Guide to Day Trading Strategies

ORDER TYPES, LEVEL2, TIME 
& SALES, HOTKEYS
Before we get into the detailed strategies I use every day, it is important to understand how to 
actually buy and sell stock. There is a vast number of brokers and platforms a new trader can 
choose from, and there is not any single broker that is the best for everyone. Depending on 
your needs as a trader, different brokers may suit you better than others. We will focus on the 
features required for day trading and then discuss the details of entering and exiting positions 
using Level2, time and sales, and hotkeys.
Not All Brokers Are The Same
We will begin by 
À
rst comparing different types of brokers. Most day traders use desktop 
brokerage applications that connect directly to their broker, and to the market exchanges. 
Day traders require two important features from their broker, fast executions and competitive 
commissions. Remember that the best prices are worthless if the broker does not offer fast 
executions or a reliable trading platform.
Part-time traders typically use full-service brokers that offer mutual funds, research tools, 
automatic bill pay from your brokerage account, ATM/debit card and checkbooks. This type 
of broker is extremely convenient, but you typically pay for that convenience with higher 
commissions. Every time you place a trade, your broker will charge a commission. Some brokers 
charge commissions based on the number of shares you trade, while most charge simply per 
order. Full service brokers have commissions ranging from $9.95 to 19.95 per trade. If you place 
one order to buy, and one order to sell, you get charged for two orders. Since day traders often 
trade ten or more times a day, we need to 
À
nd a broker that will provide a better commission 
structure based on our increased trading activity.
Full service brokers do not cater to day traders. Instead, they cater to part-time investors looking 
to take a few positions and manage their own retirement accounts. Those types of customers 
make up the bulk of their business. Full service brokers offer platforms that tend to run slower, 
because they offer a lot of features for research and analysis. This lag time can be a real burden 
for a day trader. Day traders typical prefer a bare bones platform that runs fast and reliably. 
Lastly, most full service brokers have slower execution speeds, because they do not allow the 
customers to choose which electronic communication network (ECN) will be used to send orders 
to the exchange. As a part-time trader, you truly do not have to worry about ECN routing, but as 
an active day trader, you will notice that some routes are faster than others. Often the “in house” 
ECN route from full service 
À
rms is far slower than ECN routes most day traders use. The simple 
conclusion is, that subpar execution speed is unacceptable for day trading.

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