Direct Access Broker Defintion & Reviews

What are Direct Access Brokers?

A direct access broker is a firm that provides their clients direct access to the exchanges via electronic communication networks (ECN).  This way traders can execute the trade directly with market makers and bypass complicated order routing paths.  This is why direct access brokers are a favorite for active traders, because slow execution leads to money loss.  Direct access brokers focus more on the trading platform and order execution than providing research or stock tips.  These trading platforms do not come cheaply.  The average monthly fee for most direct access brokers is $100.  However, since the majority of the direct access brokers client's are active traders, if a minimum number of shares are traded per month, this fee is waived.

Direct Access Broker Fees

Direct access brokers are able to provide cheaper commissions to clients by cutting out many overhead costs.  Retail trading companies (Etrade, TDAmeritrade, etc.) have analysts, local offices and large tv marketing campaigns.  This leads to higher costs which are eventually passed on to the client.  Direct access brokers rely solely on their order exeuction and reliability of their trading platform to retain clients.  This is why the majority of direct access brokers offer a per share commission model to keep costs extremely low for active traders.

Direct Access Brokers Review

There are a number of popular direct access brokers in the marketplace.  Each broker has their own speciality but it appears that automated trading and lower commissions will be the battleground in the foreseable future.  Currently there are a number of popular direct access brokers and below are some of the top companies.  The basic assumption is that all of these brokers provide support for trading stocks, futures, options, and forex.  The goal here is to point out some of the benefits of each platform.


thinkorswim is taking the approach of capturing the hearts of young investors.  The platform provides a number of cool user interfaces, such as a fully functioning PDA platform.  thinkorswim also offers a real-time trading simulator for active traders to practice on.


TradeStation is one of the older direct access brokers and is the recognized leader with their rules based trading platform.  This allows for automated execution of trading systems but programming through easy language.  TradeStation began to lose ground to other companies which were pushing out new capatilities, such as simualted trading, flat fee trading, etc.  TradeStation has recently added a number of features to keep up with this ever chaning climate.


MBTrading is very unique in that it can be integrated with other trading platforms.  This way MBTrading focuses on handling the orders, while the trader can execute their orders via another trading application such as Esignal, AbleSys, or NeoTicker.
Tim Ord
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