Best Online Brokerage for Day Trading - 2024 Guide
With many years of meticulous FOREX broker testing, Arincen stands out as a voice of authority. Our analyses, shaped by exhaustive data collection, are trusted by many. Each year, we gather 120 data points from more than 100 brokers. Our team of more than 20 people collaborate extensively to produce high-quality broker reviews like this one. For a detailed explanation of how we test brokers, navigate to the bottom of this article.
Day traders operate in a world with little room between success and failure. Having the best platform for their needs can be the difference between heavy losses and handsome profits. As day trading is modelled against professional trading, retail day traders must get the best tools to execute their strategies.
Day trading is all about making money from entering and exiting several trades per day. The best online FOREX trading platforms must guarantee fast and reliable execution at low commissions, with robust platforms and responsive customer service as part of the package. These demanding requirements rule out a great many run-of-the-mill brokers. For the rest, you must carefully analyze the strengths and weaknesses of each broker to get the perfect deal for yourself.
In this article, we will explain day trading in more detail, expand on what traders need to look for in a good day-trading broker and include a list of the best online brokers for day trading.
Best Online Brokers for FOREX Day Trading
| Company name | Regulations | Minimum deposit | Main branch | Open account |
|---|---|---|---|---|
ICM Capital |
500$ | United Arab Emirates | ||
Tradeview |
250$ | USA | ||
XTB |
500$ | UK | ||
IG |
500$ | UK |
| Company name | ICM Capital |
| Regulations | |
| Minimum deposit | 500$ |
| Main branch | United Arab Emirates |
| Company name | Tradeview |
| Regulations | |
| Minimum deposit | 250$ |
| Main branch | USA |
| Company name | XTB |
| Regulations | |
| Minimum deposit | 500$ |
| Main branch | UK |
| Company name | IG |
| Regulations | |
| Minimum deposit | 500$ |
| Main branch | UK |
Best Online Brokerage for Day Trading 2024
There are several outstanding day trading brokers for beginners. As always, it's important to safeguard your investments by partnering with a broker that has a proven history of success and a hunger for constant innovation. Undertaking thorough research is the key. Take a look at our top online brokers that offer day trading:
ICM - Capital 91.10: Best Deposit and Withdrawal Broker
Tradeview: 90.00: Trusted broker that offers very low trading costs as well as comprehensive financial literacy materials for its clients.
XTB - 85.55: Best Customer Service Broker
IG - 85.45: Best Regulations Broker plus Convenient Platform
Saxo Bank - 80.09: Excellent Private Trading Platform
CMC Markets - 80.07: More than 9,000 Assets
ThinkMarkets - 80.05: Aimed at the Audience of Traders
ICM capital Broker
ICM Capital is considered the industry leader in deposits and withdrawals, whereby each withdrawal does not take more than five business days. Moreover, the company offers its customers a handy credit card to withdraw their profits, in addition to enabling customers to use various deposit methods. The company, which is licensed by the UK's FCA, has several branches around the world. Among other things, it has a rich portfolio of assets, especially stocks, offers a low spread, as well as the ability to use MT4.
| Broker Evaluation | 8.11 |
| Regulatory Bodies | |
| Minimum Deposit | 500$ |
| Islamic Account | yes |
| Payment Methods | Bank transfer - credit card - Electronic Banks - Crypto |
| Main Branch | United Kingdom |
| Customer Service | 24/5 |
| Demo account | yes |
| Trading Platforms | MT4 - MT5 - C TRADER -Web Platform |
Pros
-
Segregated client funds.
-
Regulated by the UK’s FCA.
-
Established in 2009.
-
More than 10,000 ICM Capital users and traders.
-
Reasonable minimum deposit from $500.
-
Decent funding options.
-
No swaps.
-
MetaTrader4 (MT4) desktop and mobile download.
Cons
-
Does not allow scalping.
-
Not ASIC-regulated.
-
Relatively limited range of instruments.
-
Slow live-chat service.
-
Relatively high trading fees.
-
Limited range of trading tools and resources
Dukascopy Broker
Tradeview Forex, interchangeably known as Tradeview Markets, was established in 2004 and is headquartered in the Cayman Islands, setting itself up as a significant player in the online FOREX and CFD trading world. Regulated by the Cayman Island Monetary Authority (CIMA) and the Malta Financial Services Authority (MFSA), Tradeview Forex is a reliable platform in a competitive market. The broker’s commitment to offering a broad and accessible trading environment shines through with its low deposit requirement and how it provides various advanced trading platforms to clientele.
| Broker Evaluation | 7 |
| Regulatory Bodies | |
| Minimum Deposit | $450 |
| Islamic Account | Yes |
| Payment Methods | Bank transfer - credit card - Electronic Banks - Crypto |
| Main Branch | USA |
| Customer Service | 24/5 |
| Demo account | Yes |
| Trading Platforms | Proprietary Platform-MT4 - MT5 -Web Platform |
Pros
-
Established in 2004.
-
Variety of trading platforms, such as MT4, MT5, cTrader, and Currenex, catering to different trading preferences and strategies.
-
Low minimum deposits.
-
beginners and experienced traders looking to refine their strategies.
-
Supports automated trading through the use of Expert Advisors (EA) on MT4 and MT5 platforms.
-
Decent leverage levels of 1:200 available in some jurisdictions.
-
Regulated by CIMA, MFSA, and will soon be regulated by the UK’s Financial Conduct Authority (FCA).
Cons
-
While regulated by CIMA and the MFSA, the broker is still in the final stages of becoming regulated by the tier-one FCA.
-
Trades on the Innovative Liquidity Connector® account are subject to commission charges, which may add to trading costs.
-
While offering high leverage up to 400:1 can be an advantage, it also introduces significant risks, especially for new traders.
XTB Broker
What distinguishes XTB is the fact that it offers the best customer experience among all the companies we have surveyed. Indeed, it boasts the fastest response rate from all the companies under investigation. This is especially relevant, since the market is always on-the-go, and so you need to act fast. XTB offers lots of asset classes, as well as the ability to use the MT4 trading platform. Finally, it maintains a relatively low spread, which is suitable for quick deals.
| Broker Evaluation | 8.55 |
| Regulatory Bodies | |
| Minimum Deposit | 500$ |
| Islamic Account | yes |
| Payment Methods | Bank transfer - credit card - Electronic Banks |
| Main Branch | United Kingdom |
| Customer Service | 24/5 |
| Demo account | yes |
| Trading Platforms | MT4 - MT5 -Web Platform |
Pros
-
Long history of operation.
-
Globally recognized, having won multiple awards.
-
Some of the lowest FOREX spreads in the market.
-
Regulated by the FCA (UK).
-
Offers protection for client accounts.
-
Emphasis on customer service.
-
Excellent support, learning and research tools.
Cons
-
Does not accept US clients.
-
Non-FOREX spread costs are relatively high.
-
No GSLO.
-
No back-testing or automated trading capabilities.
-
Conditions vary according to regulation and entity.
ig markets Broker
IG is arguably the best broker when it comes to security and trust, boasting, as it does, licenses from 10 regulatory bodies, including the all-important FCA from the UK. The company is also a bank and is a publicly traded company in London. It is known for offering more than 10,000 asset classes of currencies, commodities, future contracts, ETFs, indices, cryptocurrencies etc. Further, it has its own state-of-the-art trading platform and offers a relatively low spread.
| Broker Evaluation | 7.54 |
| Regulatory Bodies | |
| Minimum Deposit | 250$ |
| Islamic Account | yes |
| Payment Methods | Bank transfer - credit card - Electronic Banks |
| Main Branch | United Kingdom |
| Customer Service | 24/5 |
| Demo account | Yes |
| Trading Platforms | Proprietary Platform -MT4 - Web Platform |
Pros
-
Easy-to-navigate platform that is simple for beginners to master.
-
Margin rates are easy to understand and affordable.
-
Mobile and tablet platforms offer full functionality of the desktop version.
-
Accepts US clients.
-
Access to more than 100 currency pairs
-
Emphasis on education and research.
-
Regulated by the FCA (UK), as well as the CFTC and the NFA (US).
-
Offers protection for UK/EU client accounts.
Cons
-
US traders can currently only trade FOREX.
-
No GSLO for US-based traders.
-
No account protection for US clients.
-
Relatively high share-CFD fees.
-
No copy trading or back-testing integration on IG platform.
SAXO BANK Broker
Saxobank is considered one of the best investment banks in the area of financial markets and currencies, as it offers the very best trading platform and tools from all the companies we have reviewed. Meanwhile, its spread is very low and, as such, suitable for short-term deals; and it offers a large number of asset classes, including currencies, commodities, indices etc. Finally, its customer service is excellent and very responsive to traders' needs.
| Broker Evaluation | 6.09 |
| Regulatory Bodies | |
| Minimum Deposit | 10000$ |
| Islamic Account | No |
| Payment Methods | Bank transfer - credit card |
| Main Branch | Copenhagen, Denmark |
| Customer Service | 24/5 |
| Demo account | No |
| Trading Platforms | SaxoTrader |
Pros
-
Extensive range of offerings.
-
Regulated by the FCA (UK) and other top regulators.
-
Great trading platform.
-
Among the industry’s best research.
-
Superior user interface.
-
Offers protection for client accounts.
Cons
-
High bond, options and futures fees.
-
Lack of emphasis on customer service.
-
Confusing instrument fee structures.
-
High minimum deposit.
-
Does not accept US clients.
-
No MT4.
-
Lacks live chat.
CMC MARKETS Broker
CMC Markets is thought of as one the best companies, offering some 9,000 asset classes that encompass currencies, commodities, indices, cryptocurrencies, bonds and stocks. The company offers a relatively low spread, the MT4 platform, and fast customer service. It is most suited for traders looking for diversity in asset classes.
| Broker Evaluation | 7.07 |
| Regulatory Bodies | |
| Minimum Deposit | 0$ |
| Islamic Account | No |
| Payment Methods | Bank transfer - credit card - Electronic Banks |
| Main Branch | United Kingdom |
| Customer Service | 24/5 |
| Demo account | not |
| Trading Platforms | Proprietary Platform -MT4 - Web Platform |
Pros
-
Extensive range of offerings.
-
Regulated by the FCA (UK).
-
Low FOREX fees.
-
Emphasis on education and customer service.
-
Great Web and mobile platforms.
-
Offers protection for client accounts.
-
Research amenities are industry leading.
Cons
-
Does not accept US clients.
-
Limited product portfolio.
-
High stock CFD fees.
-
High CFD spreads for certain indices.
-
Differences between Next Generation and MT4.
-
Complicated account verification.
-
No back-testing or automated trading capabilities.
think markets Broker
Originally founded in New Zealand in 2010, and moving to Australia within the space of their first two years, Think Markets is a global online brokerage focusing on FOREX and CFD trading. In addition to a range of major and minor currency pairs. Think Markets has an array of CFDs on offer. This includes indices, as well as hard and soft commodities.
| Broker Evaluation | 8.05 |
| Regulatory Bodies | |
| Minimum Deposit | 0$ |
| Islamic Account | yes |
| Payment Methods | Bank transfer - credit card - Electronic Banks - Crypto |
| Main Branch | Australia |
| Customer Service | 24/5 |
| Demo account | not |
| Trading Platforms | Proprietary Platform -Web platform-mt4- mt5 |
Pros
-
Beginner assistance offered through 24/6 channels.
-
Spreads are as low as 0.0 pips.
-
24/7 expert customer service.
-
CFD shares and indices come at no extra fee.
-
Zero broker fees for FOREX trading.
-
Technical analysis and quality market information.
-
Percentage allocation management module (PAMM) and Multi-account manager (MAM) accounts available.
Cons
-
Direct share trading is on a separate platform.
-
No binary options offered.
-
Commissions charged for two account types.
-
After a strong early start, ThinkTrader user ratings have slid to 3.4 stars.
-
No US, Canada or Japan clients allowed.
There is a high degree of risk involved in trading securities like FOREX, or CFDs, which are highly complex instruments. As a trader, you could be exposed to excessive leverage, questionable broker tactics, market volatility, and limited regulatory protection. Despite your best trading techniques and risk management strategies, your efforts may not be profitable, and you could suffer losses.
What is Day Trading?
Day trading is when retail traders buy and sell a security multiple times on the same day to make a profit from short-term movements. They deal in securities like FOREX, bonds, stocks, and exchange-traded funds (ETFs). To qualify as a day trader, you must exit all your trades at the end of a daily trading session.
Some day traders are discretionary traders, which means they watch market conditions and decide when to enter and exit trades based on their sense of whether they will be successful. Other types of day traders deal more systematically, automating strategies along a set of predetermined rules.
Day trading originated in Wall Street, where highly skilled professional traders travelled to a stock exchange and traded all day before closing their positions by the final bell. However, with the growth of online brokerage firms, backed by powerful platforms and instantaneous newsfeeds and low commissions, home-based traders can now replicate the day-trading format popularized by professional traders.
How Does Day Trading Work?
Day trading can make you a lot of money if you do it right. Of course, we must also say that you can just as easily lose money. Traders who are new to this type of trading are in for a bumpy ride if they do not approach it with a well-thought-out strategy.
The speed of the market and the sheer number of transactions you need to make day trading worth your while mean that it is vital you have a strong plan.
Normally, long-term investors try to buy low and sell high as a basic concept. It may take several days or weeks for their trades to reach a point where they are content to close them. Some longer-term instruments, like bonds, require that you hold on to them for months.
With day trading, investors look to opportunistically profit from daily price movements in any direction. Relying on intraday price fluctuations to make them money, they rely on rapid order execution of instruments that trade in high volumes and are characterized by high volatility. The FOREX market and the stock market are perfect examples of this.
Day traders use several tools at their disposal to make the most of each trading day. One example is how they use leverage to profit from movements in markets. Here are some other key characteristics of day trading:
- Day traders are normally well-educated and well-capitalized.
- Day trading requires traders to be highly disciplined and objective.
- Day trading requires a sound strategy informed by technical analysis.
Day trading is certainly an exciting field in which to play. Yes, the potential profits are a major draw, and they always will be, but many traders appreciate the thrilling cut and thrust of making deals in a highly liquid and volatile space.
One aspect of which day traders must make the most is using the news to their advantage. For this reason, many traders watch scheduled announcements of corporate earnings, economic updates, or interest rate changes with great attention. They come to understand how market sentiment affects market psychology and they use it to their advantage. Some of the most common trading strategies day traders use are:
- Scalping: This is where traders attempt to make small profits from minuscule price movements throughout the day.
- High-frequency trading (HFT): Using advanced algorithms, traders look to make the most of short-term inefficiencies that exist in every market.
- Range trading: This is a strategy where traders identify a range of fluctuation outside of which they believe an instrument will not stray, and they only trade inside that range.
- News-based trading: By watching important news updates, traders can anticipate if markets will be buoyed or deflated by important performance or policy updates.
How to Choose the Best Online Broker for Day Trading FOREX
With so much choice out there, it can be difficult to decide on a broker with whom to work. As you may have noticed by now, day trading requires you to perform due diligence and give the entire process your full attention. It is a fast-moving and highly volatile trading environment in which you need to be switched on at all times. There is nothing passive about day trading, and you cannot delegate the selection of the ideal broker to a broker rankings page, even if it gives you a good start! To give you the best chance of success, we'll tell you about factors that can help you choose the best online day-trading FOREX broker:
The Need for Regulation and Licensing
Online brokers who offer their services to day traders must be regulated by a top-notch oversight body. Regulated brokers are compelled to stick to common best practices, like keeping their operating funds separate from client funds, complying with strict leverage rules, and staying away from offering bonuses and overly generous promotions.
It is always a good sign if your broker is active in countries that are regulated by tier-1 bodies, like the Financial Conduct Authority (FCA) in the UK and the Cyprus Securities and Exchange Commission (CySEC) in Cyprus. They are two of the best regulators in the world. although there are more good ones. However, even if your broker is only regulated by a reliable oversight body in your country, that is good enough.
Here is a list of major reasons your broker must be regulated:
Safety of funds:
A regulated broker must comply with strict regulations to protect client funds, including segregating client funds from the company's own funds.
Fair trading practices:
A regulated company must adhere to strict guidelines ensuring products and services are offered fairly and without manipulation, helping create a level playing field for all clients.
Transparency:
The law compels regulated brokers to be transparent with clients, which assures you of safe trading. In practice, this looks like brokers stating openly that FOREX trading is highly risky and that you could lose your money.
Protection from fraud:
Regulatory authorities protect clients from fraudulent activities and scams by ensuring that FOREX brokers operate within set guidelines to safeguard clients' interests.
Commissions and Fees
Trading fees are not always easy to account for. Be sure to check how these fees compare with those of other brokers:
Commissions are, broadly speaking, no longer such a big concern for day traders as much of the industry has moved to a zero-commission model. However, minimum deposits must be considered. In the US, the stipulated minimum deposit is $25,000, but traders in Europe and other regions can get trading with much less.
The following are some of the fees that day traders may encounter:
- Spreads: In FOREX day trading, a spread is the difference between the price at which a trader can buy (ask) and the price at which they can sell (bid) a currency pair. The spread can be categorized into two main types: fixed and variable.
- Fixed Spreads: As the name suggests, fixed spreads remain constant regardless of market conditions. They don't change during the day and are generally set by the broker. Some traders prefer fixed spreads because they provide predictability, especially during times of high market volatility.
- Variable Spreads: These spreads fluctuate based on market conditions. During times of low liquidity or high volatility, variable spreads can widen. However, during times of high liquidity and normal market conditions, the spreads can be very narrow. This type of spread is a direct reflection of market supply and demand.
- Example of Good vs. Worse Spreads for EUR/USD: A good spread for the EUR/USD currency pair might be around 1.4 pips. This means that if the bid price is 1.1000, the ask price would be 1.10014. A worse spread could be significantly higher, let's say 3.0 pips over the bid price. In this scenario, if the bid price is 1.1000, the asking price would be 1.1003. Traders always prefer narrower spreads because the cost of entering and exiting a trade is lower. However, it's essential to consider other factors, like the broker's reliability, platform features, and overall trading conditions when choosing among brokers offering different spreads. This article explains more about this important concept.
- Trading fees: These are commissions charged by brokers for executing orders on the sale or purchase of securities, including stocks, commodities, options, or exchange-traded funds (ETF). Trading fees vary from firm to firm, so it's important to verify a brokerage's fee schedule before deciding to use their services
- Management or advisory fees: These are fees charged by investment advisors for managing a client's portfolio. They are typically a percentage of the assets under management.
- Trading platform fees: Some brokers charge fees for using their trading platforms. These fees can range from $50 to more than $200 per month.
- Paper statement fees: Some brokers charge fees for paper statements. Opting for emailed statements and notifications can help avoid these fees.
- Account closing or transfer fees: Some brokers charge fees to transfer or close an account. Some brokerages will offer to reimburse transfer fees incurred by new customers.
It's important to note that fees can take a bite out of investment earnings, and the more frequently a trader trades, the more they can pay in fees.
Comparing day trading broker costs is not an easy task as many brokers do not charge traditional trading fees, which is one of the best ways to directly compare broker prices.
It might not be what an under-capitalized day trader wants to hear, but the quantum of fees payable is often less important than the “fee versus value” equation.
There is no formal equation to measure this, except to say that investors need to tally what they are getting for the fees they pay. This involves undertaking fundamental research, as opposed to simply comparing fees on a table.
It is important to note that not all brokers charge the same fees for the same service, let alone call them the same thing! Even if they have significant fee overlap, brokers may be more expensive on one fee line and cheaper on another. Traders need to conduct their research while paying attention to the fee versus value equation.
| Spread | Commission | Swap | Islamic Account | |
| Currencies | Starting from 1.3 Pips | 0$ | No | Available |
| Stocks | Starting from 18 Pips | 0$ | Yes | Unavailable |
| Commodities | Starting from 2.3 Pips | 0$ | No | Available |
| Indices | Starting from 4 Pips | 0$ | Yes | Unavailable |
| Spread | Commission | Swap | Islamic Account | |
| Currencies | Starting from 0.14 Pips | $0 | No | Available |
| Stocks | Starting from 0 Pips | $0 | No | Available |
| Commodities | Starting from 2 cent | $0 | No | Available |
| Indices | Starting from 0.2 Pips | $0 | No | Available |
| Spread | Commission | Swap | Islamic Account | |
| Currencies | Starting from 0.2 Pips | 0$ | No | Available |
| Stocks | Not Mentioned | 0$ | Yes | Unavailable |
| Commodities | Starting from 8 Pips | 0$ | No | Available |
| Indices | Starting from 4 Pips | 0$ | Yes | Unavailable |
| Spread | Commission | Swap | Islamic Account | |
| Currencies | Starting from 0.6 Pips | 0$ | Yes | Unavailable |
| Stocks | Starting from 2.4 Pips | 0$ | Yes | Unavailable |
| Commodities | Starting from 0.1 Pips | 0$ | Yes | Unavailable |
| Indices | Starting from 0.2 Pips | 0$ | Yes | Unavailable |
| Spread | Commission | Swap | Islamic Account | |
| Currencies | Starting from 0.9 Pips | $0 | Yes | Unavailable |
| Stocks | Starting from $0.02 | $6 | Yes | Unavailable |
| Commodities | Starting from $0.6 | $6 | Yes | Unavailable |
| Indices | Starting from $0.7 | $6 | Yes | Unavailable |
| Spread | Commission | Swap | Islamic Account | |
| Currencies | Starting from 0.5 Pips | $0 | Yes | Unavailable |
| Stocks | Starting from $0.2 | $10 | Yes | Unavailable |
| Commodities | Starting from 0.2 Pips | $0 | Yes | Unavailable |
| Indices | Starting from 0.5 Pips | $0 | Yes | Unavailable |
| Spread | Commission | Swap | Islamic Account | |
| Currencies | Starting from 0.4 Pips | $0 | Yes | Unavailable |
| Stocks | Starting from 0.1% | $0 | Yes | Unavailable |
| Commodities | Starting from $0.19 | $0 | Yes | Unavailable |
| Indices | Starting from 0.4 Pips | $0 | Yes | Unavailable |
Reliability
Day-trading broker platforms must be robust and durable. With lightning-fast trading conditions, your broker’s platform must have high uptime and low latency.
Account Minimum
US day traders are saddled with a high minimum of $25,000, but day traders in other areas can choose their broker based in part on account minimums. Every trader has different amounts of capital available to them. Choose the broker that lowers the financial barriers to entry to a trading career.
Execution Speed
There is no getting around the importance of fast execution in day trading. A broker with mediocre execution speed places the trader at a significant disadvantage in the competition with algorithmic trades and professional traders. In fact, for day traders, it may be the most important deciding factor.
Tools, Education, and Features
This applies to traders of all instruments and it's no less important to day traders. You will need to have access to well-developed tools, strong educational materials, and features that give you an edge in this competitive space.
Promotions
There are often restrictions on promotions, with Europe being a prime example where promotions are discouraged; but if your broker operates in a jurisdiction where you can get an attractive offer, it may be something to consider.
Customer Service
Traders will always need access to a responsive customer desk, preferably one that operates across many time zones and offers multilingual support. As a day trader, you never want to be saddled with an account issue or a technical issue that hampers you during a trading session.
Technical Support
Day trading requires access to high-quality technical tools. Technical support, not to be confused with general customer support, is required when advanced tools and features malfunction.
| Live Chat | Phone | |||
| Available | Available | Available | Available | Available |
| Quick response | Very Fast | Very Fast | Very Fast | Very Fast |
| Live Chat | Phone | |||
| Available | Available | Available | Available | Available |
| Quick response | Quick response | Fast | Fast | Fast |
| Live Chat | Phone | |||
| Available | Available | Available | Available | Not Available |
| Quick response | Very Fast | Moderate | Moderate | Not Available |
| Live Chat | Phone | |||
| Available | Available | Available | Available | Not Available |
| Quick response | Very Fast | Very Fast | Moderate | Not Available |
| Live Chat | Phone | |||
| Available | Available | Not Available | Available | Not Available |
| Quick response | Slow | Not Available | Moderate | Not Available |
| Live Chat | Phone | |||
| Available | Available | Not Available | Available | Not Available |
| Quick response | Moderate | Not Available | Moderate | Not Available |
| Live Chat | Phone | |||
| Available | Available | Available | Available | Not Available |
| Quick response | Moderate | Fast | Moderate | Not Available |
What are the Risks of Day Trading?
For all the glamor of day trading, there are many more unsuccessful day traders than there are successful ones. Technology is making it harder for day traders to succeed. In the early days of this type of trading, new entrants to the market could get by with “point and click” trading strategies based on introductory research and good fortune.
Today, algorithmic trading, driven by boundless computing power, means that humans are up against machines. In the US, algorithmic trading accounts for about 60% to 73% of all equities trading. Based on economics research from Yale University, it is an accepted number in the industry that only 1% of day traders consistently make money.
Not only are retail traders up against algorithmic trades, but they are also facing a congested field of highly capitalized and experienced professional traders. These traders have the best combination of:
- execution speed,
- trading capital,
- access to powerful technology, and
- software knowledge.
If algorithms and professional traders are taking advantage of inefficiencies in the market, there is less room for inexperienced traders to get a piece of the pie.
Another risk of day trading is leverage. It is a rewarding tool when used well, but when new traders make unsuccessful bets on high leverage, they stand to lose a lot of money. Sometimes, new traders simply do not have enough capital. Inevitably, there is a learning curve to day trading that includes traders making losses early in their careers. This is normally where designated risk capital comes in handy, as traders can write off these funds and put the losses down to experience. However, if traders don’t have enough risk capital, then the stakes rise very quickly once they start trading, causing them to lose money on irrational trades.
Tip for those who have no experience
At Arincen, we operate on the principle that a well-informed trader is a successful one. That’s why we’ve assembled an array of educational and research tools crafted for traders like you. Immerse yourself in our in-depth articles to understand core concepts, engage with our educational videos, and steer your trading decisions with our updated newsfeed and precision signals.
Be Careful of Non-Regulated Brokers
Your broker should be regulated by a reputable authority who has a history of strong oversight. Your broker does not have to be regulated by an overseas watchdog, you can also go with a regulator in your jurisdiction. To check if your broker is registered with a regulator, navigate to the regulator’s official website.
How Leverage and Stop Outs Can Work for You
Here we describe two important tools that you will come to know well as a day trader. In time, you will be able to make quick mental calculations about how various leverage levels and stop-out percentages will affect your trading positions. They will become second nature.
Leverage
Depending on the regulator under which your broker works, you will encounter different policies relative to leverage. Key regulators have implemented specific rules to limit the leverage offered to retail traders as a means of consumer protection. Remember, even if your broker is not regulated by these international brokers, if they are regulated by a competent local regulator, that’s a good enough start.
Here are selected leverage rules according to some key regulators:
Financial Conduct Authority (FCA) UK:
30:1 for major currency pairs
20:1 for non-major currency pairs, gold and major indices
10:1 for commodities (excluding gold) and non-major equity indices
5:1 for individual equities and other reference values
2:1 for cryptocurrencies
These limits are in place to reduce the risk of significant losses for retail traders.
Australian Securities and Investments Commission (ASIC) Australia:
30:1 for major currency pairs
20:1 for non-major currency pairs, gold and major stock market indices
10:1 for commodities other than gold and minor stock market indices
5:1 for equities (stocks) and other underlying assets
2:1 for cryptocurrencies
Swiss Financial Market Supervisory Authority (FINMA) Switzerland:
FINMA has not set specific leverage limits like the FCA or ASIC. However, Swiss brokers must adhere to rigorous capital and risk management requirements, ensuring they don't offer excessively high leverage that could endanger their solvency or their clients' funds.
Commodity Futures Trading Commission (CFTC) USA:
The CFTC enforces a 50:1 leverage limit on major currency pairs and a 20:1 limit on non-major currency pairs for retail FOREX traders.
The U.S. has a distinct regulatory environment, with retail FOREX trading regulated separately from other forms of derivatives trading.
It's worth noting that these rules generally apply to retail clients. Professional or institutional clients might have access to different levels of leverage, depending on the regulatory environment and the broker's policies. As we can see, responsible regulators closely monitor leverage levels. Leverage is a double-edged sword because you can make a lot of money, but you can just as easily suffer bad losses.
Leverage, while offering handsome profits, significantly increases potential losses. Engaging in high leverage trading without a robust risk management strategy is like navigating treacherous financial waters without a safety net. Approach leverage with caution, employ sound trading strategies, and always try to develop a comprehensive understanding of market behaviors and how they affect your portfolio when you trade on leverage.
Stop Out
A stop-out refers to a situation where a broker automatically closes some or all of your open positions to prevent your account from going into a negative balance. To be clear, this is an unwanted situation on your part, as it means something has gone wrong with your trading strategies.
This is especially relevant for traders using leverage. The stop-out level is typically expressed as a percentage, representing the margin level at which the broker starts to close out open trades.
Here are the three most common stop-out levels:
0% Stop-Out Level:
At this level, when the margin level of the account drops to 0%, the broker will automatically close all open positions. This is the most aggressive stop-out level, and it gives no room for your positions to recover, even if the market turns in your favor immediately after reaching this level.
Here's how it works:
Imagine you have a day-trading FOREX account with a balance of $10,000 and you've opened several positions in the market. Your broker has a 0% Stop-Out Level policy, which means that if your margin level drops to 0%, they will automatically close all your open positions to prevent further losses.
- You start with a $10,000 trading account balance
- Using 30:1 leverage, you can control $300,000 worth of currency with your $10,000 account
- You open a position in EUR/USD with a notional value of $300,000, and the margin required for this trade is $10,000 (3.33% of the notional value)
- The market moves against your position, causing your account balance to drop to $9,000
- If your losses accumulate, your account balance decreases, and your margin level (account equity divided by used margin) drops accordingly
- When it reaches 0%, the broker's 0% Stop-Out Level policy comes into play
50% Stop-Out Level:
Here, if the margin level drops to 50%, the broker will start closing out positions. It offers a bit more flexibility compared to the 0% level. The broker will typically close the most unprofitable positions first, and if that's not enough to bring the margin level back above 50%, more positions will be closed until it's achieved.
100% Stop-Out Level:
A 100% stop-out level means that when a trader's equity equals the margin required for the open positions, the broker will start closing those positions. It's important to know that this is similar to the 0% level but might be worded differently, based on broker terminology.
It's worth noting that while stop-out procedures are meant to protect traders from negative balances, they can lead to significant losses in volatile markets if positions are closed automatically, especially if the market quickly reverses after the stop out. As such, using protective measures, like stop-loss orders and not over-leveraging, is always a good idea. Additionally, the specific percentage and the order in which positions are closed can vary among brokers, so day traders need to be aware of their broker's policy on stop-out levels.
How Do You Start Day Trading with the Best Brokers?
The best way to start day trading as a novice is to first sign up with a broker that offers simulated trading. By using a demo account, you can improve your trading skills and refine your strategies even before you place a cent of real money on the line.
This is also the time to learn all the features of your broker’s platform. Remember that day trading is characterized by fast and high-volume transactions. You will not be able to orientate yourself around your broker’s platform while in the act of trading. Therefore, you need to take the time to practice first.
It is a good idea to document your progress. Start by writing down the main elements of your trading strategy so you can internalize them by regularly referring to the strategy. Also, keep a running record of your trade successes and failures week by week. Sometimes, seeing how you are doing in black and white can entrench some of the lessons you need to take home.
When you eventually start trading, it is always good advice to start small. Investment experts often repeat the 1-2% rule – never risk more than a small amount of your portfolio in any one trade. Learning to walk before you can run will hold you in good stead for later.
| Method | Credit Card | Wire Transfer | Skrill | Neteller | Cryptocurrency | PayPal |
| Deposit fee | 0$ | $0 + Bank commission | 1.9% | 2.5% | Unavailable | 3.75% |
| Withdrawal fee | 0$ | $15 | 1% | $0 | Unavailable | 2% |
| Method | Credit Card | Wire Transfer | Skrill | Neteller | Cryptocurrency | PayPal |
| Deposit fee | 0$ | 0$ | 1.9% | 2.5% | $0 | 3.75% |
| Withdrawal fee | 0$ | 0$ | 1% | $0 | $0 | 2% |
| Method | Credit Card | Wire Transfer | Skrill | Neteller | Cryptocurrency | PayPal |
| Deposit fee | 0$ | $0 + Bank commission | 1% | 1% | Unavailable | Unavailable |
| Withdrawal fee | 1.5% | 30$ | 1% | 1% | Unavailable | Unavailable |
| Method | Credit Card | Wire Transfer | Skrill | Neteller | Cryptocurrency | PayPal |
| Deposit fee | 0$ | $0 + Bank commission | Unavailable | Unavailable | Unavailable | 3.4% + fixed fee |
| Withdrawal fee | 0$ | $0 + Bank commission | Unavailable | Unavailable | Unavailable | 3.4% + fixed fee |
| Method | Credit Card | Wire Transfer | Skrill | Neteller | Cryptocurrency | PayPal |
| Deposit fee | 0$ | $0 + Bank commission | Unavailable | Unavailable | Unavailable | Unavailable |
| Withdrawal fee | 0$ | $0 + Bank commission | Unavailable | Unavailable | Unavailable | Unavailable |
| Method | Credit Card | Wire Transfer | Skrill | Neteller | Cryptocurrency | PayPal |
| Deposit fee | 0$ | $0 + Bank commission | Unavailable | Unavailable | Unavailable | Unavailable |
| Withdrawal fee | 0$ | $0 + Bank commission | Unavailable | Unavailable | Unavailable | Unavailable |
| Method | Credit Card | Wire Transfer | Skrill | Neteller | Cryptocurrency | PayPal |
| Deposit fee | 0$ | $0 + Bank commission | 0$ | 2.5% | Not mentioned | Unavailable |
| Withdrawal fee | 0$ | $0 + Bank commission | 5.50$ | 0-7.5% | Not mentioned | Unavailable |
What to Consider When Choosing the Best Day Trading Platform?
When choosing a trading platform, you should consider a range of features that cater to both novice and seasoned traders. Here are some elements to keep in mind:
- Technical analysis tools: The platform should have robust technical indicators to help traders make informed decisions.
- Customization and user interface: Traders should be able to mold the platform according to their preferences, allowing them to set up their trading environment precisely how they want. We find that the products from the MetaTrader suite, especially MT4, offers excellent features for this purpose.
- Platform accessibility: A top-notch trading platform should offer flexibility in terms of access, whether it's web-based or a downloadable application.
- Risk-management tools: Trading inherently comes with risks, and a high-quality platform should provide instruments that allow traders to set stop-losses, take-profits, and other crucial order types.
- Performance and reliability: Beginner traders especially need a platform that operates seamlessly with minimal downtimes or glitches. This ensures a smooth trading journey, allowing them to focus on market movements rather than technical hiccups.
- Learning and educational resources: The best brokers will offer platforms that are not only intuitive, but also come with tutorials, guides, and responsive customer support to assist traders in navigating any challenges they might face.
To choose the perfect trading platform, here’s some advice:
- Determine your trading style and needs.
- Research different platforms and compare their features.
- Test the platforms with a demo account to see which one suits you best.
- Choose a platform that offers the features you need and is user-friendly.
- Ensure that the platform is reliable and has a good reputation in the industry.
Remember that the trading platform you choose can have a significant impact on your trading success, so it's important to choose wisely.
Available Assets and Instruments with Day Trading Brokers
Retail day trading offers a diverse range of financial instruments, each with its own set of opportunities and challenges. Remember that not all of these financial assets are suitable to day trading as they do not move fast enough. One example of this is the commodities market, which moves slower than many financial markets. However, if you get wind of a significant event that could affect the price of gold or oil, for example, you can engage in day trading on that basis. Here are the most common tradable assets and instruments:
FOREX:
With the largest trading volume globally, the FOREX market allows traders to speculate on the future movements of currency prices, trading pairs like EUR/USD, GBP/JPY, and many more.
Commodities:
Whether it's precious metals like gold and silver, or energy commodities like oil and natural gas, commodities trading offers a chance to profit from the tangible assets that drive global economies.
CFDs:
CFD trading allows you to speculate on the rising or falling prices of fast-moving global financial markets, such as shares, indices, commodities, currencies, and treasuries. You don’t own the underlying asset and you can go short or long. CFDs are traded on margin, meaning the broker allows investors to borrow money to increase leverage or the size of the position to amplify gains. Brokers will require traders to maintain specific account balances before they allow this type of transaction. CFD brokers typically provide a wide range of financial instruments across different asset classes, allowing traders to diversify their portfolios with ease.
Equities or Stocks:
These represent ownership in a company and constitute one of the most popular avenues for retail traders, given their potential for substantial returns and the thrill of being a part of the corporate world.
Indices:
These are baskets of stocks representing a particular market or sector, like the S&P 500 or the Nasdaq, giving traders exposure to broader market movements.
Cryptocurrencies:
Digital coins like Bitcoin, Ethereum, and countless altcoins offer both high rewards and volatility.
| Brokers | Currency pairs | Stocks | Indices | Commodities | Crypto | ETFs |
| ICM Capital | 67 Pairs | 89 Shares | 17 Indices | 12 Commodity | 6 Coins | Unavailable |
| Tradview | 80 Pairs | 5000 Shares | 10 Indices | 10 Commodity | 30 Coins | Unavailable |
| XTB | 57 Pairs | 1848 Shares | 36 Indices | 22 Commodity | 22 Coins | 135 ETFs |
| IG | 108 Pairs | 20000 Shares | 200 Indices | 20 Commodity | 5 Coins | 200 ETFs |
| Saxo Bank | 320 Pairs | 22000 Shares | 200 Indices | 200 Commodity | 9 Coins | 6700 ETFs |
| CMC Markets | 330 Pairs | 8000 Shares | 80 Indices | 100 Commodity | 18 Coins | 200 ETFs |
| Think Markets | 46 Pairs | 3750 Shares | 15 Indices | 11 Commodity | 21 Coins | 350 ETFs |
The Bottom Line
Choosing the best online day trading broker will come down to how they measure up in such key areas as execution speed, liquidity, reliability, and financial stability. But you can rest assured that the environment for day trading for beginners is much more vibrant, competitive, and safe than at any time in our history.
Day trading can be highly lucrative, but it takes considerable practice and application to reach a level where you are making consistent profits. It is fair to say that merely choosing the best online broker will not be the sole reason you succeed, as you still need to do your part as a responsible, consistent and studious trader. However, choosing the wrong broker can go a long way to setting you up for failure. If you do not have fast execution speeds, quality market data and good liquidity, your chances of success will dwindle.
Day trading can be highly lucrative, but it takes considerable practice and application to reach a level where you are making consistent profits. It is fair to say that merely choosing the best online broker will not be the sole reason you succeed, as you still need to do your part as a responsible, consistent and studious trader. However, choosing the wrong broker can go a long way to setting you up for failure. If you do not have fast execution speeds, quality market data and good liquidity, your chances of success will dwindle.
Recommended Brokers
Methodology
The team at Arincen collected over 120 pieces of data covering more than 100 licensed FOREX companies. Data collection was done in three ways:
- Companies’ websites.
- Other Websites that have ranked FOREX companies.
- A survey questionnaire (referred to here as Survey “1”) was sent to the companies invited to participate in the exercise.
We have identified 12 criteria for our assessment, each containing several aspects and carrying its relative weight. These include licensing, deposits and withdrawals, number of assets, day trading, etc.
Afterwards, we validated the data by:
- Registering with FOREX companies as a secret shopper and/or as Arincen.
- Survey number “2,” in which we asked these companies’ customers for important feedback and experience.
The next step saw us evaluate and rank each company, relying on the hard work of 15 Arincen employees. We were very careful in ensuring the most accurate assessment possible, including considering different languages, as well as the various mobile-app operating systems, e.g., Apple, Samsung etc.
To add credibility to our research project, we sent a third and final survey (referred to here as Survey “3”) to enable participating FOREX companies to evaluate our research and whether it accurately reflects the realities on the ground. We were fortunate enough to receive a mark of 9.9 out of 10! We have kept to a minimum the margin of error, which stood at a measly 1%. To learn more about how we came up with the evaluation, please click here.
Forex Risk Disclaimer
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
FAQ
Are the trading profits from day trading taxable?
The proceeds from day trading are generally taxable. Remember that day trading is a trading style, not a distinct financial asset. So, you can be a day trader of FOREX, cryptos, or stocks. The taxation of financial trading varies greatly from country to country and depends on local tax laws and regulations. It is always a good idea to contact a tax expert in your country to fully understand your tax liability.
What is the Best Way to Learn about Day Trading?
Starting with a demo account is the way to go. With this approach, you can practice without fear of losing real money.
What are the Risks of Day Trading?
You could suffer heavy losses. All trading activity comes with risks, but day trading contains significant risks because of how fast trades open and close, the effect of leverage, and the fact that in some jurisdictions you must be well capitalized to even qualify for an account.
You can mitigate these risks by educating yourself on day trading before you start, practicing on a demo account, and never risking a significant amount of your capital on any one trade. Very few day traders consistently make money. The vast majority lose money. You can improve your chances of success by working rationally to a well-researched plan.
Is Day Trading Legal?
Day trading is legal in the vast majority of open economies. Even in the US, which has imposed tight restrictions on how pattern day traders can operate, the practice is legal.
How Much Money is Needed to Day Trade?
Besides the US Securities and Exchange Commission (SEC) mandating that you keep no less than $25,000 in your account as a day trader, there is no set amount you need to have to day trade. Some jurisdictions do not require a minimum balance at all. As always, you are advised to only risk the money you can afford to lose.
What is Margin?
Margin is when you use your broker’s money to place trades. When you trade on margin, you stand the risk of suffering heavy losses. Margin trading is a risky exercise and you need to know the pitfalls before you start trading on margin.
What Should I Look for in an Online Trading System?
It is vital to have access to well-developed day-trading software. Watch out for commissions of any kind as these can be debilitating in the long run. You also need to place a premium on execution speed. Your online broker must be reliable and offer fast execution on a platform with high uptime.
Which Stocks are Best for Day Trading?
This is the precious information that many thousands of traders are trying to uncover every day. The instruments you end up day trading are a matter of personal choice informed by market information and several other factors.
Suffice it to say, there are a few key factors you need to keep in mind when day trading. This type of trading is best suited to instruments that are highly liquid, volatile and can be traded in large volumes.
Can you Day Trade on More than one Platform?
Yes. Some traders use multiple platforms at the same time. While day trading is an active trading form that requires dedicated attention, these traders manage to keep a steady eye on their trades across more than one platform. The reasons for doing this include needing a backup account in case of outages, or because one platform contains features the other does not. It is mainly for well-capitalized traders as they need at least double the capital a normal trader would need.
Is Day Trading Worth the Effort?
The cold hard truth is that very few traders do so profitably over time. In today’s trading landscape that includes sophisticated algorithms powered by advanced computers with the heft of large hedge funds behind them, the average day trader has a slim chance of getting a meaningful piece of the pie.
Any market inefficiency gets swept up by bigger and more professional parties. Further, gullible traders end up paying a lot for peripheral ways to increase their chances of success. These include chat-room memberships, educational courses and information subscriptions. That said, there is always a percentage of day traders who are successful, it just takes experience, application, capital and skill.
What is the Best Platform for Day Trading?
This article is dedicated to breaking down the most crucial factors to look for when engaging with a day-trading broker. In short, brokers must be regulated, well-established and well-capitalized. Crucially, they need to have advanced platforms that place an emphasis on speed of execution, providing market news while giving traders access to excellent liquidity. Fees are also a consideration that every trader must factor into their decision making.
Written by
Adrian Ashley
Adrian Ashley is a seasoned business and finance writer. With a corporate career spanning over 20years, he has developed deep experience in such diverse areas as investing, business, finance,technology and macroeconomics. He is passionate about captu...
Edited by
Marwan Kardoosh
The Editorial Department at Arincen makes an important contribution to the world-class content that...
Fact Checked by
Bahaa Khateeb
Bahaa Khateeb is currently the CEO of Arincen, a start-up Fintech company based in Haifa. Baha...
May be interesting for you
Carousel
Similar articles
Carousel
To Comment You Must