Top 3 Things Active Traders need to look for in a brokerage firm

An article by Punit    No Comments

Active traders are the category of investors who execute number of trades throughout the day. They typically have large sum of money and take advantage of market volatility by tapping into the opportunities created by intra-day events that swing the market direction.

Several of active traders are day traders who usually do not hold any positions overnight and prefer to close most of their positions before the market closes. Such traders rely on the volume of trading. Lot of these traders are purely technical and execute trades purely based on what their charts say. Others combine charting with market news and other factors.

You will usually notice that these traders look for following parameters when selecting their brokerage firms. So if you aspire to take part in trading on that scale, be sure to check out the list below. So that you can pick  your broker correctly.

Platform Speed

Platform speed plays a big role in day trading. Imagine you are about to purchase a big block of $c stocks and your buy point is 3.98 and sell point is 4.03. Now if the platform was slow and it executed your order at 3.99, you have already reduced your profit by 20%! So pick a brokerage firm which does NOT have any latency and is QUICK.

Low Commission

Commission plays a big role if you are an active investor because you are potentially going to execute tens of trades in a day. If you are paying 15$ per trade vs. 5, thats a difference of 10$ per trade and 100-200$ per day of gain. On the same note, you should not choose a broker solely based upon commission. For example, OptionsHouse charges 2.95$ for a trade but their platform is just not built for active traders. So stay away from them. Lightspeed on the other hand is surely tailored towards active traders.

Automated Trading

Automation for investors can be of various forms. Some investors like to execute trades from their spreadsheet, some like to build a tool with brokerage API. This is a major differentiation between retail investors and active traders. Retail investors are usually satisfied with just online trading. Active traders on other hand like to things their own way, in their own native platforms.

I would like to mention a notable brokerage firm which is aggressively positioning themselves for Active Traders. High Speed active trading is what Lightspeed goes by.

Be sure to check out  Lightspeed if you are serious about trading and have the mindset to make money