This guide may contain affiliate links, please read my disclosure for more info
If you want to be a profitable trader, choosing a broker that fits with your goals and trading style is key.
The good news is that competition among online brokers is fierce, which keeps costs on the low side.
There are many options open to you, but choosing a broker will mostly depend on the degree of sophistication you are willing to pay for.
Do you want a state of the art platform or a mostly low-cost option?
Let’s take a look at the 10 things you should consider when choosing an online broker:
- Where you live: depending on your place of residence, all brokers might not be available. Interactive Brokers, FXCM or IG might be available worldwide, while Charles Schwab or TD Ameritrade will only accept US citizens.
- Minimum account funding: some brokers could ask you for up to $5,000 but most will have minimal requirements;
- Securities you want to trade: some brokers are specialized in Forex, others in CFDs. If you’re going for stocks, is it US stocks, European stocks? If cryptos is your choice, then you might need a dedicated crypto exchange.
- Fees & Commissions: this is absolutely key, transaction costs will be a huge part of your P&L. Be careful with zero commission brokers, you will always pay something in a form or another (check out my Robinhood review). If you are going to be a scalper, getting the lowest possible transaction costs is mandatory;
- Platform is another key element. Look at the charting capabilities, is there a mobile platform, how elaborate are the tools? Again, if you’re going to scalp for example, you will need hotkeys and lightning fast execution.
- Social Trading functionalities: can you share ideas with other traders, are there « copy trading » options to follow the best traders?
- Educational resources: if you’re a beginner, the quality and quantity of online training material will be important.
- Paper trading: make sure your broker provides paper trading accounts, this will enable you to learn the physics of trading firsthand and check if you have a viable strategy
- Market data and analysis: if you’re already a seasoned trader, you might want high end investment analysis and fundamental information provided by professional investors
- Funds protection: is the broker a member of specific regulatory authorities that will provide rules and protection (FINRA, SIPC, FDIC)? Look out specifically for the SIPC the consumer protection rules to keep your funds safe.
This might seem a little overwhelming, so let me simplify things and make five broker recommendations depending on what type of trader you are :
- Option #1: eTORO ⇒ if you’re a beginner looking to try your hand at swing trading stocks and would like copy trading options, and the possibility to trade Forex, stocks, or cryptos. The winner for dipping your toes and social trading.
- Option #2: Robinhood ⇒ a very good discount broker, with an ultra simple interface and mobile app. Read my full review. The clear winner for ease of use.
- Option #3 : eTrade ⇒ if you live in the US, an excellent broker for beginners. Includes $0 trades. Excellent platform, regularly awarded (especially options). Great mobile app. The winner for mobile trading.
- Option #4: Interactive Brokers ⇒ if you need pro features, IB is a very advanced broker with rock bottom transaction fees if you’re a heavy trader (perfect for Day Traders). Their platform could use some refreshing but their margin rates are unbeatable. Accessible in 26 countries. The winner for fees & commissions.
- Option #5: TD Ameritrade ⇒ for their fantastic platform thinkorswim, a great option for beginners, regularly awarded in best broker rankings. Fantastic educational material, no minimum deposit and $0 stock trades. The winner for Platform & Tools.
Exchanges for Crypto Trading
If you specifically want to trade cryptos, I’ve covered the Top Cryptocurrency Exchanges for buying Bitcoin or Altcoins.
If you are going to be an active Crypto Day Trader, then you definitely have to take a look at the Coinigy platform.
Now Open a Demo Account
This is probably one of the most important pieces of advice in this guide:
“DO NOT TRADE WITH REAL FUNDS UNTIL YOU HAVE AT LEAST 2 MONTHS OF PROFITABLE DEMO TRADING”
You wouldn’t drive a car without a license, why would you waste precious funds and start trading until you have reasonable assurance that you can be profitable? that would be madness.
So the advice is simple, open a demo account with your broker of choice (most offer that option), and start trading.
Here are the 3 main reasons to open a Demo Account
- Learn the mechanics of trading: how to place an order, the different types of orders (limit, stop,…), the impact of commissions, margin requirements, etc… On a demo account you can mess it all up, there’s no consequence other than climbing the learning curve.
- See if the market you’ve chosen fits you: if you’ve chosen Forex, demo trading it will tell you if the dynamics of that market fit you
- Test your trading style: not everyone can be a scalper, it requires a lot resistance to stress, long hours of screen time, etc… Scalping on a demo account
Let’s be clear : even if you successfully trade demo for 2 consecutive months, you won’t know if you can replicate that until you go with live funds. So it would be madness to go live without these successful two months. Do it seriously, treat trading like a business, you will only succeed if you’re committed, serious and disciplined.
Another great platform to Trade Demo is TradingView. The HTML5 web-based interface is fantastic, and the number of tools and functionalities limitless (screeners, social trading,…). I’ve covered Tradingview in this Complete Beginner’s Guide.
Choosing the Best Day Trading Setup and Gear
A broker is fine, so is a Demo account, but none of that is possible without adequate gear.
Here’s a complete article on the Top Day Trading and Gaming Setup. Choose the best PC, an ergonomic chair, a real Day Trading Desk, and wide and high-quality trading monitors.
If you’ve chosen trading for the nomadic lifestyle, a laptop is definitely what you need. In order to make the right choice you will need to check a few of your laptop’s specs:
- Speed. Trading means quick decision making, You need a laptop that boots quickly in order not to miss a trade.
- Screen size and quality. Essential given the long hours of screen time.
- Lightweight. You will carry your laptop with you everywhere.
Given these criterias, here is a selection of the best laptops for trading.
Get yourself a comfortable Trading Chair
As a Day Trader, it’s likely you are going to spend hours in front of your screen. Your eyes will feel sore and your back will ache, but if you want to make this easier, check out this amazing Trading Chair.
Designed and made with the total comfort of humankind in mind. Esthetics, form and function allow this series to utilize a synchro tilt mechanism with infinite lock, sliding seat, pneumatic height adjustment, and headrest option all in one very unique chair…
Give yourself a treat.
Now that you’re all set up with a Broker, an account, and some gear, let’s take a look at some of the free websites that can really help you in your trading.