Becoming a day trader means learning how to profit off the volatility of the market. You want to be good at high frequency trading. It means reading advanced charts, learning technical indicators and being good at making multiple trades in an hour. That is how you profit. Knowing that, you need to make sure that you have the right tools for the job. That can mean the right kind of trading platform. Is the Etrade that kind of trading platform? Most would say no. Read on to find out why.
Etrade is an excellent tool for beginning investors, but it falls short of being a top quality platform for high frequency traders. Day traders need a different set of qualities than investors. Investors are looking to make many fewer transactions per month and looking to hold onto assets for a long time. The strategy is different for investors than it is for traders. Traders are looking for short-term profits while investors are looking to profit off long-term value in stable companies.
Warren Buffett and Charlie Munger represent the type of strategy that the ideal investor employs. When you are looking at the long term health of a company or stock, day to day volatility is not what you need to be paying attention to. The overall fundamentals of the company and the quality of the management are key to making money off long-term plays.
Day traders are geared towards making multiple transactions per day that helps multiply profits quickly and efficiently. Etrade is built for long term investors to do research and complete a few trades per month. Multiple trades per day can add up quickly for high frequency traders and eat into their profits.
The Etrade interface and execution of trades is better suited for long term investors. Traders may find themselves frustrated with the lack of hotkeys and a slower than usual execution of trades. Because Etrade also automatically upgrades frequent traders to the company’s Pro platform once they reach 30 trades per quarter, it signifies that the basic level of the platform is designed for more traditional retail investors.
If you do level up to Etrade Pro, you can get advanced features like extended trading hours and real-time tools that track trends in a manner that day traders might find useful. However, the extended hours come at a price. On top of the regular fees, which you will continue to pay, you will be hit with a certain percentage per share for extra-hours trading. The fees do not go down with more activity. It is just that the features become more advanced and the money you need to spend increases.
The user interface becomes more sophisticated and the ability to chart risks becomes unlocked. Reading and creating advanced charts is a must learn skill for frequent traders, but with Etrade that ability comes at a cost. To make your way as a novice day trader, it is probably best to look elsewhere for your trading platform needs.
