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Best Day Trading Platforms and Brokers in 2024
Written By
James Barra
Edited By
William Berg
Cryptocurrencies have grown faster than any other asset class in history. Since the launch of Bitcoin (BTC) in 2009, day trading in cryptocurrencies has skyrocketed, with an astounding 285,060 BTC transactions taking place each day.
Quick Introduction
A contract for difference is an agreement between two parties to pay the difference between the opening and closing price of an asset.
They are flexible instruments that allow traders to profit (or lose) from changes in asset values without having to own the underlying security.
A contract for difference is an agreement between two parties to pay the difference between the opening and closing price of an asset.
CFDs can be used to gain exposure to a variety of asset classes including stocks, commodities, forex and cryptocurrencies.
Traders have the option of opening both long and short positions, thus allowing them to make profits even when markets fall.
Top 4 CFD Brokers in South Africa
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HEADWAY
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What Are Cryptocurrencies?
Cryptocurrencies are a fast-growing medium of exchange. According to crypto payment services specialist Triple-A, there were as many as 420 million global users of this new form of currency in 2023.
Similar to traditional currencies like the US dollar, British pound or Japanese yen, they can be used to buy goods and services. However, unlike other forms of legal tender, they exist only digitally and are not issued or controlled by governments or central banks.
Instead, cryptocurrencies are a decentralized form of money that are created through a peer-to-peer network rather than by a central authority. Information on transactions and ownership of the currency is stored on an electronic ledger known as blockchain.
This network is made up of computers that are called nodes. When a transaction takes place, these nodes work together to validate the information via complex mathematical calculations.
This process is known as crypto mining, and when it is completed a new block is created that is added to the blockchain. During this process new virtual coins or tokens are created.
Cryptocurrency Vs Fiat Currency
Cryptocurrencies have certain advantages over their paper equivalents. The use of blockchain technology ensures high levels of transparency and prevents problems like counterfeiting and manipulation by one centralized power.
Transactions using virtual currencies can also be carried out more quickly and cheaply than old-fashioned currencies. And because the exchange of these currencies involves a third party like a bank, users also enjoy a level of privacy.
There are also limits on the supply of certain cryptocurrencies, which can help them retain their value better than paper currencies. Total production of Bitcoins, for instance, has been capped at 21 million. Central banks and governments, on the other hand, can print more banknotes whenever they choose.
What Cryptocurrencies Can I Day Trade?
The number of cryptocurrencies out there is staggering. According to crypto data website CoinMarketCap, there were 22,932 digital currencies in existence as of early 2023.
Yet while the cryptocurrency trading market is valued at above $1 billion, only a couple of hundred different digital assets are actively traded every day. And as the table below shows, a handful of virtual tokens make up the lion’s share of the market’s value, with Bitcoin being by far the biggest and most popular.
So how do traders make money? In the case of a long trade, an investor will buy the CFD at the market price and look to sell it back after (hopefully) the value of the underlying asset has risen. They will then pocket the difference, which is paid by the brokerage.
However, if the asset falls in value, the trader will be required to pay the difference to the CFD provider, resulting in a loss.
The process of going short works in the opposite way. Bearish traders will borrow the contract from the broker and sell it in the hope of buying it back at a lower price later on. But if the price unexpectedly rises, the trader will have to repurchase the CFD at this higher price and pay the difference to the contract provider.
What Moves Cryptocurrency Prices?
Macroeconomic And Geopolitical Developments
As with any asset or financial instrument, the price of cryptocurrencies is highly changeable according to the economic and political landscape.
Inflation readings, interest rate movements, GDP data and employment numbers from across the globe all impact the direction of Bitcoin, Ethereum et al.
Cryptocurrency trading prices often follow those of other ‘riskier’ assets like stocks and industrial commodities higher or lower.
That said, some believe that digital currencies are becoming an increasingly popular safe-haven asset in tough times like gold or the US dollar.
During inflationary periods, for instance, prices of virtual currencies can rise as the real-world value of paper currencies erodes. Cryptocurrencies with fixed supply like Bitcoin can also rise in value when central banks launch quantitative easing programmes to print more fiat money.
Source: FxPro Website
Here you can see the maximum leverage that FxPro offers CFD traders for different asset classes. A leverage ratio of 1:5 (or margin rate of 20%) means that a trader can control a position size of $5,000 with just $1,000 of their own capital.
Whilst the use of leverage can supercharge a trader’s earnings, massive losses can be racked up if markets move in an unexpected direction. The number of people who end up making a negative return is significant.
Managing Leverage Risk
This is why taking a sensible approach to leverage is essential when CFD trading. It is a good idea for beginners to use low leverage or even no leverage at all.
Leverage of 1:2 or 1:3 can help new traders take part in the market without exposing themselves to monster levels of risk.
When your CFD trading strategy is paying off, it can be hard to resist racking up higher levels of leverage in the pursuit of bigger profits. But keeping a level head (and especially at the beginning) in this situation is critical. One highly leveraged loss can wipe out all the success you’ve had leading up to that point.
It is also important for traders to use tools like stop loss orders to help them establish strong risk management protocols. These particular functions automatically close a position when the market plunges to a price level that the trader has pre-selected, which in turn helps to minimize losses.
Take profit orders are another weapon that successful CFD traders frequently use. They work in a similar way to stop losses in that they close a position when prices reach a certain level, in this case when the market has risen to a point previously identified by the investor.
Not only do take profit orders allow profits to be locked in before the opportunity passes. They help minimize the emotional aspect of the CFD day trading process, thus preventing traders from chasing bigger profits based on unsound reasoning.
Top Platforms For Day Trading – Fee Data
Markets
Our recommended brokers provide access to popular global markets, such as stocks, forex and commodities, something we confirm by signing in to brokers’ platforms to record the assets available.
We also consider the availability of trading vehicles that cater specifically to day traders, such as contracts for difference (CFDs). This derivative allows you to speculate on rising and falling prices without owning the underlying asset.
You can compare the financial markets available at our best brokers below.
Note market access may vary depending on jurisdictional rules.
Movements in currency pairs are measured in pips, which stands for ‘percentage in point’ or ‘price interest point.’ Like EUR/USD, the majority of pairs are quoted at four or five decimal places.
When searching for the price of a forex pair a trader will see two prices. These are the bid price, the price at which a trader can sell a forex pair, and the ask price, which is the price at which a trader can buy a currency pair.
The difference between these two prices is known as the spread. It is also measured in pips, and illustrates the profit a broker will make on a specific transaction. Day traders need to pay close attention to this: large spreads can eat into profits.
Pros & Cons Of Forex Day Trading
For retail investors, participating in the foreign exchange market carries a range of advantages and disadvantages. These include:
- Trades can be placed 24 hours a day, five days a week. This provides excellent flexibility and means participants don’t have to worry about things like exchange opening times.
- Most of the top forex day trading brokers offer a vast range of currency pairings to trade. More choice equals more opportunities to make a profit.
- High liquidity means that day traders can enter and exit positions quickly.
- The costs and fees associated with forex trading are usually much lower than those of other financial markets. In fact, some brokers operate on a ‘zero commission’ basis.
- Traders can get much higher levels of leverage through margin trading. This can amplify gains by providing a trader with more capital. But beware: it can also multiply losses if a trade goes wrong.
- Forex prices can be highly volatile and movements are hard to predict. Whilst this presents opportunities to make a profit, it can also open the door to losing a lot of money.
- Forex trading is complex and requires a solid knowledge and understanding of fundamental and technical analysis (the method of forecasting price movements using charts and data). Those who have neither the time nor resources to become experts leave themselves open to making large losses.
- The health and performance of a specific currency are tied closely to those of the issuing country or region. So signs of economic or political turmoil can cause a counter to plummet. This is a particular danger for developing nation currencies.