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Novice traders would usually hire online brokers to execute day trading for them Online brokers is relatively cheaper and within anyone’s reach Anyone with an internet connection and a credit card can acquire one. The major disadvantage of online brokerage is the fact that it promotes slow order execution Speed is important in trading. A trader should have a system that can order and place trades on the dot if he or she wants to succeed. A professional trader would immediately recognize the importance of speed which makes them prefer direct access trading to online brokers. Direct access trading can make things a lot easier when you are getting into the stock market for beginners.

For professional day traders, success depends a lot on speed of execution. Direct access trading eliminates the need for a middleman, which in this case is the online broker. The absence of this middleman can save time—from several seconds to several minutes. This is because direct access trading, as the term implies, allow traders to order directly from a client or a market maker who is actually working on the floor of the stock exchange. This allows immediate execution since orders need not pass through online brokers. One you’ve mastered the stock market basics things get easier quickly, then you can move onto things like beginners forex trading.

It is also important to consider the fact that online brokers might also work directly for market makers. This means that online brokers do not choose their market makers in terms of the price that they offer when executing orders. They would rather route the trades to their clients to earn rebates. This acceptable practice in financial trading wherein brokers get commissions from executing orders to their market maker clients is known as “payment for order flow.” With direct access trading, the trader can choose the market maker that provides the best price.

Direct access trading is relatively more expensive to online brokers due to the probability that online brokers are receiving payment for order flow from the market maker which ensures hefty commission rates. Consequently, they can afford to offer rock-bottom rates to traders. Commissions obtain from direct access trading are based on the number of traders executed by a trader within a certain period. Commission rates for each trade may fall within $15 to $35. There will also be additional monthly charges for the software, ranging from $250 to $300. Some companies waive the software charges if the traders executed 50 to 3 trades per month.

There are several direct access trading systems available in the internet today. All of them differ in terms of speed and accuracy of order execution as well as the commission price that they charge for every trade. A trader must carefully choose the trading system that suits their needs in terms of price, performance and speed.