A part of trading success involves choosing the right broker(s) for your needs. Here’s a list of brokers I currently use, followed by a list of ones I’ve used in the past. I’ll give advantages and disadvantages to each one. I’ll also note that I’m not an affiliate for any of these brokers, so I don’t get anything if you click on the links to them.
Brokers I Currently Use
Cobra Trading has been my primary broker for a while now. They are an excellent broker if you’re a day trader or short-term swing trader. They are also one of the best if you’re someone who likes to short hard-to-borrow (HTB) stocks like I do.
- Excellent locates on HTB stocks. If you like to short HTB stocks like I do, then you need a broker with excellent locates. Cobra has 4 locate sources in its platform. Most of the time I’m able to find locates for stocks I want to short. And if there aren’t any locates on the platform, you can call up their chat window to see if one of their customer service representatives can find locates for you.
- Direct access. I can route my orders directly to individual exchanges and ECNs, and get rebates if I wish.
- Cheap commissions. I only pay 0.003/share for commissions. You can pay even less if you trade really high volumes.
- AMAZING customer service. The customer service for Cobra has always been top-notch. It feels very personal, and you almost feel like you get to know the staff there.
- Less volatility-related buying power restrictions than other brokers. During the meme stock craze (like AMC/GME), brokers started putting severe buying power restrictions on volatile stocks, and started requiring much higher margin requirements for shorting these stocks. In fact, one reason why I left Vision Financial in early 2021 was due to the extreme buying power restrictions they placed on stocks for shorting, which made it too difficult for me to trade my strategies. I have almost never run into volatility-related buying power issues when trading with Cobra.
- No overnight locate fees. Some brokers charge you extra for holding HTB stocks short overnight. The only overnight fees you’ll pay with Cobra are the short interest fees (which you’ll pay at any broker).
- Not for small account traders. You need a minimum of $30K to open an account, and you must maintain a minimum of $25K.
- Occasional shorting restrictions on REG SHO stocks. Sometimes you can’t find locates on certain REG SHO stocks, although usually this clears up by the market open. However, you can’t re-use the locates if you get them. If you shorted a REG SHO stock and then covered it, you have to locate new shares if you want to re-short that same stock.
- Trading platforms aren’t free unless you trade extremely high volumes. You’ll pay anywhere from $100 – $230/month for your trading platform unless you trade 200-300K shares/month or more.
Centerpoint is also an excellent broker if you’re a day trader. They are also a great broker if you like to short HTB stocks. I primarily use them when I can’t find locates with Cobra, or if the locates happen to be cheaper at Centerpoint. I can’t comment on their customer service as I haven’t interacted with their customer service much.
- Excellent locates on HTB stocks. Centerpoint has 2 locate sources. Most of the time I’m able to locate something that I want to short.
- Discounts for stock locates based on account size. The bigger your account size, the more discount you get. I currently get a 20% discount on my locates. You also get an initial $15 discount on your first locate regardless of your account size.
- Direct access.
- Cheap commissions. I currently pay $.003/share, and you can pay less if you trade really high volumes.
- Recent reductions in the cost of overnight shorts. Centerpoint used to be a poor choice if you wanted to short HTB stocks and hold them overnight. You’d often have to pay 2-4 times your locate fee if you held the shares short overnight. However, this has recently dramatically improved. You can now hold up to 25K shares overnight for free. You’ll pay twice your locate fee for anything over 25K shares. But really that’s not a big disadvantage since most people won’t be holding over 25K shares of something short overnight.
- Less REG SHO restrictions. Usually if I’m not able to find a locate for a REG SHO stock on Cobra, I’m able to find one on Centerpoint.
- Not for small account traders. You need a minimum of $50K to open an account, and you must maintain a minimum of $25K.
- Trading platforms aren’t free unless you trade extremely high volumes. You’ll pay $120/month for your trading platform unless you trade 200K shares/month or more.
- Buying power restrictions on volatile stocks. I’ve had a number of situations where I couldn’t trade with the size I wanted to on certain volatile stocks. When I’d try to do a locate for a certain number of shares, the trading platform would alert me that I’d have insufficient buying power for the shares I was requesting, despite my buying power being sufficient for normal circumstances.
Brokers I Have Used In the Past 4 Years
Here’s some brokers I’ve used in the past 4 years, with some brief commentary on each one. I no longer use them due to them not meeting my needs anymore. Cobra and Centerpoint will likely be my only brokers for the foreseeable future.
TradeZero is probably the best option for small account traders who want to short HTB stocks.
- Low account minimum. You only need $2500 to open an account, making it ideal for small account traders.
- No commissions. You don’t pay commissions on trades. However, commissionless brokers use a pay-for-order flow model, and thus trade execution may not always be the best.
- Good locates on HTB stocks. Tradezero has good locates for HTB stocks, making it good for a small account trader who wants to short these stocks.
- Rebates on unused HTB stocks that you’ve located. If you’ve located a stock for shorting, and then decide not to use those shares, you can sell them back for a rebate. However, the amount you’ll get back will only be a small percentage of what you originally paid for them.
- Free web-based trading platform
- Direct access. Tradezero offers direct access to certain ECNs, although the options aren’t as extensive as Cobra or Centerpoint. That means you can also get tiny rebates for adding liquidity to certain routes, although you won’t get the full rebate like you would at brokers like Cobra or Centerpoint (Tradezero will take some of the rebate).
- Steep overnight borrow fees. You’ll pay 4x your locate cost (in addition to the original 1x cost you paid for the locate) to hold a stock short overnight for the first night. It’s then 1x per night each night afterwards.
- 5K limit per order. If you’re trading more than 5K shares per trade, you need to split them up into multiple orders.
- Desktop-based or advanced web platform fee. If you want to trade using the desktop platform or more advanced web platform, you’ll pay $59/month.
- Locate fees can be high, although it can vary on the stock. The locate fees you’ll pay at Tradezero can sometimes be higher than Cobra or Centerpoint, although sometimes they’re comparable and there have even been a few instances where it was cheaper at Tradezero.
- ETB list is awful. A lot of stocks that are ETB at brokers like Cobra or Centerpoint, including basic largecap stocks like TSLA, are HTB at Tradezero and you’ll have to pay a HTB fee.
- Steep Professional Fees for Entities. If you trade through an entity like I do, you’ll pay $300/month in fees.
- Paltry rebates for adding liquidity. While you can get a rebate for adding liquidity, Tradezero takes most of it. For example, EDGX provides a .002/share rebate if you add liquidity through it with a broker like Cobra or Centerpoint. However, if you route to EDGX with Tradezero, you’ll only get a rebate of .0005, which is tiny and means Tradezero is taking most of the rebate.
IB has lower account minimums than Cobra or Centerpoint and low commissions making it accessible to small account traders. However, availability of HTB stocks isn’t great, and you can’t reserve shares ahead of time, so it’s not a great broker if you like to short HTB stocks.
- Option of free or low cost (.005/share) commissions.
- Direct routing with low cost (.0035/share) if you choose tiered commission structure, and thus you can get full rebates if you add liquidity to certain routes.
- Easy to set OCO (one cancels the other) or bracket orders in its platform Trader Workstation. I always loved IB’s Trader Workstation and the ease with which you could place OCO orders, which is great when you want to have a stop loss and a profit target. I’ve never been able to get OCO orders to work correctly in DAS Trader Pro, which is the platform I use for both Cobra and Centerpoint. I can do “range” orders with DAS, but you’re limited to 2500 shares for an order, so you have to put in multiple orders for range orders in DAS if you have any position more than 2500 shares.
- Stops can work premarket and after hours. For most brokers (including Cobra and Centerpoint), stop losses won’t work after hours, so you have to manually watch your trades if you’re trading premarket or after hours. However, in Interactive Brokers Trader Workstation, stop limit (not market) orders can work during premarket and after-hours trading.
- Trader Workstation (the trading platform) is free.
- Can’t reserve shares of HTB stocks. With Cobra, Centerpoint, and Tradezero, you can do your locates of HTB stocks ahead of time, pay the fee, and then you have those shares reserved for the trading day. You can then short those stocks and go in and out of them as much as you want (although you can never exceed the amount you initially borrowed…you also can’t repeatedly short a REG SHO stock in Cobra without doing relocating each time). However, in Interactive Brokers, you can’t reserve your shares. Shares will either be available or not at the time you want to trade it. If they’re not available at the time you want to place your trade, well, you’re out of luck. Usually the HTB stocks run out of shares by the time you want to trade them. Thus, IB isn’t a great choice for people that want to short HTB stocks.
- $10,000 minimum to open an account. While this isn’t nearly as much as Cobra or Centerpoint, it’s higher than many other brokers, and thus may put it out of reach for some small account traders.
- Not great customer service. This is what I’ve heard from others in the past, so maybe it’s changed. During my time with IB, I didn’t do much interaction with their customer service so I can’t comment personally.
Vision Financial was one of the main clearing firms for Centerpoint for a long time before Centerpoint switched to Clear Street. For a while, they had great ability to locate HTB stocks and were one of the best in that area. However, at the time that I had started back up trading in late 2018/early 2019, I didn’t have the minimum funds for a Centerpoint account. Thus, I went to Vision directly and opened an account with them. I was able to get similar borrows on HTB stocks as Centerpoint, although I was under the pattern day trader rule at the time and had to keep close track of my day trades. Because my main strategies involved shorting HTB stocks, my Vision account grew more rapidly (I had opened multiple accounts with multiple brokers to maximize my day trades per week due to the PDT) than the others. In fact, it was the first account of my multiple accounts that eventually exceeded the $25K minimum for the PDT. It became my primary broker for a very long time before Cobra eventually took its place. Unfortunately, I had to leave Vision because they instituted extremely high margin requirements for shorting after the whole AMC/GME debacle. I don’t recall exactly what they were, but it was something like requiring 10x the amount in cash of a stock you wanted to short. So if you wanted to short 1000 shares of a $30 stock, you would need $300K in your account. On top of that, the quality of the HTB locates had deteriorated. I found myself having harder time finding locates in the stocks I wanted to short and for a reasonable locate fee. For these reasons, I left Vision.
- Low account minimum. When I first opened a Vision account, I only deposited $5000. Thus, it’s a reasonable alternative for small account traders.
- Low commissions. When I was with them, I was paying $.005/share.
- Better HTB locates than big-name brokers like TD Ameritrade, Etrade, or Interactive Brokers. While the quality of the locates had decreased over time, around the time I left I was still able to get decent locates on a number of HTB stocks through Velocity, their third party locate firm.
- No overnight borrow fees on HTB locates.
- Direct access.
- Excellent customer service. My contact point, Steven Silver, was always amazing and helpful.
- Extremely high margin requirements for shorting. I don’t recall the details, but after the AMC/GME debacle Vision switched its policy on margin requirements for shorts. You now needed something like 10x the cash in your account relative to a position size. Since most of my trades were shorts, this made my strategies mostly untradeable with the size that I wanted to use.
There are many other brokers out there, including some that I used several years ago (for example, I was a Thinkorswim user around 2009-2010…now I only use them for charts). These are the ones I have direct experience with over the past 4 years. There’s a couple others I’ve used in that time frame (Suretrader, TEFS) but they are more sketchy overseas operations and thus I don’t recommend them.