Picking the Right Online Broker
There are two types of day-trading options: pay-per-trade and pay-pershare. The one that’s right for you depends on how often you trade, and also on your level of experience, and the amount of your trading capital.
If you plan to be a professional day trader, meaning you want to do multiple round-trip daily trades and you’ll never hold overnight—then sooner or later you’ll want to escape the high pay-per-trade commissions. For serious day traders who are in for the long haul, the way to go is pay-per-share brokers.
I have to confess, however, that along with the alternative, I do keep a pay-per-trade account. I’ve found that the pay-per-trade brokerages are useful for certain things, even for a pro. Traditional online brokers offer crucial stock research tools. They can boast great platforms to trade on, and they impress with slews of incentives, like ATM cards, free checks, and free data feeds. For all of those reasons the pay-per-trade brokers are the place where a greenhorn should start. They facilitate a beginner’s transactions. They provide great customer service. They offer the market data that’s needed to build a newcomer’s skills.
STARTING OUT WITH PAY-PER-TRADE
Here’s the most important reason to get your feet wet with pay-per-trade: when you’re beginning they’ll only let you trade with your actual capital amount. The minimum capital required is usually only $500. That policy effectively ...