Choosing a broker:
Many day traders are comfortable conducting their trading activities from an office in their home. However, for those day traders who aspire to make a full-time career day trading, there are a number of benefits to trading on the premises of a day trading firm rather than from home. The principal advantages to trading in-house at a good day trading firm are the availability of structured training programs, top of the line trading software, hardware and data feeds as well as the ability to interact with and learn from other professional traders.
It is important to keep in mind that day trading firms who offer in-house training and trading services differ significantly in the range and quality of the services they provide as well as in their fee structures. Accordingly, it is wise to perform some due diligence prior to selecting a firm to trade at.
In this regard, here are some of the more important questions that should be posed:
Questions to Ask
1. Is it possible to spend a day or two with a day trader in the firm in order to assess the facilities and overall office environment of the firm prior to making a commitment?
2. What account size is required to be a member of the particular day trading firm? Note: A minimum account size of between $10,000 to $50,000 is common.
3. Does the firm have a screening process for new members to assess a person’s suitability for day trading or does it accept anyone who has sufficient capital? Note: Avoid those firms who will accept virtually anyone who walks in the door.
4. How long is the training program? Note: The training program should last for at least month and should offer you the ability to practice the techniques taught by way of simulated trading.
5. What trading software, hardware and other trading tools and educational materials will be made available to you during the training process?
6. Does the firm teach risk management strategies in addition to trading techniques and strategies?
7. Apart from commissions and ticket charges, how much does it cost per month in order to trade at a particular firm?
8. What is the charge for commissions on trades?
9. What are the ticket charges, if any, that are payable on trades routed through the various ECNs?
10. Is there a minimum number of trades required on a monthly or other periodic basis in order to continue trading with the firm?
11. Is a percentage of your profits earned while trading at the firm paid to the trading firm? Note: Avoid those firms that want a percentage of your profits.