Recommended Brokers

The two full service brokerages that we recommend are SureTrader and Interactive Brokers. At least half of our trades involve “short-selling." Although the loss potential in short-selling is unlimited,  our losses during the market hours are limited by using stop-losses.  We rarely hold shorts overnight unless we are very confident that the stock will not move against us.  Not being able to short-sell is like playing tennis using only the forehand. Being able to play the market both ways is essential to becoming a versatile, capable trader. 

Margin is your broker lending you funds before the trade settles in T+3 for equities. This means it takes three days from the time you close your trade to when you will have that purchasing power again. Margin accounts are required to short-sell. Margin is your broker lending you capital so you have buying power without waiting 3 days. Pattern Day Trader rule does not apply to cash accounts.

Full Service Brokers


Interactive Brokers

Pros

  • Pre-market starts at 4:00 AM EST, earlier than most other brokers
  • No fees for holding short overnight.
  • Excellent execution quality.
  • Able to trade equities, options, futures, forex.
  • Free mobile app.
  • Secure login.


Cons

  • $10,000 minimum to open an account.
  • 0.005/share commissions can add up quickly especially when trading penny stocks.

ThinkorSwim

Pros

  • Ability to display multiple charts on the same page, removing need for multiple monitors.
  • Custom indicators, studies and strategies that can be applied to your charts.
  • Excellent execution quality.
  • Able to trade equities, options, futures, forex.
  • Free market data scanner.
  • Free mobile app.
  • Risk profile analysis for options plays.
  • No fees for opening account or minimum account fees. Free Level 2 market data.

Cons

  • Difficult to get approved for futures/options.
  • High fees at $9.99 per a trade. Tip: you can ask them to lower it if you are an active trader. They will match Schwab's new $6.95 per a trade fees

For members with smaller accounts or simply more risk averse and want to only go long on stocks, we recommend Robinhood. Consider this, if you take a $1000 position and you pay $6.95 each way, that is $14 in commissions. Between the commissions and the spread which is at least a penny, possibly more with SEC's Tick Size Pilot (TSP) on 1200 equities, you are down more than 1.4% already!

Update: we no longer recommend Ustocktrade due to its slow execution. In trading, milliseconds matter. For the retailer trade, seconds matter. On Ustocktrade, there are instances of trades being delayed for minutes.

Brokers for Smaller Accounts


SureTrader

Pros

  • No Pattern Day Trader(PDT) rule.
  • 6:1 margin versus standard 2:1.
  • No account minimums.
  • Largest list of stocks to short-sell. Not all brokers are equal in this manner.
  • Promotion Code: 50ONUS (+50$ at sign up)

Cons

Robinhood

Pros

  • Commission-free trades.
  • No account minimums.
  • Limited access to after-hours pre-market and margin for a $9.99 monthly fee.

Cons

  • Market orders can add up to 5% of your total holding cost. Must use limit orders.
  • Subject to PDT if using Robinhood Instant.
  • Only available on mobile platform unless you install an android emulation program such as this one.

 

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