Full-Service Firms

Deep-Discount Online Firms

The first type of brokerage firm you can consider is the deepdiscount firm that only offers services online. These brokerages will offer a discount on the price if you exceed a certain amount of trades, usually above fifty in a monthly period. If you plan to do Forex trading, be ready for a completely hands-off approach from the brokerage firm. Many do not offer any broker assistance, and often offer only limited technical assistance, if any at all.

FX Brokerage Firms

If you will be day trading in an FX account, you will need to keep very good records of your cash deposits, cash withdrawals, and all of the gains and losses for each trading day. These firms will not send you a statement every month, and will not list the trades you make over the quarter or year. Most likely they will keep track of your overall profit and loss as it accumulates in your account, but often this will roll over from year to year. In this aspect, with the FX accounts and others that do not send you a statement or send you a loosely based one, it is best to keep track of your profits, losses, and interest earned on a daily profit and loss sheet.

Multiple-Sector Brokerage Firms

The lack of records provided by a brokerage firm should not prevent you from considering that brokerage firm if it fits your needs in other matters. Perhaps you would like to be able to trade gold, oil, and FX; in that case you would do well by opening up a multiple-sector account. Multisector brokerage accounts usually have a higher minimum then the pure FX accounts, as the lot size in the other sectors might require a higher minimum to trade effectively. For example, some brokerage firms offer full multi-sector accounts with 200:1 margin with an opening deposit of $2,500. Again, with this type of account you would not get any type of broker assistance in setting up trades, and you would not get any type of statement from the firm.

You can keep track of your daily net gains, losses, and interest earned using pre-printed paper trading forms. These forms also have places to record the stock index levels and overall market conditions present during that day. They can be used for tax purposes and to have a permanent record of your trading successes.

Combination Brokerage Firms

Combination brokerage firms have trained licensed brokers available to assist in the setting up of a trade or a hedge trade. They have two types of pricing structures, one for online trading at the discount rate, and one for broker-assisted trades, at a higher, full-service rate. This higher rate can be worth the price if you are just starting out, setting up a complicated trade, or would just like to talk through the logic of a trade before making a commitment to it.

Full-Service Brokerage Firms

The inclusion of a full-service brokerage firm will help out greatly, even though the high commissions will prevent you from day trading in this type of account. The research and education supplements provided by full-service firms are indispensable in your day trading career. They offer overall market technical analysis, sector and industry-specific analysis and information regarding the trading potential of the S&P 500, ETFs, commodities, and currencies as to where to place enter and exit points during your trading day. Although most of the brokerage firms will give you access to some kind of news feeds and research reports, some of the reports are nothing more than a collection of articles that are on the public access news sites such as CNN or Forbes. The key is to get access to the best research and day trading ideas that you can, even if you have to pay for it. The way around this is to open an account at a full-service brokerage firm that offers insight into the markets you are trading in their offerings. Perhaps you can put your other money into this account, roll over your 401k, open an IRA, or retail brokerage account with your investments, long-term money, or mortgage, in some cases. The yearly price the full-service brokerage firms charge to keep the account open can be anywhere from $75$250 a year, but the benefits of having access to all their reports and information is worth the price.

Foreign currency brokers usually charge very low commissions on popular pairs, called majors. Higher commissions are charged on other currency pairs, or crosses, consisting of two major currencies paired less commonly. The highest commissions are charged on infrequently traded pairs, referred to as exotics.