Types of Brokers for Different Types of Trading


Written By: Ehsan Jahandarpour

Different types of brokers provide traders with access to the financial markets and allow them to make their trades for different types of trading instruments. Brokers offer many different types of services and products, and each type of broker has its own set of advantages and disadvantages. In this guide, we’ll take an in-depth look at the different types of brokers, from ECN brokers to market makers, as well as discuss the advantages and disadvantages of each.

Different Types of Brokers for Different Types of Trading

When selecting a broker, it is important to take into account the type of trading you plan to do. Different types of trading require different types of brokers, and each broker may offer different levels of services and fees. Here is a list of some of the best brokers for different types of trading:

Day Trading

For day traders, some of the best brokers include Interactive Brokers, TD Ameritrade, and Robinhood. These brokers offer a wide range of services, including fast execution, low commissions, & advanced trading tools.

PlatformFeesMinimum DepositLeverageCommissions
Interactive BrokersLow$0YesYes
TD AmeritradeLow$0NoNo
E*TRADELow$0NoYes
Charles SchwabLow$0NoNo

These are suggested Strategies for day trading:

StrategyRisk LevelTimeframeMarkets
ScalpingHigh1-5 minForex, Indices, Stocks
Momentum TradingMedium10-30 minForex, Indices, Stocks
Day TradingLow30 min – 4 hrForex, Indices, Stocks
Swing TradingLow4-24 hrForex, Indices, Stocks
Position TradingLow24+ hrForex, Indices, Stocks

Forex Trading

A list of the best brokers For forex traders can be AvaTrade, FXCM, Oanda, and Pepperstone. These brokers offer a wide range of markets, tight spreads, and advanced trading tools.

PlatformFeesMinimum DepositLeverageCommissions
Saxo BankLow$0YesNo
Interactive BrokersLow$0YesYes
OandaLow$0NoNo
AvaTradeLow$0YesNo
StrategyRisk LevelTimeframeMarkets
ScalpingHigh1-5 minForex, Indices, Stocks
Momentum TradingMedium10-30 minForex, Indices, Stocks
Day TradingLow30 min – 4 hrForex, Indices, Stocks
Swing TradingLow4-24 hrForex, Indices, Stocks
Position TradingLow24+ hrForex, Indices, Stocks

CFD Trading

A combination of the best Trading Platforms for CFD Traders include Plus500, eToro, and IG. These brokers offer access to a wide range of markets, low commissions, and advanced trading tools.

PlatformFeesMinimum DepositLeverageCommissions
Saxo BankLow$0YesNo
Interactive BrokersLow$0YesYes
OandaLow$0NoNo
PepperstoneLow$0YesNo
StrategyRisk LevelTimeframeMarkets
ScalpingHigh1-5 minForex, Indices, Commodities
Momentum TradingMedium10-30 minForex, Indices, Commodities
Day TradingLow30 min – 4 hrForex, Indices, Commodities
Swing TradingLow4-24 hrForex, Indices, Commodities
Position TradingLow24+ hrForex, Indices, Commodities

Stocks Brokers

For stock traders, some of the best brokers include Fidelity, Charles Schwab, and E*TRADE. These brokers offer a wide range of markets, low fees and commissions, and advanced trading tools.

PlatformFeesMinimum DepositLeverageCommissions
Charles SchwabLow$0NoNo
TD AmeritradeLow$0NoNo
Interactive BrokersLow$0YesYes
FidelityLow$0NoNo

Options Trading Brokers

For options traders, some of the best brokers include Ally Invest, Interactive Brokers, and TD Ameritrade. These brokers offer a wide range of options trading tools, low fees and commissions, and advanced trading tools.

PlatformFeesMinimum DepositLeverageCommissions
Charles SchwabLow$0NoYes
TD AmeritradeLow$0NoYes
Interactive BrokersLow$0YesYes
TradeStationLow$0NoYes

Future Brokers

Futures For futures traders, some of the best brokers include E*TRADE, TD Ameritrade, and Interactive Brokers. These brokers offer a wide range of markets, low fees and commissions, and advanced trading tools.

PlatformFeesMinimum DepositLeverageCommissions
Interactive BrokersLow$0YesYes
TD AmeritradeLow$0NoNo
TradeStationLow$0NoYes
CMC MarketsLow$0YesYes

Platforms for Trading Commodities

Some of the best brokers For commodity traders include Saxo Bank, Interactive Brokers, and TD Ameritrade. These brokers offer a wide range of markets, low fees and commissions, and advanced trading tools.

PlatformFeesMinimum DepositLeverageCommissions
Interactive BrokersLow$0YesYes
TD AmeritradeLow$0NoNo
E*TRADELow$0NoYes
Charles SchwabLow$0NoNo

Bonds

For bond traders, some of the best brokers include Interactive Brokers, E*TRADE, and Fidelity. These brokers offer access to a wide range of markets, low fees and commissions, and advanced trading tools.

PlatformFeesMinimum DepositLeverageCommissions
Interactive BrokersLow$0YesYes
TD AmeritradeLow$0NoNo
FidelityLow$0NoNo
Charles SchwabLow$0NoNo

Cryptocurrency

For cryptocurrency traders best brokers include Coinbase, Kraken, and Binance. These brokers offer access to a wide range of cryptocurrencies, competitive fees and commissions, and advanced

PlatformFeesMinimum DepositLeverageCommissions
BinanceLow$0YesNo
KrakenLow$0NoYes
Coinbase ProLow$0NoYes
BitMEXLow$0YesNo
StrategyRisk LevelTimeframeMarkets
ScalpingHigh1-5 minCrypto
Momentum TradingMedium10-30 minCrypto
Day TradingLow30 min – 4 hrCrypto
Swing TradingLow4-24 hrCrypto

Mutual Funds

For mutual fund traders, some of the best brokers include Vanguard, Fidelity, and Charles Schwab. These brokers offer a wide range of markets, low fees and commissions, and advanced trading tools.

PlatformFeesMinimum DepositLeverageCommissions
VanguardLow$0NoNo
FidelityLow$0NoNo
Charles SchwabLow$0NoNo
TD AmeritradeLow$0NoNo

Table 2: Mutual Fund Strategies

StrategyRisk LevelTimeframeMarkets
DiversificationLowLong-termMutual Funds
Cost-AveragingLowLong-termMutual Funds
RebalancingLowLong-termMutual Funds
Asset AllocationLowLong-termMutual Funds
Tax Loss HarvestingLowLong-termMutual Funds

ETFs

For ETF traders, some of the best brokers include TD Ameritrade, Schwab, and E*TRADE. These brokers offer access to a wide range of ETFs, low fees and commissions, and advanced trading tools.

Table 1: ETFs Trading Platforms

PlatformFeesMinimum DepositLeverageCommissions
Charles SchwabLow$0NoNo
TD AmeritradeLow$0NoNo
VanguardLow$0NoNo
FidelityLow$0NoNo

ECN Brokers

ECN brokers are a type of broker that provide direct access to the interbank market. ECN stands for Electronic Communications Network, and these brokers provide access to the liquidity of the market through the use of their own proprietary software. ECN brokers provide traders with direct access to the interbank market, meaning that they can trade directly with the market and avoid dealing with a middleman. Examples of ECN brokers include IC Markets, Pepperstone, and FP Markets.

BrokerFeesMinimum DepositLeverageCommissions
PepperstoneLow$200YesNo
IC MarketsLow$200YesNo
FXOpenLow$1YesYes
DarwinexLow$200YesYes

Table 2: ECN Strategies

StrategyRisk LevelTimeframeMarkets
ScalpingHigh1-5 minForex, Indices, Commodities, Stocks
Momentum TradingMedium10-30 minForex, Indices, Commodities, Stocks
Day TradingLow30 min – 4 hrForex, Indices, Commodities, Stocks
Swing TradingLow4-24 hrForex, Indices, Commodities, Stocks
Position TradingLow24+ hrForex, Indices, Commodities, Stocks

STP Brokers

STP brokers are a type of broker that provide access to the interbank market. STP stands for Straight Through Processing, and these brokers provide direct access to the interbank market through their own proprietary software. STP brokers offer traders access to the interbank market without the need for a middleman, allowing them to take advantage of the best prices available. Some of the top STP brokers in the market include Pepperstone, AvaTrade, and XM.

STP brokers provide traders with access to the interbank market without the need for a dealing desk. This is because STP brokers use their own proprietary technology to connect their clients directly to the interbank market. This means that STP brokers do not take the opposite side of a trade, and instead, they provide traders with direct access to the interbank market. This provides traders with the best prices available in the market.

BrokerFeesMinimum DepositLeverageCommissions
FXTMLow$100YesNo
OctaFXLow$50YesNo
FBSLow$1YesNo
XMLow$5YesNo

Table 2: STP Strategies

StrategyRisk LevelTimeframeMarkets
ScalpingHigh1-5 minForex, Indices, Commodities, Stocks
Momentum TradingMedium10-30 minForex, Indices, Commodities, Stocks
Day TradingLow30 min – 4 hrForex, Indices, Commodities, Stocks
Swing TradingLow4-24 hrForex, Indices, Commodities, Stocks
Position TradingLow24+ hrForex, Indices, Commodities, Stocks

In addition to providing access to the interbank market, STP brokers also provide their clients with access to multiple liquidity providers. This allows traders to take advantage of the best possible prices and spreads available in the market. STP brokers also offer competitive trading conditions, such as tight spreads and low commissions.

Scalpers

Scalpers are a type of broker that specializes in taking advantage of small price movements in the market. Scalpers use a range of strategies to take advantage of these small price movements, such as placing orders with tight stop losses and using technical indicators to identify entry and exit points. Scalpers are typically active traders who seek to make frequent, small profits from the market. Examples of scalping brokers include FXCM, FX Pro, and Oanda.

Scalping is a type of trading strategy that is used to take advantage of small price movements in the market. Scalpers use a range of strategies to identify potential entry and exit points, such as placing orders with tight stop losses and using technical indicators. Scalpers typically take advantage of short-term price movements and aim to make frequent, small profits from the market.

StrategyRisk LevelTimeframeMarkets
ScalpingHigh1-5 minForex, Indices, Commodities, Stocks
Momentum TradingMedium10-30 minForex, Indices, Commodities, Stocks
News TradingMedium10-30 minForex, Indices, Commodities, Stocks
Reversal TradingHigh1-5 minForex, Indices, Commodities, Stocks
High Frequency TradingHigh1-5 secForex, Indices, Commodities, Stocks

Scalping Tactics

TacticsDescription
Price Action AnalysisAnalyzing price movements, using charts and technical indicators, to identify potential trading opportunities
Order Book AnalysisAnalyzing the order book to identify potential trading opportunities
Speed TradingExecuting trades quickly to capitalize on short-term price movements
Short-Term Position SizingAdjusting the size of positions to take advantage of short-term

Scalpers also make use of leverage to increase their profits. By using leverage, scalpers can increase the amount of money they are able to make from a small price movement. However, it is important to use leverage responsibly, as leverage can also lead to large losses if the market moves against the trader.

Hybrid Brokers

Hybrid brokers are a type of broker that combines the features of both STP and Market Maker brokers. Hybrid brokers provide their clients with access to the interbank market, like STP brokers, and also act as a counterparty to the trades of their clients, like Market Maker brokers. This allows them to provide their clients with the best of both worlds, providing access to the best possible prices and spreads available in the interbank market, while also providing a counterparty to their clients’ trades.

Some of the top hybrid brokers in the market include Plus500, eToro, and OctaFX. Hybrid brokers provide traders with access to the interbank market, as well as the liquidity provided by other market participants. This allows traders to take advantage of the best possible prices and spreads available in the market.

BrokerFeesMinimum DepositLeverageCommissions
FXChoiceLow$100YesNo
FXOpenLow$1YesYes
FXTMLow$50YesNo
XMLow$5YesNo

Hybrid Strategies

StrategyRisk LevelTimeframeMarkets
ScalpingHigh1-5 minForex, Indices, Commodities, Stocks
Momentum TradingMedium10-30 minForex, Indices, Commodities, Stocks
Day TradingLow30 min – 4 hrForex, Indices, Commodities, Stocks
Swing TradingLow4-24 hrForex, Indices, Commodities, Stocks
Position TradingLow24+ hrForex, Indices, Commodities, Stocks

Hybrid brokers also offer competitive trading conditions, such as low commissions, tight spreads, and high leverage. Hybrid brokers also offer a range of trading tools and features to help traders take advantage of the market, such as automated trading, copy trading, and advanced charting and analysis tools.

Comparison of the Features of Different Types of Brokers

When comparing different types of brokers, it is important to consider a range of factors, such as the types of trading services they offer, the range of markets they provide access to, their fees and commissions, the speed of execution, their customer service, and the trading tools and features they offer.

Here is a table for a Comparison of the Features of Different Types of Brokers from two different points of view:

Type of BrokerFeesMinimum DepositLeverageCommissionsPlatformsTrading Tools & FeaturesMobile Trading AppTypes of AccountsCustomer SupportInstruments
Stock BrokerLowHighHighLowWeb-basedCharting ToolsYesCash & Margin24/7Stocks
Forex BrokerHighLowLowHighMetaTraderAdvanced Order TypesYesDemo & Live24/7Forex
CFD BrokerLowMediumMediumLowWeb-basedRisk Management ToolsYesCash & Margin24/5CFDs
Type of BrokerFeesMinimum DepositLeverageCommissionsPlatformsTrading Tools and FeaturesMobile Trading AppTypes of AccountsCustomer SupportInstrumentsLeverageOrder Types
Market MakerLowVariesYesYesDesktop & WebVarietyYesStandard & ProfessionalYesForex, CFDs, CryptocurrenciesVariesMarket, Limit, Stop, OCO
ECNLowVariesYesNoDesktop & WebVarietyYesStandard & ProfessionalYesForex, CFDs, CryptocurrenciesVariesMarket, Limit, Stop, OCO
STPLowVariesYesNoDesktop & WebVarietyYesStandard & ProfessionalYesForex, CFDs, CryptocurrenciesVariesMarket, Limit, Stop, OCO

Market Maker brokers provide traders with access to the markets through an internal dealing desk, which acts as a counterparty to all their trades. Market Maker brokers typically offer a wide range of markets, as well as a range of trading tools and features, such as charting and analysis tools. However, they may have higher spreads and commissions than other types of brokers. Examples of Market Maker brokers include AvaTrade and City Index.

STP brokers provide their clients with access to the interbank market, meaning they can provide their clients with access to the best possible prices and spreads available in the market. STP brokers typically do not provide access to a wide range of markets, but they may offer lower spreads and commissions than Market Maker brokers. Examples of STP brokers include FXCM and FX Pro.

Guidelines for Selecting the Right Broker

For traders looking for a broker to trade stocks, for example, one important factor to consider is the range of markets a broker offers access to. While many brokers provide access to major stock markets, such as the New York Stock Exchange and the NASDAQ, some may offer access to more niche markets, such as the OTC markets or penny stocks.

Another important factor to consider is the fees and commissions charged by the broker. Different brokers offer different fees and commissions, so it is important to compare brokers to make sure you are getting the best deal. It is also important to consider the speed of execution of the broker, as this can affect your trading performance.

Different types of brokers offer different trading tools, from basic charting and analysis tools to more complex algorithmic trading tools. It is also important to consider the range of trading platforms offered by the broker, as some may only offer access to a single platform, while others may offer access to a range of platforms, such as MetaTrader 4 brokers, cTrader, and WebTrader.

Finally, it is important to consider the additional resources offered by the broker, such as educational materials, tutorials, and webinars. These can be invaluable in helping traders understand the markets and develop their trading strategies. Some brokers may also offer additional services, such as copy trading and managed accounts.

What Types of Brokers are Available?

There are a variety of brokers available, depending on the type of trading you plan to do. Common types of brokers include stock brokers, which specialize in trading stocks, futures brokers, which specialize in trading futures contracts, options brokers, which specialize in trading options, commodities brokers, which specialize in trading commodities, and forex brokers, which specialize in trading foreign currencies.

What Types of Trading Do They Offer?

Different brokers offer different types of trading. Stock brokers generally offer trading in stocks, options brokers in options, futures brokers in futures, commodities brokers in commodities, and forex brokers in foreign currencies. Additionally, some brokers may offer additional services, such as margin trading, automated trading, and financial advice.

What are the Advantages and Disadvantages of Each Type of Broker?

he advantages and disadvantages of each type of broker vary depending on the type of trading you plan to do. Stock brokers generally offer access to a variety of markets and a wide range of services, but may charge higher fees than other types of brokers.

Futures brokers may offer access to specialized markets, but may require more capital and have higher fees. Options brokers may offer access to a variety of markets and may offer lower fees than stock brokers, but may require more specialized knowledge. Commodities brokers may offer access to a variety of markets, but may have higher fees than other types of brokers. Forex brokers may offer access to global markets, but may require more specialized knowledge and higher fees.

What are the Fees Associated with Each Type of Broker?

The fees associated with each type of broker vary depending on the type of trading you plan to do. Stock brokers generally charge fees for trading stocks, options brokers charge fees for trading options, futures brokers charge fees for trading futures, commodities brokers charge fees for trading commodities, and forex brokers charge fees for trading foreign currencies. Additionally, some brokers may charge additional fees for services such as margin trading, automated trading, and financial advice.

What is the Minimum Deposit Requirement for Each Type of Broker?

The minimum deposit requirement for each type of broker varies depending on the type of trading you plan to do. Stock brokers generally require a minimum deposit of $500 or more, while options brokers may require a minimum deposit of $2,000 or more. Futures brokers may require a minimum deposit of $5,000 or more, while commodities brokers may require a minimum deposit of $10,000 or more. Forex brokers typically require a minimum deposit of $100 or more.

What Types of Security Measures Do Brokers Provide?

Brokers typically provide a variety of security measures to ensure the safety of their customers’ funds and personal information. These security measures include two-factor authentication, encryption technology, and secure storage of customer data. In addition, brokers may also provide other measures such as firewalls, secure access to trading accounts, and regular security audits.

What Customer Support Options are Available?

Most brokers provide customer support through a variety of channels, including telephone, email, and live chat. Some brokers may also provide support through social media or through their own dedicated customer service websites. Additionally, some brokers may offer access to financial advisors and/or account managers who can provide advice and assistance with trading.

What are the Trading Hours for Each Type of Broker?

The trading hours for each type of broker vary depending on the type of trading you plan to do. Stock brokers generally offer trading hours from 9:30am to 4pm, futures brokers offer trading hours from 8:30am to 3pm, options brokers offer trading hours from 8:30am to 4pm, commodities brokers offer trading hours from 8am to 2pm, and forex brokers offer trading hours from 5am to 11pm.

What Types of Trading Platforms Do Brokers Offer?

Brokers typically offer a variety of trading platforms to meet the needs of different types of traders. These platforms can range from basic web-based trading platforms to advanced desktop trading platforms. Additionally, some brokers may offer mobile trading apps for trading on the go.