If you’re a swing trader, or if you plan to engage in the strategy, your choice of brokerage accounts will be an important part of your success. Swing trading is a form of (very) active investing and will require a brokerage platform that can comfortably accommodate high-frequency trading.
We’ve identified six of the best brokerages for swing trading that will help you be more successful with the strategy.
Being a fairly specialized form of trading, swing trading does require working with a broker that can easily enable you to work the strategy on an ongoing basis. That effectively eliminates managed portfolio platforms, in favor of investment brokerage firms.
Below is our list of what we believe to be the best brokerages for swing trading:
Why Webull is a good choice for swing trading: Webull is a trading app designed specifically for active traders, which includes swing traders. It doesn’t offer much in the way of investor support, so you’ll need to be a fully independent, self-directed investor. Webull’s trading app offers watch lists, individual stock- and fund-tracking, real-time market information, and stock and bond screeners. Webull offers extended hours trading, as well as margin trading, which is frequently used with swing trading. They also offer paper trading, which will give beginning swing traders an opportunity to test their skills before committing real money.
Webull offers NASDAQ TotalView, providing Level II Advanced quotes and trading, which can be particularly beneficial to active traders, like swing traders. It lets you see the bid and ask prices for stocks you are tracking, as well as the number of shares investors are looking to trade. It will give you an opportunity to determine the inflows and outflows of a stock, as well as to spot patterns and unusual activity.
Why Robinhood is a good choice for swing trading: This is a trading app targeting younger investors who are fully self-directed. You can trade individual stocks and exchange traded funds (ETFs) commission-free. Robinhood also offers a margin account for a low minimum investment of just $2,000, which can be an important benefit for swing trading since it commonly involves margin trading.
But the key to swing trading successfully on Robinhood is to be a fully independent investor. The trading app is limited, and customer service can be difficult to access. You may need to supplement Robinhood a good stock screener.
Why Firstrade is a good choice for swing trading: Firstrade is a diversified investment platform that can accommodate nearly any type of investing activity. That includes swing trading. They provide comprehensive research from Morningstar, Zacks, and Benzinga. You can swing trade individual stocks and ETFs, but since Firstrade offers more than 11,000 commission-free mutual funds, it may be the top choice for traders who want to include mutuals in their trading activities. Firstrade offers extended trading hours and while they do provide no fewer than three trading platforms, they’re not as advanced as those offered by some larger competitors.
Why Public is a good choice for swing trading: Public is a relatively new trading app, and while it can be used for swing trading, it’s best suited to new investors. Investing tools and research are very limited, but they do specialize in fractional shares – which they refer to as “slices” – which is a major advantage to new investors with small amounts of money to invest. You can trade in both individual stocks and ETFs.
Why Charles Schwab is a good choice for swing trading: The world’s largest investment brokerage is essentially a full-service broker offering commission-free trades. They have everything needed for any type of investing, including unlimited investment options, plenty of online tools, 24/7 customer service, 140 brick-and-mortar branches, and investment research provided by more than a dozen sources, including Moody’s and MorningStar.
Schwab’s StreetSmart Edge is one of three free trading platforms offered, and it’s well suited for swing trading. It’s fully customizable, and includes charting tools, as well as the ability to monitor your positions and make multiple trades through the same order window. You can also access research directly from the platform. And since it offers several thousand commission free-mutual funds, you can add those to your swing trading options, along with individual stocks and exchange-traded funds.
Why Fidelity is a good choice for swing trading: Fidelity is an excellent choice for virtually any type of investing, including swing trading. The wealth of investment opportunities, trading options and investor tools make it particularly well-suited for self-directed investors, which is exactly what you’ll be as a swing trader.
Fidelity offers 24/7 customer service, as well as the ability to place trades after hours. But they also have more than 300 branch offices throughout the country, which will be convenient if you ever have a problem with your account that needs to be straightened out. And since they have so many investment options, including their own robo-advisor, you can hold long-term investments (which you should) on the same platform where you swing trade.
Fidelity offers their Active Trader Pro platform free of charge. As the name implies, it’s designed with active traders in mind. It will provide all the charting capabilities needed for successful swing trading. You can even place trades from your charts.
The traditional way to invest in stocks is through “buy-and-hold”. That’s where you buy a stock – generally one with solid long-term prospects – and plan to hold it in your portfolio for several years. When the strategy works, the stock rises in value, increasing your investment the longer you hold it.
At the polar opposite end of the spectrum is day trading. That’s where an investor attempts to exploit very small changes in a stock’s price by – hopefully – buying in at precisely the right time, then selling for a small, quick profit. The trade is typically completed within the same trading day which is where the name comes from. The basic idea is to make enough day trades – each at a small profit – to add up to larger gains on a monthly and annual basis.
Similar to day trading, you’re looking to get the benefit of relatively small upward movements in a stock. And much like buy-and-hold, you’ll hold onto the stock, at least for a few days.
More realistically, swing trading is much more closely related to day trading. Both look to take advantage of small gains in a stock’s price, but the main difference being that where day trading compresses the process into a single trading day, swing trading involves holding the stock for anywhere from a few days to a few weeks. The longer holding period means executing fewer trades and generating higher profits on each trade than you will with day trading. So, while a day trader may be looking for a gain of 2% in the same trading day, a swing trader might target a gain of between 5% and 10% over several days or weeks.
There are different variations of swing trading, but the explanation above represents the general idea.
If you’re planning to open a brokerage account for swing trading, which one you choose will have a major impact on your success. That will require choosing a platform that puts no restrictions on short-term, high-frequency trading, and also offers the type of investment tools that swing trading requires.
Any of the platforms in this guide are an excellent choice for swing trading, and offer the best opportunity to trade profitably.