Description

My basic trading philosophy can be summed up by one simple quote:

"Trade the ticker, not the company" - Nate Michaud


Tuesday, February 4, 2014

Question: "What brokers do you Use?"

Let me start by saying that if any of you see information listed below that is incorrect about any of these brokers, please let me know so that I can fix it! But before I get into brokers, please note that the brokers I use are best for MY trading strategy. I don't believe there is one broker that fits everyone, and it is up to you to decide which broker(s) might be the best fit for you and the trading strategy that you implement. There are plenty of brokers out there that I don't know about or don't care to use, so don't limit your research just to this blog post. Listed below are notable brokers I use or that I have used and some info about each:

  • Interactive Brokers
Commissions: .005/share or 0.5% of total trade value, whichever is less expensive
Trading Platform: "Trader Workstation 4.0"
Platform Cost: Under $10/month
Required Initial Deposit: $10,000 (no requirement to maintain $10,000 in account beyond opening)

Interactive Brokers' main strengths are their low costs and their availability of shares to short. However, while Interactive Brokers typically has more shares to short than other brokers, don't make the mistake of thinking that it will be easiest to short the biggest pump and dumps here. They issue their shares on a "first-come, first-served" basis; and given the limited number of shares they usually have, they run out quickly. However, if you're looking to short and hold long-term, IB probably gives you the best chance of being able to hold the shares beyond the typical three day period. While I still have an IB account, I rarely use it anymore. They just don't have shares available for me often enough, I don't want to rush my entries trying to lock them up in the cases where they do, and I don't take long-term positions so that benefit is meaningless to me. IB enforces the $2.50 rule and the Pattern Daytrader Rule. One downside of IB is that they do not offer level 2 data for OTC stocks.

  • Speedtrader
Commissions: $6.95/trade or $.0044/share + Routing Fees
Trading Platform: "DAS Trader" 
Required Initial Deposit: $15,000 

Speedtrader has recently returned to their former glory, as they've added back most of the OTC routes that they lost and executions are once again superb. I use Speedtrader almost exclusively for buying, and their routing fees are still MUCH cheaper than anywhere else. One downside of Speedtrader is that you will rarely find shares to short of OTC stocks there, however if you open an account with their ETC-clearing division that will help solve this problem. The Pattern Daytrader Rule is enforced at Speedtrader. You can view Michael Goode's early video review of Speedtrader here. One other upside is that I'm a big fan of their trading platform, "DAS Trader". I use it for all my level 2 feeds as I find it to be very reliable and quick information. Unfortunately, they recently raised their account minimums, and now you need $15,000 to open an account.

  • Centerpoint Securities
Commissions: $4.95/trade (up to 10k shares) + routing fees (usually $.002/share)
Trading Platform: "Sterling Trader Pro"
Platform Cost: $284/month for platform + data
Required Initial Deposit: $50,000 (must maintain $30,000 minimum balance)

The old saying, "You get what you pay for," sums up Centerpoint pretty well. While they are the most expensive of all my brokers, they are also by far my favorite. The biggest downside to Centerpoint is the cost. Routing fees and locate costs can really add up in a hurry. That being said, they don't enforce the $2.50 rule intraday. I can almost always find shares to short on the major pumps, and there are plenty of OTC routes; so executions are excellent. This is probably not a broker for beginners, or costs will eat you alive. However, if I had to pick one broker on this entire list to trade with, Centerpoint would be an easy choice.


Whether or not one of these brokers is right for you I leave to you to decide. All I can do is lay out the information. I hope I have given some of you a good idea of what's out there though - but, of course, remember to do your own research and see if there's anything else out there that appeals! Who knows, maybe someday one of you will refer me to the latest-and-greatest broker!

89 comments:

  1. http://www.avalonfaltd.com/trading/platforms/

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  2. Tim, please can you explain the $2.50 in laymans terms? I know I did not read that when i opened an account with ST. I am sure it was there, but I probably missed it. thanks and I enjoy following you and your great input, cheers, Kevin

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  3. Here is the post explaining what the 2.50 rule is! Hope this helps! http://tradetheticker.blogspot.com/2014/02/question-what-is-250-rule.html

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  4. Hey tim, can you do a basics and beginners guide to learning how to use level 2 quotes? Im having difficulty understanding the level 2 action and what to look for.

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  5. The PDT rules do still apply to non us citizens. Along with extra paperwork to convince IRS that you dont need to pay US tax.

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    1. So, I will still be under the PDT rule if I will open an account? I am not a US citizen, nor am I living in the US

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    2. Yes I am in australia and it still applies. Unless you open with suretrade or some other offshore/possibly sketchy broker. I have been through a few brokers since the Australian government took away margin account licensing at IB (story for another day) and there have not bern any exceptions to the rule so far. The other option for non US is use a cfd broker but my in my experience so far you either take their money or they take yours by way of dodgy fills/the order desk accidentally closes out your winning trade/anything they can come up with.

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    3. Mark who do you use to replace your interactive Broker account. Their fees all in one account and ease of trading multiple markets have left me waiting/hoping they reintroduce lending to Aussies soon. But if there is a good alternative I haven't tried I'd like to do some more research.

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    4. I contacted IB recently and they said they hope to have some idea towards the end of the year. Here's hoping they get it sorted (not their fault blame ASIC) I am with Lightspeed at the moment. They are not bad but their short list is nothing special. they offer Forex. Stocks, Options as far as I know. No experience with OTC so I cannot comment.
      Speedtrader is out of the question for us unless you have 2.2M assets and $200,000 plus income for consecutive years.

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  6. Thanks for the heads up Mark! I'll get that fixed

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  7. Hey Tim! Thanks for this post. Question though: How do you withdrawal from ST? I have started to wonder since I don't see that option on my iboss. I am considering using a different broker but I have a small acct. and my assets are currently tied up in ST.

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    1. all you have to do is contact their support staff and request a wire withdrawal. unfortunately, i believe there is a $100 wire fee. of course that's their only withdrawal option (at least last i heard)

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  8. so to buy say 50000 shares at 0.1$ at Centerpoint
    I should put 5 consecutive buy orders for 10000 shares one by one, right ?

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    1. That's how you would do it, but I don't recommend trading stocks that cheap there the routing fees will eat you alive! $0.002/share each way means you need a 4% gain just to break even!

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  9. Tim what's a low cost broker for a starter stock trader. I have a Scottrade Account however for lack of knowledge I'm not a 100% sure of it's usability in penny stock trading. Any advised would be helpful thanks.

    - Chris

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    1. I don't know anything about Scottrade, sorry. The brokers above are the only ones I can recommend or give in depth information on. I recommend a site like investimonials.com to check broker reviews

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  10. How would a beginner with low funds start if the option for brokers seems limited. Seems speedtrader whom I think is affiliated with suretrader doesn't have much short volume, how would beginners execute these strategies? Thank you.

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  11. Tim, What broker did you use when you first started out? SureTrader has a lot of negative posts on investimonials.com. what broker would you recommend with a account of $2,000-$2,500? I plan on just buying long until I grow my account.

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  12. Hi Tim,

    Thanks for your advice and time! Any thoughts on think-or-swim?

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    1. With ThinkorSwim you'll rarely find shares to short and OTC executions really are nothing special. They even restrict what OTC tickers you can trade sometimes. There are better options out there in my opinion

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    2. In your youtube speech you said you started out with ThinkorSwim. I plan on opening a $3500 account when I feel I'm ready and am currently using ToS papertrading. Do you think it's alright to use ToS when you're just starting off and learning. Then once I'm more experienced and have grown my account then open an IB account?

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    3. Could you explain more why thinkorswim isn't an option for level 2? Are you saying their level 2 is essentially unusable for otc's? I'm just trying to get it sorted out what brokers I'm going to use and where I get my level 2 from. I know you say speedtrader and suretrader are good for level 2 but it seems like besides that they are not very good brokers.

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  13. Tim,

    Thank you. I'll look into speedtrader, my TOS account on "paper money" rejects alot of my orders. Should I be purchasing the $20 Pink Sheets data feed on speedtrader?
    I'm trying to walk in your footsteps. I have signed up for many promotional news letters from penny stock rumble. I'm going to wait for the emails and try and sort good promoters from bad, then practice trades for a few months before I make a real trade. Thanks again for your time, your blog is very informative and I appreciate it.

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    1. You'll need Pinksheet Level 2 data with Suretrader if you plan to use the platform

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  14. Tim,

    I found something that fellow IB traders might find useful as far as L2 access goes. I see that through Das Trader direct I can link my IB account, though at a subscription cost of $150pm. For this you get :

    PRO Platform with All level 2 market data:
    Totalview, Options Level 2 and OTC Markets Level 2
    Futures level 1
    Access to iDAS.

    Tim, it seems obvious to me, though I would appreciate your confirmation, that this package should provide ALL the L2 OTC coverage that I need.

    The reason I dont just open a SureTrader/SpeedTrader is that I live overseas, and os opening accounts is a drawn out process. Plus I have enough to just get above 25k, and so can avoid this crazy PDT rule. So splitting accounts doesn't seem my best option.

    http://dastrader.com/subscribe_NEW.php

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  15. Thanks for posting! It does appear that this would cover ALL level 2, although since I have level 2 already I won't be testing it myself. I hope this is the solution IB users have been looking for though!

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  16. Tim,

    Im really trying to make an effort to learn level 2. What broker can I use to short OTC without problems like "no shortable shares"? Am I supposed to get a level-2 feed from another source other than my broker? Thanks.

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    1. Please read my post on brokers it will answer all your questions

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  17. Hey Tim G, big thanks for this blog post, it was put together perfectly!
    Your personal write-up on each broker is incredibly invaluable. Before finding this post I was leaning towards IB or Suretrader to trade OTCs/pennystocks, but I was thankfully saved money and hassle, and see Speedtrader is the way to go now because I'm only looking to trade long low priced pennystocks. Can't go with Suretrader because their 'OTC executions don't compete' and IB commissions would literally cost several thousand dollars if I get several million shares worth of extremely low priced pennystocks With pennystocks, executions and commissions are everything. Being an essential needed direct access broker, I'm hoping Speedtrader is the secret weapon needed to get in and out of highly volatile pennystocks with ease.

    I just noticed on your profitly page you have "ETRADE" listed on a few trades. Is that just a mistake selection or are you really testing out Etrade? If so, maybe you could update this post with your opinions on Etrade?
    Thanks!

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    1. Thanks for the idea, I do need to add Etrade and Regal to this list. I'll try to update soon!

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    2. How has Regal been for you and what routing options do they have? I think it is time for me to move on from Speedtrader for my OTC longs.

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    3. I liked Regal when I was with them, they had NITE, CDEL, ARCA, and I think a couple other routes although I wasn't totally clear on where specifically they routed. Although they totally butchered my 1099 haha

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    4. So I take it you left Regal? Why was that?

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    5. Their clearing firm booted me with no explanation. My rep said they're a very conservative clearing firm, so best guess I can come up with is that it's due to my exposure on google. I had no wash sale issues or anything like that, so all i can do is speculate

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    6. Maybe they were losing more money than they could afford because of your solid batting avg? Reminds me of Jesse Livermore's problem in the bucket houses (old otc) in his book Reminiscences of a Stock Operator. He was forced to learn to trade on the major exchange because they shut him out. I recommend this book for newbs. - bon

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  18. Hi Is the level 2 of Suretrader the same has Speedtrader? It seems to be DAS in both cases. Also in one of your speech you mentionned a 5 th promissing broker that you heard off. Any news about that one? Thank you for your blog it's very helpful.

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    1. The 5th broker is "Regal Securities", I'll update this post to include them when I have more time. Yes, both Suretrader and Speedtrader offer DAS.

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  19. hi, I read one of your comments about adding etrade to the list. is it okay if you explain why etrade would be a choice worth considering? thanks a lot Tim!

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  20. Hi Tim,

    Regarding centerpoint, why did you choose the sterling platform as opposed to the other two. Also what is DAS, i see this on other brokers/platforms? Thank you.

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    1. DAS Trader is just another trading platform offered by other brokers. I choose Sterling for Centerpoint because it offers more routing options

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  23. Which broker do you think is best suited for a beginner?

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  24. When I look at your level 2 videos. the chart is thinkorswim right? Is the top one Sterling pro and is etrade good on OTC? because i was trading thinkorswim today but it wouldnt executed NGMC and executed ERBB late and lost profit.

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  25. Hey Tim, I am a fan of yours for the last 6 months! I haven't be able to enter the market yet but I am planning. Let's say you are a citizen somewhere in Europe. You wan to start short selling on the US stock market. Which broker comes first in your mind to be able to trade short and with reasonable commissions?

    You know the most difficult step is the first one. I was ready to open an account on SureTrader which I have read that it is one of the best for international buyers... What do you think?

    Thank you for your time!

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  26. Tim,

    Do you know of or heard anything about Questrade? The company is based in Canada and is not restricted by PDT. I would like to open up an account but my initial deposit will only be $1000. Having a small account I am not sure Suretrader is my best option based on their rates.

    Here are the rates for Questrade, are their rates similar to Suretrader?
    http://www.questrade.com/pricing/exchange_ecn_fees
    http://www.questrade.com/pricing/commissions/stocks

    Any other brokers to use for small accounts which avoids PDT?

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  27. Hi, I just came across you post, thanks a lot for the info. What do you think of TD Ameritrade?

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  29. Greetings, Thank you for all you do. I have read this thread, and I have a new question What info could you offer to someone looking for an acct to short low priced stocks who cannot afford $10k for IB? In other words, who has the best borrows with a flat rate commission? It would be an acct to supplement Sure, and Regal.

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  30. There are many factors which influenced the development of trading broker. Indispensable to homosapians today, trading broker is featuring more and more in the ideals of the young and upwardly mobile. It is an unfortunate consequence of our civilizations history that trading broker is rarely given rational consideration by those most reliant on technology, many of whom blame the influence of television.

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  31. Does regal securities offers level 2? Thanks a lot for this blog Tim. I'm just starting out and this blog is by far the best help I've found. Considering I'm not an English speaker, so even for us the information is very clear. Thank

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  33. Hi Tim,

    I see that Centerpoint has 2 options for Sterling Pro:
    ETC clients $150 + Data
    Wedbush clients $235 + Data

    Which one would you recommend, and what's the difference if you would know?

    Also, I see another offering from Centerpoint: DAS Trader Pro ($150 + Data
    Available for ETC clients only).
    Would you recommend DAS pro over Sterling Pro?

    Kindly advise and thanks for your help!

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    1. Hi Tim, Please respond when you have the opportunity, thanks!

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    2. Lately wedbush has had better borrows and restricted less tickers, so I think they're the better option even though they're pricier. I use Sterling trader with it, because for whatever reason there are more routing options with Sterling

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    3. Thanks Tim. Really appreciate your constant help!
      As always, looking forward to your next blog entry.

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  35. can non-US Citizen buys stocks online?
    I am a technical analyst and i am from egypt … i want to open account with E*trade. I do have SSN in Egypt but I am not a permanent resident. I was wondering if I could open an account to purchase stocks in places like eTrade, I am not working at this moment, so my income is close to 0. If you know that I can open up an account with E*trade only and do some sort of investment trading, can you please help me describe where and how I can do it?

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  37. Wondering if there is a "test drive" platform for paper/virtual trading that allows you to short stocks?

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  39. I have read via several different blogs and other internet sources that Interactive Brokers' customer service varies from not so great, to just plain frustrating, some of the time, to most all of the time. What has been your experience with them.

    I am currently using Scottrade, which has excellent customer service, and local offices, for occasional in person assistance, but at $7 per trade, their commission fees are absolutely killing my trading account balance.

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  40. Hi Tim,

    Which Level 2 service are you using?

    Thanks
    Brian

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  42. Hey Tim, I wanna open an account and I think I have narrowed it down to two options ThinkORswim or sure trader I was leaning towards sure trader but I have heard many negatives about the platform but yet Sykes recommends them. What's your opinion?

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  44. SureTrader must have changed their fees since this post. They are now $4.95 for up to 1000 shares and $0.00495/share after. https://suretrader.com/trading-fees/trade-rates/

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    1. You actually have to contact their support and specifically request the lower rate

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  46. Hi Tim,
    I am inspired by you and have have devoted since last few weeks to dedicate myself to learning from all I can and then opening a paper trading account, before I start to get my feet wet. However I am only a student and have roughly $500 to begin with, but most brokers require really big minimum deposits. Can you please offer me some advice on which broker will be good for a small account and or good enough OTC executions ?

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  50. Hey Tim, I've been following your video lessons for quite some time now and im just wanting to know if I can trade OCT's with Suretrader?
    Also what brokers could I use for trading on the American markets from England?

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  51. I have an account with TDA and almost all stocks below $10 are not available to short. How can I find a broker who has the shares to short without actually opening an account?

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    1. Well, you could read the article above where I mention the best ones. Or you could ask each brokers' customer support staff to help guide you in figuring out how good their locates are

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  53. Great info Tim. I am looking into an account with CenterPoint. It seems like Vision is the way to go but I'm requesting a demo. Thank you for your insight!

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  55. Tim - I know this was written awhile back. Are you still good with the brokers above for shorts..?

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  56. Tim, do you recommend DAS Trade pro or sterling trader pro for trading platform?
    I am comfortable with Stock to trade. I liked it so far.

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  57. Hey Tim G, big thanks for this blog post, it was put together perfectly! Your personal write-up on each broker is incredibly invaluable.
    broker software

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  59. Great blog about trading.Binary option trading is also the provider of same service.

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  60. Hello Tim. What kinds of question should we be asking the broker to make sure they will be the right broker we are looking to use? Thank You,Roberto Baca.

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