Brokers |
NASDAQ StocksIf you are going to trade NASDAQ stocks you definitely need a US direct access broker. Web based brokers are too slow and their spreads (the difference between the buying price and the selling price) can be much wider than the actual market. Spread bet websites obviously have tax advantages for UK traders but again they suffer from poor data reliability and very wide spreads compared to actual NASDAQ quotes. A direct access broker will provide you with a trading platform that has direct access to the trading floor. This is relatively simple for NASDAQ brokers because the 'floor' is actually a network of computers. You access the floor over your normal internet connection using the supplied software application. The application should give you access to level 1 (best bid and ask) quotes, level 2 (showing market depth) quotes, charts, news and an order execution system. Some traders split the data display function from the order execution function to get lower commissions for each trade. When choosing a US direct access broker there are three main considerations:
I've listed these in my order of priority. You must have support and access to a trading desk by phone for those times you are stuck in a trade and your internet connection goes down. You have got to be happy with your trading platform that allows you to carry out quick executions. Like everything you get what you pay for so the lowest commissions and fees generally don't point to the best broker. Avoid any 'free commission' brokers as they will just sting you in wide spreads, if it looks too good to be true it probably is. If you are a UK trader then another major consideration is whether your chosen broker will accept accounts from the UK. UK legislation means some US brokers (including many of the larger ones) will not accept UK accounts. Make sure your chosen broker does before spending too much time investigating other aspects. There are five main trading platforms available:
I personally use Real Tick 3 (RT3) as my trading platform as it provides everything I need for trading and it also has a very simple interface for importing data from the data feed into third party applications. If you are a programmer then you may be interested in the RT3 toolkit at toolkit.taltrade.com. Brokers for StocksTerra Nova - MB is one of the largest US direct access brokers and provides the RT3 platform to its remote access traders. I personally use Terra Nova - MB. It meets all the main criteria laid out above BUT it is not currently accepting new UK accounts. Commission rate about $15/ticket plus exchange fees. Master Trader is a new US direct access broker offering the RT3 platform and it also accepts UK accounts. I have not checked out the broker for support and trade desk support but I know other traders who are using them successfully. Commission rate about $12/ticket plus exchange fees. Cyber Trader is another huge US direct access broker with a good reputation for support and reasonable charges and fees. They offer two trading platforms, a full functioning platform similar to RT3, and a smaller platform (free of charge) for those just interested in trading one stock at a time. Commission rate about $10/ticket plus exchange fees. Interactive Brokers is positioned as a low commission broker. It is used by many traders just for these cheap commissions, 1c per share on small lots. It does not have the best reputation for customer or telephone support but does have the major advantage that you can trade stocks and futures with the same broker (unlike any of the other brokers listed). If you want more information or reviews on these and other brokers then there is a good site at Elite Trader on broker reviews. Another excellent source of broker information is DayTradingStocks.com which lists almost every US direct access broker along with the trading platform they offer. Brokers for FuturesELocal Trading is the broker I use. They are one of the larger brokers and they offer the J-Trader platform for order placement. J-Trader does not have its own charts so you will need another charting package, like Real-Tick 3, E-Signal, Ensign or Sierra, to trade from charts. Commission charges are $6 per round trip for e-minis - one of the best I have found for J-Trader brokers. They do double all their overnight margin for foreign customers so they may not be the best broker for UK traders wanting to hold overnight. Very good customer support. Interactive Brokers is positioned as a low commission broker. It is used by many traders just for these cheap commissions, $4.80 per round trip for e-minis. It does not have the best reputation for customer or telephone support but does have the major advantage that you can trade stocks and futures with the same broker (unlike any of the other brokers listed).
|