Best Brokers for Active Traders
If you are looking to sign up at an online broker that is suitable for an active options trader, then we strongly suggest doing so at one these brokers listed below. These brokers all come highly recommended and, in our opinion, they are all of a very high standard.
At OptionsTrading.org we take great care to only recommend brokers of the highest standard, and we also go one step further. We have separated our recommendations into different categories, making it easier to find a broker that is suited to a particular purpose. You can now be assured that the brokers listed above aren't just quality brokers, but also particularly well suited for active traders.
We suggest that you use one of the recommended brokers we have listed above if you are planning on day trading. We would also suggest that you take a look at the advice we have provided on this page about how to select a suitable broker.
Advice on Choosing a Broker for Active Traders
With the advent of online trading and online brokers, trading options has become much more accessible for many people. As a result, it's not uncommon for people to progress to doing their trading on a full time basis: often staying at home and monitoring the markets throughout the day to look for trading opportunities.
This has meant more and more people are using an active trading style, such as day trading, which involves making a lot of trades on a regular basis. Using an active trading style also often means having to react very quickly to changes in the market. It's one the most intensive forms of trading there is and it can be very stressful.
When trading while using an active style it's vital that you trade with the minimal amount of distractions so you can concentrate completely on what you are doing. It's also important that you are able to make your trades as easily as possible and with as little hassle as possible. You simply must choose a broker that can service traders that need to make a lot of transactions on a regular basis.
Factors To Consider
If you consider yourself an active trader, then we would suggest you take the following points into account when you are deciding which options broker to sign up with.
- Commission Charges
- Order Execution
- Alternative Ordering Methods
- Minimum Trade Values
Commission charges are an important consideration for any trader, but they are particularly relevant if you are an active trader because of the amount of transactions you will be making. If you are making a number of trades on a regular basis then the amount of commission you will be paying can be quite substantial.
Just a small difference in the amount you pay per trade could end up making a big difference to your profits. As such, we strongly recommend that you carefully compare the commission rates at different brokers before choosing which one to sign up with.
Executing your orders is ultimately the main role of a broker so it's something that you should expect them to do well, and most online brokers do indeed provide high quality order execution. It's especially important you are an active trader, simply because you will be placing a lot of orders.
There are two specific factors relating to order execution that need to be considered. The first is the ease of placing an order; if you are placing a large number of orders throughout the day then it will obviously be a great deal more manageable for you if the process for entering an order is as simple as it can possibly be. Saving a few seconds on each order can actually be quite a big benefit when you are making so many of them each and every day.
The second factor is also speed related because you want your broker to be executing your orders as quickly as possible. This is because active trading often involves trades that try to take advantage of very small price movements, making it essential to enter and exit a position at precisely the right time.
Just a short delay between placing your order and it being executed can result in reducing your profits or even mean the order doesn’t get filled at all and you miss out completely. Of course, this is something that is hard to test without actually signing up and trying a broker out. We are confident that all of the brokers we have listed above offer very good order execution, which is one reason why we recommend them.
Alternative Ordering Methods
Something that else that you really should consider as an active trader is whether an online broker offers any alternative ordering methods. Because many of your trades will be time critical, you could find yourself in a bad situation if you were about to make a trade and you lost your internet connection or there was a power cut.
Such scenarios may be pretty unlikely, but they can happen and you should ideally have a back-up plan if they do. If an options broker offers alternative methods for placing an order, such as over the phone for instance, then this might just save you a lot of money at some point in the future.
Minimum Trade Values
This might not be relevant for everyone, but a lot of active traders often do make trades that are quite low value. If you think that you are likely to be making any significant number of low value trades, then you should check out what the minimum trade value is at a broker if you are considering trading with them.
Most brokers have minimums that are perfectly reasonable, but they can be a bit high at some brokers. Before you go ahead and sign up with an online broker, make sure that the minimum trade value is at a level that suits you.
Choosing the right broker is an important decision for any trader, and it's no different for those using an active trading style. As we have outlined above, there are certain factors that are particularly relevant for active traders and we strongly suggest that you take these factors into account when you are deciding which online broker you are going to sign up with. Our list of recommended options brokers is a great place to start, and we believe they are all well worth considering.