I covered in a recent post three tools every trader must have. One of them being a broker. It’s a crucial tool for all traders.
One question I often get is, “Which is the best broker?” To answer that, I usually only need to know one thing – “What type of trader are you?” Are you the type who places 10-12 trades a year through your IRA/401k? More of the ‘buy and hold, set it and forget it type’? Then really, any broker is fine. They are all pretty much the same and offer very similar resources for the fairly inactive trader.
If you plan on being a more advanced trader, either day trading or option trading, then there is one broker that stands head and shoulders above the rest (and no, I’m not receiving compensation for this endorsement).
Interactive Brokers is the best broker on the market for my more advanced traders, hands down. It’s incredibly inexpensive, and it offers 1:4 margin for my day traders (a few others do this also). This broker (and I’ve been through the majority of them) can do anything you want it to. Advanced OTOCO option orders, with time contingencies on a vertical spread? Sure. You just have to build it.
That’s the only flaw of Interactive Brokers. Their site is not designed to be the most user-friendly. Yes, they do have many helpful videos and tutorials, but the main platform looks and feels very 1980 Microsoft Das. The most important factor is that it’s an extremely efficient broker. You will have to spend a solid 4-5 hours fully figuring out the classic Trader WorkStation which is a downloaded application. It works on a MAC or PC but does require a hefty amount of ram to run. Inside the Trader Workstation there is the choice of classic or mosaic. The best way to describe this is ‘would you rather have to click buttons to build your orders’ or ‘would you rather manually build your orders through a basic system of coding/programming like steps’.
Again, Interactive Brokers is not for the beginning trader. It overwhelmed me the first time I used it, six years into the game. But wow, it really can do anything. If you are a programmer or engineer, you will love Interactive Brokers!
It’s also a great broker for international traders and can be used to trade forex, futures, commodities, or whatever it is that turns your gears.
If I scared you away from Interactive Brokers, do not worry. Honestly, Schwab, optionsXpress, and Think or Swim all work fine. Think or Swim has its complexities, similar to Interactive Brokers, though. Seriously, if trading is your career or ultimate goal, learn Interactive Brokers. It’s worth it (if not just for the commissions alone).
You rock! Until next time, remember – love life, live life and trade it!
