In order to start day trading, you will need to register for a broker account with one of the many brokerage firms operating online and offline.
Before choosing which broker to do business with, you should take your time to look at the available options. Like anything in the world, there are brokers that are good and brokers that are not so good. Finding a broker that suits your own personal day trading style is the key to a successful relationship.
Broker Fees and Commissions
Every trade that you make a profit on, you will be subject to broker fees and commissions. With this in mind, it is sensible to look for a day trading broker who offers low fees and competitive commissions.
The commission percentages vary with each brokerage firm. Some brokers offer a flat rate commission structure that stays at the same level no matter what the size of the trade, and can end up working out at only a few dollars for every trade.
Other brokerage firms have a sliding commission structure in place, where the amount you pay depends on how small or large the transaction is.
Two Different Types of Broker Accounts:
Regular Broker Account
A regular broker account is great for beginners to get started with. In these accounts, you are limited to only trading stocks and ETFs, and because you are limited in your position sizing, it greatly reduces the amount of risk you take on with each trade.
If you were to open a margin account with a brokerage firm and then deposit some cash into the account, the firm would then supply you with your own line of credit which would give you a greater buying power. If you are interested in trading FX, commodities or futures, then you will require a margin account.
How to Choose a Broker
One way to find a good day trading broker is to ask around and get some word of mouth recommendations. If a friend or colleague has had a good experience with a particular firm, then they will definitely let you know about it.
Also, check places such as online forums and blogs to read some unbiased reviews about the different brokerage companies.
Another factor to take into consideration is how many years they have been operating and their level of experience in the day trading world. Do they have a proven track record of being reliable and efficient? Is there any testimonials on their website from satisfied clients?
Lastly, you should check to see if they have a good level of customer support.
For example, can you reach them at all times of the day via the telephone, and actually speak to a real person? And is that person knowledgeable about day trading?Also, do they have other lines of communication open such as email and Skype, and are they fast to respond to queries.
Being with a broker who quickly answers your questions and can help you with problems makes a big difference to your day trading business, as you can quickly get issues sorted and turn your attention to more important matters…such as making money.