How to Day Trade for a Living: Tools, Tactics, Money Management, Discipline and Trading Psychology

An electronic online trading platform is a computer software program that is used to place orders for day trading. The trading platform is different from the direct-access brokers themselves. However, I see often that traders confuse these two as one. The trading platform sends and places your order at the Exchange so the direct-access brokers can clear the order for you. Usually, direct-access brokers offer their own proprietary trading platform to their clients. The quality, charting capability, speed of the software, and many other features regarding the software, varies significantly, which also of course affects their pricing. Many brokers offer their platform for a monthly fee, but they may waive that fee if you make sufficient commissions for the broker. For example, Interactive Brokers offers a trading platform called Trader Workstation (TWS), but it also allows you to use the DAS Trader platform. Lightspeed Trading also offers its own platform called Lightspeed Trader. TD Ameritrade’s own software is called thinkorswim.

The table below summarizes some of the well-known direct-access brokers for day trading. Please note that there are many more firms that are not listed below.

From the brokers listed in the table above, I personally prefer Interactive Brokers (IB) as my broker and DAS Trader (www.dastrader.com ) as my trading platform. My broker, Interactive Brokers, offers their own platform called Trader Workstation or TWS, which I do not recommend for day trading. The DAS Trader platform is one of the nine Nasdaq Platinum Partner order entry platforms that offer the highest level of efficient execution and market functionality for online traders. As mentioned earlier, DAS Trader is not a broker, it is only a trading platform, so I linked my IB trading account to it. When I enter my order in the platform, DAS will send my orders to Nasdaq data centers and Interactive Brokers, as my clearing firm, will fill my orders. I pay my trading commissions to IB and a monthly fee to DAS Trader for using their platform and providing me with a real time data feed and Level 2, which I will explain in just a few paragraphs.

Fast trade execution is the key for day traders to be successful. You need to be able to move in and out of trades quickly. If your broker doesn’t use a platform or software that has Hotkeys, you’re not going to get in and out of trades fast enough. I can’t tell you how many times I’ve been up a thousand dollars because all of a sudden the stock spiked. When the stock spikes, you want to be able to put money in your pocket and profit from it quickly. You definitely don’t want to be fumbling with your orders. You need quick executions, which is why I highly recommend a good broker and also a fast order execution platform.