Whether you’re trading a small account, large account, going loan biased or short biased, or trying to avoid the PDT restriction. Contrary to what most people think, the deciding factor for which day trading broker you should be using should never be whether they are commission-free. You should be choosing a broker that gives you the most optimized platform at a reasonable cost to trade your own trading style and strategies. Whether that’s buying breakouts shorting parabolics swing trading or options trading, think of it this way.
Fees are Just the Cost of Doing Business
I don’t want to be saving five dollars in commissions. but actually getting filled with 50 cents slippage and even just 100 shares that are losing 50 dollars of potential profits. At the same time I don’t want to be saving a couple of dollars per trade but never have any stocks or shorts available when I see an amazing low float penny stock being pumped 400 percent and very extended on the day. Broker commissions and fees adjust the cost of doing business if paying those fees means you end up with better execution fills and speed and a lot more profit, then by all means that’s absolutely worth it.
Best Broker for Buying Stocks
Interactive Brokers: https://www1.interactivebrokers.com/en/index.php?f=1338
Account minimum: $2,500 USD
Pros: Cheap commissions. Getting better at having short borrows on small call penny stocks. I use this broker for day trading penny stocks. Plenty of easy-to-borrow stocks to short at no extra borrow cost.
Cons: Expense on monthly individual data subscriptions add up. Terrible customer service. No hard to borrow stocks and short stock locate function.
Let’s start with the most basic brokers for most beginner traders to get started. Going long I personally started with learning loan strategies and that’s how I built my small account with interactive brokers. IB which is short for interactive brokers it’s the first broker I got when I started day trading six years ago so interactive brokers are known for their discount commission fees. Basically, the cost of buying and selling us listed stocks is 0.005 dollars per share, with a minimum of a dollar u.s per share so for newer traders with small accounts this is very affordable. And from my past experience, interactive brokers fail and the speed is pretty decent as well. But keep in mind to trade on interactive brokers you will need to purchase additional market data subscriptions for their platform trader workstation TWS if you are day trading mostly on the US NASDAQ and NYSE stocks and options like myself this is what the subscriptions would look like. And it adds up to about 20 to 30 dollars per month. So those packages include things like equities options quotes for NASDAQ exchanges level 1 level 2 etc. But if you trade those true sub dollar penny stocks, you will need to purchase additional otc or pink sheets data for I think about ten dollars or fifteen dollars a month. In terms of the ability to short IB has generally good short locates for the large-cap stocks.
But they would not have anything available on the hard-to-borrow stocks such as the small-cap runners on day one and sometimes on day two. So that’s something to keep in mind of on top of that they also do not offer traders the function to reserve shares to short for later on so you have to use a short locate right away but the good news is for any of the stocks that they do have available to short.
They come at no extra cost interactive brokers are available in the US, Canada, and most international countries. if you’re in the US there’s also the option of IB lite which is their version of free commission trading. but I believe if you are on the IB lite plan you would only be able to trade a mobile or the web platform, not on the TWS trader workstation desktop.
If you open an account with interactive brokers there’s also the option of linking your broker account with Dash Trader Pro which is a much better and much more optimized trading platform in my opinion.
Fidelity Active Trader Pro
Pros: Good execution fills and customer service.
Con: Outdated trading platform, sometimes the buttons lag.
Let’s talk about fidelity active trader pro. I have not used this broker myself but I hear from many traders I trade with every single day that they have great execution fills.
And for a broker that’s gone commission-free now like everyone else that’s amazing what a lot of traders love about fidelity is their customer service their support line is known for picking up the phone within one-minute wait and this broker has pretty good short availability for the mainstream large-cap stocks. Such as the Roku and tesla and no additional borrowed cost. Basically, in terms of shorting, they’re around the same level as interactive brokers. But the downside to trading on Fidelity active trader pro is their platform. The reviews from traders I know are generally the same. Their platform functions are really outdated and clunky.
So keep that in mind if you decide to trade with them. Fidelity is available for the US, Canada, and many other international countries as well. So make sure to check out their international website for more details.
Great for trading automation, direct access broker, Matrix feature for faster order entries
Now for all the traders interested in trading automation and coding, you might be interested in Tradestation. Tradestation is another direct routing broker that offers good executions for traders the shorting availability is on par with fidelity and interactive brokers.
Where most of the large-cap stocks are available to short for free. Tradestation platform offers a very unique matrix feature which is a more advanced but easy to follow level 2 montage. This feature offers lightning-fast order entries on all kinds of orders to trade with. Such as bracket orders sell stop orders and buy stock orders. and like I mentioned earlier TradeStation platform also allows you to build your own automated trading strategies. So if you ever build a bot that’ll make it rain Lamborghinis. Make sure to call me now.
Best brokers for Shorting Stocks with a Large Account ($30K Min)
Cobra Trading: https://bit.ly/3iNLqJq
Great list of hard to borrow stocks to reserve short, affordable fees for overnight short swings
Get 25% off commissions, mention “Humbled Trader” at the time of account opening
Let’s talk about the exciting topic of the best brokers for shorting so when it comes to shorting these hard-to-borrow low-flow stocks at an extremely affordable price, the winner has to be Cobra trading.
Cobra Trading is a premium direct access broker that offers the function of reserving hard-to-borrow stocks to short at a most reasonable price. And sometimes they even offer their clients free locate on these stocks. All these small-cap runners that ran 200 percent or 400 on the day, that everyone wants to short, They were available at cobra trading and sometimes you might want to short these stocks overnight. And guess what while a lot of other brokers charge three times or five times overnight fees cobra trading does not. They offer flexible & affordable short swing fees on a stock-to-stock basis. You can link your cobra account with fast trader pro as well. It’s a platform that offers the best execution fields whether you’re going long or going short. If you are in the US the account minimum to open is $30,000. And for the international clients, the minimum will be $50,000. But sorry at the moment they do not service the Canadians but I will have another option for you later on so hold on tight. If you are interested in opening an account with cobra trading I have a link for you to sign up and if you mention humbled trader at the time of account opening, You’ll get 25% of your commissions. That’s a pretty sweet deal.
Centerpoint Securities (Broker for shorting with Large account)
Great list of hard-to-borrow stocks to reserve short, at a more premium price. Great customer service. https://centerpointsecurities.com/
This broker is also amazing for shorting hard-to-borrow stocks and that is CenterPoint Securities. They are a little bit more expensive in terms of short-to-locate fees than cobra trading. And there’s also the additional three times overnight fees. If you swing the stock short however they do offer amazing customer support service direct access trading and connection with dash trader pro. CenterPoint Securities is available for traders in the US, Canada, and many other international countries with an account of over $30,000.
Now for the traders starting out with a smaller account of fewer than thirty thousand dollars, I have more broker options for you.
Best brokers for Shorting Stocks with a Small account
Trade Zero (PDT rule still applies for the US)
Account minimum: $2500 USD
Okay, let’s talk about the top choice for shorting if you have less than thirty thousand dollars. And that is Trade Zero.
This is an offshore broker in the Bahamas trade zero is known for having an extensive short locate on these hard-to-borrow penny stocks just like cobra trading and center point. And you can open an account with them with a $2500 minimum. However, that’s at an extra cost of course. Theirs locate fees on these hard-to-borrow stocks are usually a lot higher than other brokers. And even though they claim to have free commission trades on limited orders trade zero they love to think traders for like these small things like wire fees statement fees and deposit fees and everything small like that they just kind of add up eventually. Another thing to keep in mind is the platform Zero Pro the executions and the fields are extremely clunky sometimes and it freezes during times of volatility. So make sure to consider both the pros and the cons when trading with this broker. But trade zero is definitely a great option for short sellers with smaller accounts. American traders can open an account with trade zero America but you still have the PDT rule restriction under $25,000. Canadians and other international traders can open an account with trade zero international.
Best Broker to Avoid PDT Rule
Now, what if you want to avoid trading under the PDT restriction.
PDT stands for pattern day trader rule basically it limits how many times you can trade if your account is under $25,000. Under the PDT restriction, the day trader can only place three-day trades in a consecutive five-day period. Keep in mind PDT rule only applies to US traders using US-based brokers. Such as all the ones that we talked about earlier ib TradeStation fidelity think of swim as well as the premium brokers like cobra and CenterPoint. Actually, they don’t even take clients under PDT. But if you are in the US and want to avoid this restriction you can open a cash account with any of the brokers I mentioned earlier.
Broker to Avoid PDT Rule:
CMEG- Capital Markets Elite Group: https://www.cmelitegroup.com/
You could also open an offshore trading account with CMEG. CMEG is one of the only few offshore brokers with a good reputation that I know many of my trader friends like to use. They are based out of Trinidad and Tobago and they take clients from the US and many international clients but not Canadians. Again I’m sorry CMEG offers dash trader pro connections as well. But their commission fees and borrow fees are extremely high. Their short-locate availability is also not as good as straight zero or cobra trading either. So make sure you read into the details in the fine print before opening an account with them.
Brokers for options trading, Free commission trading
Let’s talk through really fast about a few other brokers that I know many traders like to use the StreetSmartEdge from the shrub is one of the platforms that I know to be very popular for options traders.
And then there’s also to think or swim I love the thinkorswim charting platform with all the customization and flexible grid and the free market data. But truth be told ever since they started with free commission trading. The platform executions have been extremely laggy, and sometimes the market data would even freeze altogether. Which to be fair seems to be the problem for all these brokers that have gone commission-free such as e-trade, IB lite, and popular free trading apps such as Weebly and Robinhood. again I think these free commission trading platforms are great for beginner traders to get started with low upfront cost or to just practice free real-time paper trading. But if you really want to take trading seriously as a business down the road after maybe six months or a year. It’s very much worth it to switch to a premium direct access broker. The speed execution fields the routing options and the ability to short hard-to-borrow stocks are worth the extra couple dollars of commissions. That’s just the cost of doing business. Hopefully, you’ll find some of the brokers I just talked about fit your trading style.
Trade with me: https://humbledtrader.com/discord-room 🙂