A stockbroker that concentrates on speed and order execution – unlike a full-service broker that focuses on research and advice. Day traders could trade their markets directly via the various exchanges, but this would require a trading account with each exchange, so it is more efficient and easier to use a day trading brokerage. In contrast to traditional investors who usually use retail brokers, day traders use direct access brokers, as they provide a direct interface to the exchanges and their markets.
Direct-access brokers usually use complicated computer software that allows clients to trade directly with an exchange or with other individuals via electronic communication networks (ECN).
Direct-access brokers have become very popular among active traders because of their speedy transaction times, but other services such as streaming quotes, interactive charts, Level II Nasdaq quotes and other real-time features have also contributed to this success. These brokers have cut down their costs and increased efficiency by eliminating the role of the third party, which in turn allows them to charge a lower commission than traditional brokers.