokers continues to be our top pick for advanced day traders, as well. Its speed and efficiency specific to order execution complements its low rates on margin trading and provides advanced traders with a strong option to execute their strategies. IBKR has also continued to add tools to an already powerful arsenal, along with tradable assets and other key capabilities.
Pros & Cons
Superior order execution
Contingent orders for every situation
Low margin interest rates
A plethora of tradable assets
IBKR continues a long run as our pick for Best Broker for Advanced Day Traders because it fulfills the needs of seasoned traders across multiple asset classes. Traders will find a wide selection of assets to choose from, as well as rapid and efficient order execution.
We expect most advanced traders will take advantage of the IBKR Pro offering in order to access SmartRouter. In doing so, traders can avoid the potential for order execution to be compromised by payment for order flow (PFOF), as may happen to Lite users. Additional features that push Interactive Brokers to the top for advanced traders are its robust selection of assets, wide selection of stocks on the easy-to-borrow list, and advanced charting tools. Trades can be placed directly via the chart itself and TWS is highly customizable in terms of standard analysis and displaying trading opportunities.
Mobile users, of Android and iOS, will be able to take advantage of IBKR’s mobile app. In addition to rapid order execution, traders can use the mobile application to review equity fundamentals, monitor valuations, and check environmental, social, and governance (ESG) ratings. Within the mobile app, traders on the go can trade options, view order books, and implement exit strategies directly from the app. Advanced traders will, of course, be working on Traders Workstation whenever it is feasible as the trading environment is more expansive than even the most robust mobile translation. While the broker has filled a major gap with the introduction of cryptocurrency trading, the lack of a user-friendly backtesting environment will still bother some more advanced traders.
Interactive Brokers: Best Charting Platform for Day Traders
Why We Chose It
There are a lot of competing platforms that have robust charting built into the trading interface, but none have what it takes to dethrone Interactive Brokers as our pick as the Best Charting Platform for Day Traders. Although IBKR holds its own in terms of charting functionality and the easy application of customized views and indicators, the robust selection of assets, the ability to both chart and trade within one platform, and the breadth of technical tools available to users all combine to keep IBKR firmly in the top spot.
Pros & Cons
Trades can be placed directly from customizable charts
Ability to chart and trade assets from multiple markets in one platform
Robust offering of technical tools
Intra-day traders will quickly find that IBKR provides them with valuable tools, robust asset selection, efficient order execution, and competitive costs. Day traders who are practitioners of technical analysis will feel at home when applying studies and indicators to a wide variety of assets across markets. There is a bevy of tools to choose from, and it’s unlikely that users will find themselves needing to go elsewhere for indicators or analysis. Furthermore, those who do not lean on technical analysis primarily will still find more than enough tools to fulfill their trading needs by identifying tradable events and fundamental data.
The challenge won’t be whether the tool exists on IBKR’s platform as much as it will be deciding which tools not to make use of. The standard relative strength index (RSI), Bollinger Band and stochastic cocktail of tools are available, as are more nuanced ones such as DeMark indicators, Connors RSI, and Donchian channels. The ability to apply statistical bands to the volume-weighted average price (VWAP) study is another feature that signals IBKR’s commitment to helping traders identify price inefficiencies.
Mobile users can make use of the same tools and indicators that are available on the desktop version, although they may find it more challenging on the mobile platform, which is not uncommon across the industry. Finally, traders can trade directly from the charts themselves via IBKR’s Chart Trader option.
All told, day traders will find tools, reliability, low cost, and speed with IBKR’s charting platform. This is, of course, in addition to all the other bells and whistles that won IBKR both the overall and best for advanced day traders categories.
Webull: Best Low-Cost Day Trading Platform
- Account Minimum: $0
- Fees: $0 commissions for stock, ETF, options, and cryptocurrency trading (small markup is priced in)
Why We Chose It
Webull is our top selection for the best low-cost day trading platform because it provides impressive platform features while levying no direct costs on its users.
Pros & Cons
Limited selection of assets
Payment for order flow can lead to slower execution speeds
Below average customer support
Limited educational materials
No income on excess cash
Where many brokers claim to be low-cost brokers, Webull essentially has zero (direct) costs. Users of Webull will enjoy commission-free trading of stocks and ETFs, along with no account minimums or deposit requirements.
Founded in 2018, Webull is a Chinese-owned broker and trading platform headquartered in New York City. Webull labels itself as a financial company driven by technology. Webull offers a strong low-cost platform for day traders looking to focus primarily on equities and ETFs. Traders who are looking to access managed futures, forex, fixed income, or advanced options capabilities will not find any at Webull.
As is the case with some other discount brokers, there is a price to pay for Webull’s low-cost structure. This is primarily due to Webull receiving payment for order flow, which presents the potential for lags in transaction execution. In addition, the social tools offered by Webull and many other online brokers can promote overtrading through gamification. Still, Webull users have access to all U.S.-listed stocks, ETFs, cryptocurrencies, and options on a platform that is quite solid overall. Day traders who wish to establish short positions have access to stocks on Webull’s easy-to-borrow list.
The Webull trading platform has fairly impressive charting capabilities for a discount broker, with many popular technical indicators available, in addition to stock screeners and newly added options screeners. Those who wish to convert those screens to watchlists are able to do so with ease. For trading, users can set only basic market, limit, stop, and stop limit orders for order entry and exit. Paper trading is also enabled for those who wish to try their ideas out without risking capital. Users are provided with up-to-date news flow, and the Webull platform keeps a running tally of best-performing industries and the most popular ETFs. Some of the drawbacks that traders may find are the inability to backtest or automate trading strategies, as well as a lack of some more advanced trading tools.
IBKR has many rivals that can challenge it in specific areas. TradeStation has better backtesting, TD Ameritrade’s powerful thinkorswim platform is more intuitive than TWS, tastyworks from tastytrade has a better all-around options trading experience, and Webull is cheaper. In this industry’s current state, however, no one broker can compete point-for-point with IBKR. It has the tools, asset range, speed, and global reach that make it a day trader’s dream in terms of constantly finding new price inefficiencies to exploit across markets and asset classes.
Of course, there is also Webull, which offers a surprisingly robust platform for its no (direct) cost approach. If you are looking to day trade on the cheap, Webull lets you get into the market for essentially nothing upfront. As you evolve as a trader, however, the allure of IBKR’s more expansive offering will become ever stronger.
Everything You Need to Know About Brokerage Accounts
Frequently Asked Questions
What Are the Risks of Day Trading?
One of the most significant risks for retail day traders is the lack of a level playing field, as they often compete against a stacked field of professionals with the resources (e.g., speed, trading capital, technology, and software) to succeed.
Another notable risk is that day traders often use leverage to enter positions, which means they can lose more than they risk on any given trade. This can be especially devastating with short trades—where the trader sells “high” in the hopes of buying to cover “low” at a profit—which have virtually unlimited risk since prices can continue to climb indefinitely. Traders who don’t have enough trading capital also risk being undercapitalized, meaning they can burn through their accounts quickly. What’s more, traders who fund their accounts with anything but risk capital stand to lose more than their trading accounts.
How Do Day Traders Use Online Brokers?
Day traders use brokers to do things like enter orders quickly, customize the size of trades, place multiple orders simultaneously, designate which trading venue will handle the order, and customize trading defaults. They may place their trades manually, often from a chart, or set up an automated system that generates orders on their behalf.
Day traders often prefer brokers who charge per share (rather than per trade). Traders also need real-time margin and buying power updates, as well as the ability to monitor price quotes, price volatility, liquidity, trading volume, and breaking news.
What Should You Consider When Choosing a Day Trading Platform?
A key consideration for day traders is trading platform quality, which can impact execution speed and price quotes. Commissions, margin rates, and other expenses are also top concerns for day traders because, even if a day trader can consistently beat the market, the profit from those positions must exceed the cost of commissions.
Additionally, day traders should consider a broker’s customer service record and financial stability. You can even look at The Financial Industry Regulatory Authority’s BrokerCheck page before signing on with a small firm to ensure it has not had claims filed against it for misdeeds or financial instability.
Why do you need 25k to day trade?
The U.S. Securities and Exchange Commission (SEC) requires all pattern day traders to have $25,000 or more in their account. Pattern day traders are those who make four or more day trades, which account for six percent of the total trades in their account, within five business days. If a trader’s account falls below this amount they will no longer be able to day trade until they restore the minimum balance.
Do day traders pay taxes?
Yes, day traders are required to pay taxes. The taxes you pay may be different if your day trading qualifies as a business however, if not, you are taxed as an investor. Investors must report capital gains and losses on the U.S. Internal Revenue Service’s (IRS) form Schedule D (Form 1040), Capital Gains and Losses, and on Form 8949, Sales and Other Dispositions of Capital Assets. Currently, individuals are usually not taxed higher than 15% in capital gains, however, some exceptions allow for a rate as high as 20% to 28%.
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This model weighs key factors like trading technology, range of offerings, mobile app usability, research amenities, educational content, portfolio analysis features, customer support, costs, account amenities, and overall trading experience according to their importance. Our team of researchers gathered 2425 data points and weighted 66 criteria based on data collected during extensive research for each of the 25 companies we reviewed.
Many of the brokers we reviewed also gave us live demonstrations of their platforms and services, either at their New York City offices or via video conferencing methods. Live brokerage accounts were also obtained for most of the platforms we reviewed, which our team of expert writers and editors used to perform hands-on testing in order to lend their qualitative point of view.
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