Our Pick Of The Best Day Trading Platforms (2024)

Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.

Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.

Day trading is the buying and selling of shares over a short time period, typically 24 hours. The aim is to make a profit on each share trade that accumulates into a significant gain over time.

Day trading is a very different approach to making money from the stock market compared with investing, where investors buy a basket of shares and hold onto them for a longer period of time.

Day traders rely on share price volatility to generate profits, either due to company-specific news or general market sentiment.

They also typically prefer shares with high liquidity, such as large-cap FTSE 100 shares, which enable them to buy and sell shares quickly due to the higher number of shares in circulation, as well as reducing the risk of their trades affecting the share price.

Day trading of shares made headline news during the pandemic thanks to the ‘meme stock revolution’. The expansion of zero-commission trading platforms and investing communities on social media forums fuelled trading in so-called meme stocks such as GameStop and AMC.

Retail investors hoped to make a quick profit from buying unloved shares and starting a campaign on social media to drive up their value. This proved a successful strategy on occasions, with the price of gaming company GameStop shares rising by over 10,000% over a nine month period.

Algorithmic trading, also called ‘automated’ and ‘black-box’ trading, uses computer software to place a trade. It is quicker than manual trading and removes the impact of human emotions.

Algorithmic (or ‘algo’) trading responds to a defined set of criteria, such as price movements. If and when these market conditions occur, the algorithm triggers the buy or sell order.

Some platforms offer algorithmic trading, using both in-house programs and third party platforms such as MetaTrader 4. Customers may have the option to customise their own algorithms or use off-the-shelf products.

Trading platforms offer investors a means of buying and selling stocks and shares, funds, investment trusts, exchange-traded products and other assets directly, rather than indirectly through a financial advisor. These platforms are sometimes referred to as DIY investment platforms, online brokerage accounts or share trading accounts.

Platforms provide software for investors to make their trades online via the website or an app for mobile devices. Some services may also offer telephone dealing.

Investors are able to view their investments online in real-time, enabling them to monitor their portfolio and make timely investment decisions. Trading platforms also offer other features such as watchlists of preferred stocks and advanced technical analysis (charts that can help investors improve the profitability of their trades.

The account opening process can usually be carried out online or via the app if your provider offers one. Major platforms say it should take around 10 minutes. You’ll need to provide some basic information, such as bank account details, debit card details (for a lump sum investment) and your National Insurance number.

You may have to supply further documents to support the verification of your identity, although these checks may be carried out electronically during the initial application process. When these checks are complete, and funds have been received into your account, you will be ready to start trading.

You can trade UK shares on a real-time basis from 8 am to 4.30 pm when the London Stock Exchange is open. After logging into the app, search by company name or ‘ticker’ to select the share you want to buy.

This depends on the platform, but many allow you to open an account with as little as £1, or £25 per month where platforms offer a monthly investment option.

Depending on the price of the assets you choose to trade, you may need to add further funds to your account.

We’ve looked at general trading accounts that allow you to buy and sell investments, however, there are a variety of tax-efficient alternatives.

We’ve also produced guides to our pick of the best Individual Savings Accounts (ISAs),Self-Invested Personal Pensions (SIPPs)andJunior Stocks and Shares ISAs (JISAs).

These accounts are types of ‘tax wrappers’, allowing you to pay no income tax ondividendsand nocapital gains tax on any profit made on buying and selling your shares. However, in the case of SIPPs and JISAs, you will not be able to access the money until you reach a certain age.

All of the trading platforms listed also offer ISA accounts, however, share trading and platform fees are typically higher for ISAs, making these less suitable for day trading.

There are various types of fees charged by trading platforms:

Share trading fee

This is a flat fee charged by the platform each time you buy or sell shares. Some platforms charge no share trading fee, while others may charge around £3-5 per trade. Trading fees are usually higher for US or other overseas shares.

Some trading platforms charge trading fees of up to £12, however, we have excluded platforms charging share trading fees of over £5 as these are an expensive option for day traders.

Platform fee

This is an annual fee charged for holding the shares on your platform and is sometimes called a custody fee. Many of best trading platforms do not charge platform fees, other than Bestinvest, ii and IG for less-frequent traders.

Looking at the wider market, some platforms charge a flat fee and others charge a percentage, typically 0.25% to 0.45% of the value of your portfolio.

These fees will usually be taken out of any cash held on your account, or you can pay fees directly by debit card. The platform is likely to sell a proportion of your shares (as a last resort) if fees remain unpaid.

It’s worth looking at the types of investments that incur a platform fee as some platforms charge for holding funds, but not for shares. When a platform fee is charged for holding shares, this is sometimes capped at a maximum amount per year.

There are two types of percentage-based platform fees:

1. Tiered fee: this is the most usual type of platform fee, whereby you pay different fees on different ‘slices’ of your portfolio. For example, if you have a portfolio worth £300,000, you might pay 0.45% on the first £250,000, then 0.25% on the next £50,000. Tiered fees are charged by trading platforms such as Hargreaves Lansdown and AJ Bell.
2. Non-tiered fee: a few platforms, such as Fidelity, charge a non-tiered fee, whereby you pay the same fee across your whole portfolio. For example, if you have a portfolio of £300,000, you would pay 0.2% on the whole £300,000.

Foreign exchange fees

When you buy or sell shares denominated in a currency other than pounds sterling, nearly all of the platforms charge a foreign exchange fee. This is also referred to as a foreign currency conversion fee and typically varies from 0.1% to 1.0%. Some platforms also charge a higher trading fee for overseas shares.

Some platforms allow you to hold foreign currency in your account, which enables you to convert it once and use this money for buying shares and holding the proceeds from selling shares in the local currency

Other fees

Some of the platforms charge other types of fees, such as inactivity fees and withdrawal fees (for accounts held in an overseas currency) and fees for trading by telephone.

Although not technically a fee, platforms also make money on the buy-sell spread on shares. For example, you might be looking to buy a share with a buy-sell spread of 100-102 pence. This means that you would pay 102 pence to buy a share, and receive 100 pence to sell a share.

Some platforms may offer more competitive buy-sell spreads than others, and less traded shares, such as FTSE Small Cap companies, typically have wider spreads compared with FTSE 100 companies.

Fractional shares are a proportion of one share, for example, 0.2 of a share. You might want to buy fractional shares if a company’s share price is very high and you want to invest an amount that’s less than the price of one share.

Only some of the providers on our list offer fractional share ownership. If you buy fractional shares, you will also receive the relevant fraction of any dividend per share.

You will be required to pay Stamp Duty Reserve Tax (SDRT) when you buy UK shares, calculated at 0.5% of the value of the transaction. This is not usually charged on buying overseas shares, although other taxes may be charged.

You may also have to pay capital gains tax if you sell the shares for a higher price than the price you paid. This is charged on the ‘profit’ (the gain you make). The capital gains allowance is £6,000 for the current (2023-24) tax year. This means that you do not have to pay capital gains tax unless you make a total profit from your shares of more than £6,000.

In addition, you may have to pay income tax on any dividends received from your investments. However, as well as your personal allowance (£12,570 in the current tax year), you have an additional dividend allowance of £1,000 (in the current tax year).

A limit order is an order to buy or sell shares at, or better than, a specified price. So if you set a buy limit order at 100 pence, it would only be executed if the price was 100 pence or lower.

Similarly, a sell limit order is only executed at that price or higher. It can be a good way of trying to obtain a good price for your share trade without having to monitor the share price in real time.

A ‘stop loss’ can also be a useful tool to limit your downside exposure from investing in shares. This is an order to sell shares if the price falls to, or below, a level you set.

A ‘trailing loss’ or ‘trailing stop loss’ sets the price based on a specified percentage above or below the share price, rather than a single value. It’s a useful tool to lock in profits or limit losses, without investors having to manually reset the stop loss when the share price changes.

Traders may borrow money to fund their trades with the aim of increasing their profits. This is known as margin trading or using leverage, and investors can typically borrow up to 50% of the overall purchase price of the shares.

For example, if you wanted to buy £20,000 of shares, you could fund £10,000 and borrow the other £10,000 from your trading provider. If you bought the shares at £1 and sold them at £2, you will make a profit of £20,000. However, you would only have made a profit of £10,000 without borrowing the money

The risk of leverage is that you can also amplify your losses. If the share price fell to 50 pence, you’d be left with an overall loss of £10,000 rather than £5,000 if you hadn’t traded on margin.

Once the shares are sold, your funds will be returned to your trading account and the outstanding borrowing returned to the broker. You can then use your funds as leverage to borrow money for another purchase of shares in the future. You will also be required to pay ‘margin interest’ which is pro-rated according to the number of days that you have borrowed the money for.

There are restrictions on margin trading in terms of the ‘maintenance margin’ which is the minimum account balance before the platform will make a ‘margin call’ to ask you to deposit additional funds or sell shares to pay down the loan.

Trading on margin is only suitable for experienced investors, due to the risk of increasing losses.

As with overseas shares, you will have to pay any share trading fee and applicable foreign currency exchange fee if you are looking to trade in US shares.

You will also be asked to complete a W-8BEN form (valid for three years) which allows you to benefit from a reduction in withholding tax for qualifying US dividends and interest from 30% to 15%. Holding US shares also carries exposure to foreign exchange risk. If the pound strengthens against the dollar, your shares will be worth less in sterling (and vice versa).

As with UK shares, any profit on US shares will be subject to CGT, unless you hold the shares in an ISA or SIPP.

When choosing a trading platform, you should check the FCA register to ensure that your provider is authorised. This means that you have access to the Financial Ombudsman Service and the Financial Services Compensation Scheme (FSCS) if an issue arises.

The Financial Ombudsman Service will consider complaints against trading providers and may be able to resolve your complaint if the firm fails to deal with it properly.

The Financial Services Compensation Scheme will consider claims if your trading provider goes out of business and owes you money, but this relates only to certain investment products.

If the product is covered, the scheme can pay up to £85,000 per investor. It’s worth checking the protection offered by your investment trading platform – some platforms are structured so that investments are held in ‘trust’ to protect them in the event of the firm running into financial difficulties.

Investing in shares can be a good way to produce higher returns than cash-based investments. However, a ‘buy and hold’ strategy is a lower-risk option than day trading. In either case, your investment can go down as well as up, and you may not get your money back.

Investing in a diversified portfolio of shares via a fund, investment trust or exchange-traded fund, may help to reduce your exposure to an individual company underperforming. However, if you are unsure as to the right path, seek financial advice.

The 1% rule – which is not a hard-and-fast rule, but an accepted guideline – says traders should risk no more than 1% of the value of their portfolio in a single trade. For example, for a portfolio of £10,000, a single trade would be capped at £100.

The 1% rule aims to limit downside risk for day traders as markets can be volatile and it can be tempting to over-trade to recover losses. With the 1% rule, traders would need to lose 100 trades in a row before losing all their money.

Traders can use trading tools such as stop losses and limit orders (see above) to reduce the risk of losses.

1. The ability to make a profit, irrespective of whether the market is going up or down.
2. The opportunity to make significant gains from making small profits on multiple trades.
3. No overnight risk if positions are closed at the end of each day.
4. Some traders enjoy the fast-paced nature of day trading.

1. Day trading is high-risk with the potential to make significant losses, which is further increased for traders using margin (borrowing funds from their broker).
2. Fees can add up due to the number of trades placed.
3. Day traders are competing against artificial intelligence and algorithmic trading, which may be more efficient.
4. Access to real-time information feeds can be expensive.
5. Day trading is more stressful than a ‘buy and hold’ strategy, particularly in more volatile markets, and emotions can lead to poor decision-making.

1. Trend (or momentum) trading: traders use technical analysis to define a trend and buy or sell, depending on the direction of the trend. For example, if a trader identifies a downward trend, they would take a ‘short’ position on the asset.
2. Swing trading: traders use technical analysis to take advantage of short-term ‘up and down’ price movements (rather than longer-term trends). Traders will look at ‘support’ and ‘resistance levels’ for price bands to identify short-term price patterns.
3. News trading: trading before or immediately after news releases to predict the impact of news on prices. For example, traders may short a stock if they expect bad news.
4. Scalping: traders place a large number of very short-term trades, aiming to ‘scalp’ a small profit on each trade which can add up to a significant profit at the end of the day.

Day traders can trade in any asset that can be bought and sold in a day. This includes shares in individual companies, indices, ETFs and bonds, in addition to foreign exchange, cryptocurrency and commodities.

One of the most popular markets for day trading is foreign exchange (forex) as it is highly liquid and can be traded 24 hours a day, five days a week. However, this market is only suitable for experienced day traders.

Alternatively, novice day traders may find researching price movements of individual company shares more straightforward than complex assets such as commodities and forex.

Jo GrovesForbes Staff