How To Choose A Brokerage Firm


By Regina Guinn


CoolTrade is a tool to automate your trading, but it isn’t a brokerage firm.  Therefore, you’ll need to choose one of the brokerage firms affiliated with CoolTrade to execute and “clear” your trades once you’re ready to trade live. 


Number of Broker Choices - The best online trading includes the lowest commissions for the typical trades for each strategy that you use. Currently, CoolTrade offers brokerage services through:



          Interactive Brokers


          MB Trading




          TD Ameritrade

Commissions - Commissions will be one consideration in choosing a firm.  Trading commissions can eat into your profits if you are not careful about choosing a plan that fits your needs.  Commissions can vary greatly from broker to broker, depending on the number of shares traded, whether the shares are in round lots of 100, price of the shares traded and the number of trades you place each month.  Stock traders may even want to have more than one account if they have a trading strategy that normally trades 100 shares lots and another strategy that trades 1000 share lots.  It pays to read the fine print.



Margin RatesAnother consideration is margin interest rates.  If you choose to have a margin account and borrow against the value of your securities to open more positions, you will be charged margin interest.  Rates will vary by firm.  Typically, firms with the lowest commissions won't pay you interest or offer a money market fund for your uninvested cash.  This is how they keep their costs down.  If you anticipate having extra cash that you won’t use for trading, you may want to keep it in another account where it can earn more. 



Minimum to Invest - You should also check if there is a minimum to open an account or a minimum number of trades required.  Ask what happens if you drop below their minimum account balance or trading volume.




Day Trading Minimum - Brokerage firms have their own minimums but there are also account minimum balances required by the Securities and Exchange Commission (SEC) for what it calls "pattern day traders."  A day trade occurs when a trader opens and closes the same position in a margin account on the same day.  A pattern day trader is any person who executes 4 or more day trades within 5 business days in a margin account, provided the number of day trades is more than 6% of the total trades in the account during that period.   All pattern day traders must maintain a minimum of $25,000 in equity at all times.  More information about these regulations is available at  Day Trading Margin Requirements.



“Paper” Trading or Virtual Account – Some firms will allow you set up a “paper” trading or virtual account once you’ve actually opened an account with them.  It will allow you another chance to practice with your strategy with data from that firm, rather than the CoolTrade data (which can vary slightly) and become familiar with their trading platform.



Broker Interface – Some brokerage firms require CoolTrade to display their account/trading platform along with the CoolTrade Auto Trader and do require more work to set up.  You can check the Community Board for comments from other traders on ease of use for each brokerage firm.



Retirement Accounts - You can you day trade in an Individual Retirement Account (IRA) but not all firms allow your trade proceeds to be available to continue to open new positions immediately.  Interactive Brokers is the only broker that we are aware of that offers something called an "IRA-MARGIN” account.  All other brokers only offer IRA-CASH accounts.  An IRA-MARGIN account frees up your funds immediately after every trade and thus allows you to continue opening and closing positions without a waiting period.  Whereas, an IRA-CASH account takes 3 days to clear funds and makes you wait 3 days before you can utilize the funds again, even if you have no open positions.  Even though they call it an IRA-MARGIN account, you still cannot borrow funds or short in an IRA account.


Service – If you have questions setting up your account, is there a live person who can help you on the phone?  Conversely, does the firm offer online account opening to make it easy for you and save time?



Moving Money – If you need to transfer money easily from a non-retirement account, ask if they offer a free money movement service through the Automated Clearing House (ACH) to other brokerage firms and banks.  Most firms offer this and allow you to initiate a setup online that is complete within a few days.

Regina Guinn CoolTrade Article

CoolTrade Home
Subscribe Now! Automated Trading Auto-Start Your Trader Supported Brokers Choose Trading Software Subscribe Now!
Subscribe Now! How To Create a Strategy How To Change Your Strategy How To Run CoolTrade How To Simulate Strategies Automatically Executes
Indicators in CoolTrade Invite Us To Your Club Long and Short Strategies Market Basics Maximizing Performance CoolTrade Partners
Subscribe Now! Protect Yourself Technical Support Trader's Best Ally Supported Brokers Subscribe Now!

CoolTrade Robotic Trading System

Completely point-and-click system. No programming required.

Traders in over 35 countries enjoy trading with the CoolTrade Fully Robotic Trader.

CoolTrade works with the following online brokers:

    TD Ameritrade

Test your strategies in real-time.

Download strategies FREE from other CoolTrade members.

The Robotic Trader may be set to start by itself in the morning and trade the market all day 100% unattended.

Click To Email CoolTrade
Terms and Conditions
Copyright CoolTradeâ„¢ Inc. 2004 - 2013