Firstrade is a U.S.-based online brokerage known for its commission-free trading on stocks, ETFs, options, and mutual funds. While it offers many benefits for long-term investors, it also provides essential tools and features that day traders can use to execute short-term strategies. Understanding how day trading works on Firstrade—including its rules, margin requirements, and trade examples—can help traders maximize efficiency and stay compliant with regulations.
Overview of Day Trading on Firstrade
Day trading on Firstrade involves buying and selling securities within the same trading day to profit from short-term price fluctuations. Firstrade supports day trading in a margin account, which allows traders to use leverage and execute multiple trades per day—subject to Pattern Day Trader (PDT) rules.
Key Features for Day Traders on Firstrade:
- Commission-Free Trades: No fees for stocks, ETFs, or options trades.
- Margin Trading: Access to 2:1 overnight and 4:1 intraday leverage.
- Extended Hours Trading: Pre-market (8:00–9:30 a.m. ET) and after-hours (4:00–8:00 p.m. ET).
- Advanced Charting Tools: Technical indicators, trendlines, and moving averages available through the Firstrade Navigator platform.
- Integration with OptionsPlay: Helps identify option-based day trades with visual analysis tools.
Pattern Day Trading (PDT) Rules on Firstrade
Firstrade follows FINRA’s PDT rule, which applies to all U.S. brokers offering margin accounts.
| Rule | Description | Example |
|---|---|---|
| PDT Definition | Executing 4 or more day trades in 5 business days if they exceed 6% of total trades | 5 trades in 5 days = PDT flagged |
| Equity Requirement | Must maintain $25,000 minimum balance in margin account | Account below $25,000 → restricted trading |
| Margin Leverage | 4:1 intraday, 2:1 overnight | $10,000 equity → $40,000 intraday buying power |
| Account Restriction | PDT violation results in 90-day restriction to closing trades only | Can’t open new day trades until equity restored |
To trade freely, day traders must maintain at least $25,000 in account equity.
Common Day Trading Strategies on Firstrade
1. EMA Crossover Strategy
Traders use two Exponential Moving Averages (EMAs)—for example, a 9 EMA and 20 EMA—to identify short-term momentum shifts.
Example:
- Stock: XYZ Corp
- Entry: 9 EMA crosses above 20 EMA at $50
- Exit: Price reaches $52
- Profit: \text{Profit} = (52 - 50) \times 100 = 200
2. VWAP Reversal Strategy
Volume-Weighted Average Price (VWAP) acts as a key intraday support or resistance level. Day traders buy near VWAP support in uptrends or short near VWAP resistance in downtrends.
Example:
- Entry: Buy 100 shares at $48 when price rebounds off VWAP
- Exit: Sell at $50
- Profit: \text{Profit} = (50 - 48) \times 100 = 200
3. Breakout Strategy
Day traders look for strong volume and price breakouts above resistance or below support.
Example:
- Stock trading near resistance at $60
- Entry: Buy 100 shares when price breaks to $61
- Exit: Sell at $65
- Profit: \text{Profit} = (65 - 61) \times 100 = 400
4. Scalping Strategy
Scalping involves taking advantage of small, rapid price movements multiple times per day.
Example:
- Entry: Buy 200 shares at $20.00
- Exit: Sell at $20.10
- Profit: \text{Profit} = (20.10 - 20.00) \times 200 = 20
Example: Complete Firstrade Day Trade Scenario
- Account Equity: $30,000 (eligible for PDT)
- Stock: ABC Corp
- Strategy: Momentum trading with EMA + volume confirmation
- Entry: Buy 200 shares at $100 when 9 EMA crosses 20 EMA and volume spikes
- Exit: Sell at $103 when RSI hits 70 (overbought condition)
- Profit: \text{Profit} = (103 - 100) \times 200 = 600
- Stop-Loss: $98 → Max potential loss = (100 - 98) \times 200 = 400
This trade illustrates how Firstrade’s charting tools and commission-free trades can support rapid execution and efficient capital use.
Risk Management for Firstrade Day Traders
| Risk Control | Description | Example |
|---|---|---|
| Stop-Loss Orders | Automatically exit losing trades to limit loss | Stop-loss at $49 for $50 entry |
| Position Sizing | Risk only 1–2% of account per trade | $30,000 × 0.02 = $600 max risk |
| Daily Loss Limit | Stop trading after fixed loss threshold | Limit daily loss to $1,000 |
| Diversification | Avoid overconcentration | Trade multiple sectors/stocks |
Advantages of Day Trading on Firstrade
- Zero Commissions: No cost per trade, ideal for frequent traders.
- User-Friendly Platform: Firstrade Navigator offers customizable layouts and real-time quotes.
- Solid Margin Rates: Competitive rates for margin trading with flexible leverage.
- Research & Education: Built-in resources, market news, and analysis tools for better decision-making.
- Extended Hours Access: Enables trading on earnings releases and pre-market movements.
Limitations of Day Trading on Firstrade
- No Direct Market Access (DMA): Orders are routed through market makers, not directly to exchanges.
- Fewer Charting Features Than Pro Platforms: Lacks advanced analytics compared to DAS Trader or TradeStation.
- PDT Restriction: Accounts under $25,000 are limited to 3 day trades per 5 business days.
- No Paper Trading: Lacks a simulator for strategy testing.
Tips for Successful Day Trading on Firstrade
- Maintain at least $25,000 equity to avoid PDT restrictions.
- Use short-term indicators like EMA (9, 20, 50) and VWAP for intraday setups.
- Watch Level 2 quotes and volume spikes for breakout confirmations.
- Use stop-loss and take-profit orders to automate exits.
- Monitor pre-market movers and news catalysts for early opportunities.
Conclusion
Firstrade is a reliable and low-cost platform for day traders seeking commission-free trading and solid margin support. While it lacks direct market access and ultra-advanced charting found in professional-grade brokers, its simplicity, extended hours, and zero-fee structure make it suitable for beginner to intermediate day traders.
By applying disciplined strategies such as EMA crossovers, VWAP reversals, or breakout trading—and maintaining proper risk management—traders can effectively leverage Firstrade’s tools to capture intraday price movements. With the right balance of analysis, capital, and discipline, Firstrade can serve as a cost-efficient gateway to consistent day trading performance.