Ross Cameron - Warrior Trading - The FASTEST Brokers for Day Trading (My Official Ranking & Broker Comparison Sheet)
The video discusses the execution speed of 17 popular brokers for day trading, emphasizing its critical role in trading success. The presenter uses both published data from broker websites and personal testing with real money to evaluate execution speeds. Fast execution is crucial for capitalizing on volatile market movements, as demonstrated by a trading example where quick execution led to significant profits. The video highlights Light Speed Trading as the fastest broker based on personal testing, while Fidelity was found to be the slowest despite its claims. The presenter also explains the trade-offs between commission-free brokers, which tend to have slower execution speeds, and brokers that charge commissions but offer faster execution. The choice between these options depends on the trader's strategy and priorities, such as speed versus cost savings.
Key Points:
- Execution speed is crucial for day trading success, especially in volatile markets.
- Light Speed Trading was found to be the fastest broker, while Fidelity was the slowest in personal tests.
- Commission-free brokers often have slower execution speeds compared to those that charge commissions.
- Traders must choose between fast execution with commissions or slower, commission-free trading.
- International brokers like CME and Ocean 1 offer alternatives without the $25,000 minimum for day trading.
Details:
1. 📈 Introduction to Broker Rankings
- Execution speed is a crucial factor in day trading, as illustrated by a stock rising 140% in less than five minutes due to breaking news.
- The speaker personally tested execution speeds with real money across different brokers and supplemented findings with published data.
- The speaker's strategy of waiting for a pullback and buying on a rise netted $11,000, underscoring the importance of execution speed.
- Execution speed discrepancies can lead to missed opportunities, stressing the need for selecting fast brokers.
- Broker comparisons: Charles Schwab averages 0.5 seconds; TradeStation at 0.43 seconds; WeBull averages 0.12 seconds; Fidelity at 0.04 seconds; E*TRADE at 0.12 seconds; Interactive Brokers claims under 9 seconds for all orders.
- Robinhood does not publicly disclose execution speed, requiring personal timing assessments by the speaker.
2. 🚦 Execution Speed Analysis
- Fidelity was identified as the slowest performing broker in execution speed tests, contrary to their advertised claims.
- The execution speed was tested using Fidelity's Active Trader Pro desktop software in a real, funded account.
- Trades were conducted on Ford stock using a marketable limit order for 100 shares, measuring execution from the buy button release to the trade reflection in the account.
- A significant delay was observed between the reported order fill and the account update, impacting trading decisions.
- This delay could lead to unintended larger or incorrect short positions, particularly in volatile markets.
- Discrepancy was noted in share count display after multiple buy actions, illustrating the delay issue.
3. 🐢 Testing the Slowest and Fastest Brokers
3.1. Comparing Execution Speed
3.2. Broker Evaluation Insights
4. 🗂️ Broker Comparison Criteria
- Execution speed and commissions are critical factors when choosing a broker for trading activities, impacting both costs and efficiency.
- Lightspeed, a US broker-dealer, requires a $25,000 minimum account for day trading, which may be cost-prohibitive for some traders.
- CME Capital Markets Elite Group offers an alternative to Lightspeed, potentially with different account requirements and benefits, making it a viable option for those seeking flexibility in account minimums.
- Ocean 1 Securities is another alternative, suggesting it may provide unique offerings or advantages that could appeal to specific trading needs or preferences.
- For a comprehensive comparison, traders should evaluate each broker's specific offerings, including minimum account requirements, commission structures, and execution speeds, to find the best fit for their trading strategy.
5. 🌍 International vs. US Brokers
5.1. Minimum Account Requirements and Pattern Day Trader Rule
5.2. Leverage and Trading Restrictions
5.3. Execution Speed and Commission Fees
5.4. Suitability for Small Account Traders
6. 🚀 Fast Execution vs. Commission Free
- Fast execution is crucial for traders needing to buy and sell shares quickly, with the example provided showing that while execution speed is not as fast as specialized platforms like Light Speed, it remains the fastest among commission-free brokers tested.
- TradeStation mandates a $25,000 minimum balance due to the PDT rule but offers commission-free trading, which is particularly advantageous for traders executing high volumes of shares daily, as it helps to protect against profit erosion from commission fees.
- The significance of commission-free trading is underscored for strategies involving large share quantities, where trading costs can substantially impact profits.
- A small account worksheet is offered, focusing on stock selection, risk management, and micro pullback entry setups, providing strategic insights for traders operating with smaller accounts.
7. 💰 Understanding Fees and Commissions
- Trade Zero and other brokers like Lightspeed, TradeStation, Fidelity, Charles Schwab, Interactive Brokers, Robinhood, and Weeble have different fee structures, with some offering free trading on certain orders.
- For instance, Lightspeed charges a $2 commission plus $15 in fees for a 10,000 share trade, totaling $17, emphasizing the need to consider both broker commissions and exchange fees.
- Commission-free brokers often route orders to wholesalers, who pay the brokers for order flow, allowing investors to trade without direct fees but potentially affecting execution quality.
- Wholesalers benefit from executing trades at fractional penny profits, accumulating substantial revenue on large trade volumes, which effectively subsidizes brokerage commissions.
- There is a potential conflict of interest as brokers might prioritize wholesalers based on profitability instead of execution speed, impacting the quality of order fulfillment.
- Regulatory requirements mandate brokers to disclose average order execution speeds and price improvements, providing a layer of transparency and helping traders make informed decisions.
- Understanding these fees and commissions is crucial for traders as they directly impact trading costs and strategy effectiveness.
8. 🤔 Making the Right Choice for Your Trading Strategy
- Charles Schwab's platform highlights the impact of payment for order flow, achieving a 10-cent profit per share, significantly affecting trade outcomes.
- Conversely, trading 1,000 shares at Light Speed could result in a $10 loss due to less favorable pricing, emphasizing the need for strategic broker selection.
- Frequent trading, while generating small profits through price improvement, faces broker-imposed limits, such as a 700 orders per day cap, challenging high-frequency traders.
- A trader's $231 profit from price improvement illustrates the shared benefits among traders, brokers, and wholesalers, although exchanges may not benefit.
- Choosing between execution speed and commission-free trading is pivotal; fast execution incurs costs, whereas commission-free trades might delay execution, impacting volatility trading.
- Commission-free brokers might offer slower execution for stocks under 5 million shares of volume, affecting trade effectiveness in lower volume markets.
- For trading during high volatility or breaking news, brokers with commissions but offering direct market access, like Light Speed, may be preferable for timely execution.
- Charles Schwab provides commission-free trading, but its Thinker Swim platform, rated 4.5 on the RW score, can be upgraded to Dash Trader for a 7.5 RW score, enhancing execution.
- Top brokers for day trading like Light Speed, Guardian, Center Point, and Cobra charge commissions but offer faster execution, beneficial for active traders.
- Brokers like cmeg and Ocean One Securities, popular for not enforcing the PDT rule and offering leverage, also charge commissions, appealing to traders needing flexibility.
- While commission-free brokers enable unlimited trades without commissions, their slower execution speed may hinder high-frequency traders aiming for quick market reactions.