The Forex and trading history in general changed greatly since 1974. Before that, traders without electronic devices and technologies had no opportunity to diversify their trading styles. Back then, the minimum equity requirement was only 2,000 USD. However, nowadays, advanced technology and high-speed software allow traders to open and close trades within the same day. That gave birth to a new concept of day trading, which confuses a lot of beginner traders but attracts millions of people worldwide.
Day trading is a very specific and risky style that requires a lot of effort, attention, and knowledge. Furthermore, the trading conditions should be supporting the chosen trading strategy in all ways. Otherwise, an already highly risk-containing activity becomes a loss-making machine for traders. For that reason, it is highly recommended that the day traders seek the best Forex brokers which support their trading style & strategy and deliver appropriate tools, platforms, and conditions.
However, it is not like you simply decide to get in and out of trades within the same day and you can go unnoticed. Most of the countries, such as the United States, impose strict rules limiting the day traders’ freedom and even go as far as requiring minimum capital of 25,000 USD in some cases. But, if you still think that day trading Forex brokers are the right option for you, then you will need to explore suitable Forex brokers for your day trading strategies.
Since day trading is not a regular method of trading in Forex or other financial markets, it is not convenient to simply trade on any platform and with any broker. First of all, the broker should allow the strategies that work best for day trading. For instance, scalping is one of the common approaches of day traders and there are quite a few brokers that prohibit it. Apart from the strategies, the trading environment along with the conditions should be favorable for traders. Below is the list of best day trading forex brokers that support day traders and their chosen trading styles.
CySEC, FCA, ASIC
MT4, MT5, WebTrader
CySEC, CBI, FSA, FFAJ, BVI FSC, FSCA, FSRA
MT4, MT5, WebTrader, AvaTradeGO
Swedish FSA, Finansinspektionen
cTrader, MetaTrader 4, MetaTrader 5
SVGFSA, FCA, DFSA, FSCA, FSA
From 30% to 100%
Risk Warning: YOUR CAPITAL MIGHT BE AT RISK
FCA, CySEC, FSA
MT4, MT5, WebTerminal
ASIC, CySEC, FSA, BVI
WebTrader, MT4, TradingView
FCA, CySEC, DIFC, CIMA
WebTrader, MT4, MT5, IRESS
ASIC, SCB, CMA, CySEC, FCA, BaFin and DFSA
MT4, MT5, cTrader, TradingView
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Many regulatory bodies that license the Forex brokers employ the day trading rules. First of all, by definition, the person is considered as a day trader if he or she accomplishes at least 3-day traders (opening and closing positions within the same trading day) within the 5 consecutive days. Simply put, if the number of day trades exceeds 6% of the traders’ overall trading activity within a five-day span then the Financial Industry Regulatory Authority (FINRA) and the New York Stock Exchange classifies the trader as a day trader. Furthermore, these regulatory authorities establish the rule according to with a day trader is obliged to maintain minimum equity of 25,000 USD.
So, is day trading profitable? according to the official statistics, 90 percent of the day trading online brokers actually lose their short-term investments. Many people even compare day trading to gambling as the risks are extremely high. Furthermore, day traders usually go for volatile markets like Forex or frequently stocks in order to gain higher returns on their traders in much shorter periods of time. Additionally, according to some of the popular trading strategies, day traders might be looking for familiarity in their tradable products. Knowing your product well boosts your trader confidence which is essential to avoid emotion-based decisions as much as possible.
Here are few hints to what day traders need from their brokers:
Quite a few things that day traders look for are essentially built in the features of the top-rated day trading brokers. For instance, a significant number of day traders could generate some profits through their traders, however, still have to give up almost all of it due to high commission rates. That is why low-commission brokers are crucial for successful day trading. Furthermore, day traders must open and close their trades in a matter of minutes and even seconds. The speed of execution highly depends on the trading software or platform, which is in fact provided by the broker. Therefore, one of the primary features that the broker should provide is high-quality day trading software. At that point, traders stand in front of the dilemma to either go for Direct Access brokers or brokers selling order flow.
The significance of the fast trade execution cannot be devalued. This is why most of the experienced traders would go for brokers that provide direct access to markets. It allows them to directly route their orders to the chosen exchanges, ECNs (electronic communication networks), or market makers. Through direct access to markets, traders acquire access to much more liquidity and fast execution. However, it comes at a greater price implemented in the commission fees. Some of these brokers might provide commissions from 0, however, it means that the commission is integrated within the spreads or might result in slower trade execution.
Alternatively, the best broker for day trading in India might act as a middleman between the market and the trader’s order. Such brokers will route the order on the trader’s behalf to the market. What it means is that there is a great chance that the customers’ orders will be combined and the priority will be given to the certain routes when they sell traders’ order flow. In this case, traders have to hope that the product trades at the given price long enough for the broker to accomplish the order. To avoid it, there is only one way – to go for DMA brokers and simply take that liquidity instantly.
First things first, the day trading for beginners might sound scary to the point that it drives them away. Often, newcomers to trading will have a fear that day trading online brokers are trying to steal money or offer the conditions that are in fact more profitable to the broker and inconvenient for the traders. That is why a reliability check should be done on the broker. There are a number of ways of how to check if the broker is legit, reliable, trustworthy, and worth your time and finances.
At first, when talking about the legitimacy of any brokerage firm, the official license or authorization of the broker needs to be considered. Meaning that the broker should have some regulatory framework within which it will adhere to rules, market standards, and limitations that guard and guarantee the safety of the traders’ rights. The regulations in some countries oblige the brokers to require minimum capital for day traders, especially in the United States. On the other hand, for the best brokers for day trading Canada requires no minimum balance unless day traders go for the securities that settle in the US.
Furthermore, the regulations guarantee that top-rated day trading brokers will hold segregated accounts for their clients. It is the best way to protect traders’ funds from any downturns or bankruptcy that the broker might face. Additionally, the regulated Forex brokers are regularly checked whether they comply with the set of rules and there are scheduled audits carried out on these firms. Therefore, if your day trading broker is regulated within an official regulatory authority there actually is nothing to fear for.
Before diving into how to start day trading another obvious way to assess the brokerages’ trustworthiness is to go through the professional reviews and see what experts have to say about the broker. If you are unable to find a legit review produced by some of the notable sources and/or expert writers it means that there is nothing wrong with the brokers. You can also check the recommendations provided by us on individual brokers, their in-depth analysis, and their services overview here.
Apart from the regulatory requirements that ask for a minimum capital balance of 25,000 USD in the United States for day traders, there are several types of fees associated with day trading. Even if you live outside the United States, trade non-US securities and your broker allows you to trade without a minimum capital requirement you will have to spend a considerable amount on state-of-the-art software and strategies. Some of the strategies can be found for 5,000 USD. Furthermore, many brokers started providing the best day trading platform for beginners.
One of the main costs of day trading is the commission fee. You should not be deceived by the discount brokers as their execution speed is relatively slow and would result in much more losses of your finances. Furthermore, they are not direct market brokers and would trade against the flow of orders. The commission fees of DMA or direct market access brokers charge commissions based on your trading volume. Basically, the more stocks you trade the less commission you pay. Usually, a decent DMA broker might charge as low as 0.0002 USD per stock traded, whereas a retail broker would ask for at least 7 USD. Furthermore, the CFDs can be traded with a commission fee of 0.25 USD. Therefore, when you determine your best day trading stocks that you would like to include in your day trading portfolio you check on the terms and conditions, spreads, or commissions applicable to the trades from your broker’s side.
Since day trading requires a lot of specific approaches, various different strategies and is much riskier than other trading styles it needs special circumstances under which the traders are prone to be more successful. As we have mentioned, the traders should emphasize the necessity of low commission rates as very often the day trading will bring minor profits and if all of it goes on the commission fee then there is no point in processing your trading activities, anymore.
Additionally, it is highly recommended that the day traders go for Direct Market Access brokers rather than retail brokers since DMA brokers provide the best day trading app and platforms with seamless order execution. Furthermore, these brokers have fewer commission costs on average compared to retail brokers and allow greater freedom of routing your trades. Nevertheless, the best brokers would be equipped with ground-breaking trading software for all trader experience levels. You would need access to market data all the time which some of the brokers provide free of charge on the financial markets, such as Forex. It is always better to check for the specific trading conditions that a broker offers for the day traders, look for ECN brokers or low-cost Forex brokers.
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