Margin & Leverage Trading
When a day trader is trading on margin, he is buying or shorting more stock with borrowed funds from his/her trading broker, which increases the buying power of the day trader. Margin is the difference between the day trader’s trading account value and the loan he requests from a broker to execute the trade. For example, if the day trader has an account of $5,000 and the trade he is looking to execute is worth $10,000, the day trader will then need a 2:1 margin to execute that trade. Margin and leverage go hand in hand; a day trader can only trade with leverage after he has opened a margin account. Leverage allows a day trader to take on a bigger position on a trade without having to pay the full purchase price at the time with their own money.
For day traders who short sell, the ‘short locate’ feature is of great importance; some of the lower-priced stocks are hard to borrow, which means the day trader has to locate the shares first from their trading broker before they can open a short position on the stock. What makes TradeZero special is the ‘sell back’ option; if a day trader no longer needs the short locates, he can simply sell them back, and receive a credit in exchange.
Where would a day trader be without a good trading platform to chart on, execute trades, and stay on top of the news? He would probably not get far; that’s why a trading broker needs to have a good trading platform. TradeZero offers multiple options; ZeroPro, ZeroWeb, ZeroFree & Zeromobile; by far the most advanced platform is ZeroPro which has everything you need as a day trader in the markets. It has a solid charting platform with indicators such as VWAP, Fibonacci, Bollinger Bands, a level 2 with time & sales, live news updates, alert settings and much more. If the day trader prefers a simpler interface, perhaps ZeroWeb, ZeroFree, or the ZeroMobile platform are a better fit.
Real-Time Market Data
This feature is also essential since accuracy is critical to base trading decisions on; a day trader is at a significant disadvantage if the trading broker he is using has lagging market data. Therefore, it is essential to have real-time market data if a day trader wants to compete in these markets.
Perhaps a feature that people tend not to pay too much attention to is the structure of the commissions at a trading broker. If a trading broker has a high commission structure, a day trader is seeing his profits being eaten by them. TradeZero offers a fair commission structure with no hidden costs; every detail about commissions and fees can be found on the website. So make sure to check all the details about the commissions of the trading broker when signing up with them, and if they do not disclose it, that in itself could be a no go.
Pre & Post Market Trading
As a day trader, there lies an opportunity in pre & post-market trading if there is a good amount of liquidity on the stock. This applies both to longing and shorting; we have seen crazy % movers in both pre-market and after-hours trading, and having a trading broker that allows trading within these timeframes can really help the day trader to catch more opportunities in the markets. At TradeZero, a day trader has the ability to trade from 4am to 8pm eastern standard time.
Having the ability to contact the support of a trading broker is very important in case something goes wrong and a day trader needs assistance immediately. The customer service at TradeZero is available 24/7 whenever a day trader needs it.
Though it is also somewhat of a personal thing to look for specific features that a trading broker has, the features mentioned in this blog are some of the most important ones. No one trading broker is the same as they have different requirements, customer targets, and account minimums. Here at TradeZero offers tools for everyone, regardless of whether you are a complete beginner or an advanced trader.
This content (“Content”) is produced by Bram Pierik. The Content represents only the views and opinions of Mr. Pierik. Mr. Pierik’s trading experiences and accomplishments are unique, and your trading results may vary substantially. TradeZero does not endorse the Content and makes no representations or warranties with respect to the accuracy of the Content or information available through any linked third party sites. The Content has been made available for informational and educational purposes only and should not be considered trading or investment advice or a recommendation as to any security. Trading securities can involve high risk and potential loss of funds. Mr. Pierik’s is compensated by TradeZero for producing the Content and may also receive compensation for customers he introduces to TradeZero.
TradeZero provides self-directed brokerage accounts to customers through its operating affiliates: TradeZero America, Inc., a registered broker-dealer and a member of FINRA and SIPC; TradeZero Inc., a dealer registered with the Securities Commission of the Bahamas; and TradeZero Canada Securities ULC, an IIROC member firm and member of CIPF.
- Learn, S. (2022, July 4). How Are Leverage and Margin Similar and Different? Retrieved from SoFi: https://www.sofi.com/learn/content/leverage-vs-margin/
- (2022, July 4). What is 'Margin Trading'. Retrieved from TheEconomicTimes: https://economictimes.indiatimes.com/definition/margin-trading
- (2022, July 4). Comissions. Retrieved from TradeZero: https://www.tradezero.co/pricing
- (2022, July 4). Leverage. Retrieved from TradeZero: https://www.tradezero.co/higher-leverage#tzd-2