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Cobra Trading: Small But Versatile

By Andrew Aziz  |  
Day Trading Success  |  
Nov 21, 2022

Quick Summary

In this review, I would like to introduce Cobra Trading, one of the best brokers available for traders in the stock market. Cobra Trading offers powerful trading execution, various clearing routes, direct access to the market, and all at a low cost. I have been familiar with Cobra Trading for many years, I have met its traders and executives at several different conferences, and I have worked with them directly. They are very professional and respectful people. I have enjoyed the opportunities that have arisen to not just work with them, but to also learn from the contributions they make to the world of trading.

Cobra Trading traders and support team at BBT Live Trading Workshop in Florida, 2022
Pros Cons
Multiple trading platforms available
(3 desktop platforms available)
Not a commission free broker
Excellent margin rates Not available to Canadian traders
Excellent short locate inventory for short selling the hard-to-borrow stocks
Discounts in commissions and platform fees for active traders
Large inventory leading to more trading opportunities on penny stocks and OTC securities
Several customer service channels, high-quality customer support
Direct market access

Broker of Choice

Compared to many of the bigger firms such as TD Ameritrade, Interactive Brokers, and Charles Schwab, Cobra Trading is a relatively smaller brokerage firm in the US, but its smaller size is a significant advantage for serious retail traders.

With a US-based broker, you can have confidence that the firm is well-regulated and that the funds in your account are safe, secure, and insured. I have found over the years that smaller trading firms often offer better customer support services. When you need to talk with someone, someone is more apt to be there to answer your phone call. This is definitely the case with Cobra Trading.

The success of its traders is of course the goal of every brokerage firm, because the more traders who are trading, the better commissions they will generate, and that therefore grows the brokerage firm’s business. Cobra Trading has earned a solid reputation based on its excellent customer support. The consensus among most traders is that smaller firms usually offer better customer service than larger firms do. I know for a fact that Cobra delivers an exceptional customer experience.

Cobra Trading was founded in 2004 by Chadd Hessing and is headquartered in Carrollton, Texas (just north of Dallas). I hope one day to visit its office! During my eight years of trading, I have worked with large firms and smaller firms, and I must note that smaller firms often offer better service to their traders because of their 1:1 customer touch. Similar to what happens in most industries, the bigger the firm is, the more likely the customer or client will have to deal with a more bureaucratic customer support system, and that leads to a much more complex (and negative) customer experience. In my opinion, Cobra is a high-quality boutique trading firm that is versatile in its ability to meet the needs of its clients by offering a wide range of account opportunities. It in particular offers an excellent short locate feature.

Cobra Trading offers various types of trading accounts including:

  • Taxable individual and joint accounts
  • Non-taxable IRAs
  • Business accounts
  • Trust accounts
  • Margin accounts 

With these accounts, Cobra Trading offers trading in stocks (including penny stocks and OTC securities), options, and ETFs. Futures and forex can be traded through a separate account with Cobra’s affiliate, Venom Trading.


Day Trading and Account Requirements

Cobra Trading is a US-based broker, and traders are therefore required to maintain $25,000 in their account for active trading. This is a rule regulated by the SEC and applies to all US-based brokers and US traders. Thus, for day trading accounts, an initial $27,000 is required to open an account with Cobra and a minimum $25,000 is required to maintain an account for active day trading. These rules are not a policy established by Cobra. They arise from the government regulators’ PDT guidelines.

For active traders such as me who require tools for scalping and fast-paced trading, Cobra Trading offers the following services through its platforms:

  • Professional-level charting on several desktop platforms 
  • Online short locating
  • Level II quotes
  • Direct-access routing with maker-taker fees 

Very Low and Competitive Pricing

Cobra Trading’s pricing is very competitive in comparison to its competition. I have worked with many brokerage firms and, among direct-access brokers, Cobra’s pricing is truly excellent and very appealing. In the long run, Cobra’s traders will find significant cost savings on their commissions. Please note, however, that Cobra is not a commission-free broker. Cobra does not charge a minimum commission, but active traders usually avoid commission-free brokers because their payment for order flow (PFOF) systems generally have slower fills, and that leads to price slippage. I personally stay away from commission-free brokers and I recommend all traders also do so. Following is the current commission structure that Cobra Trading offers. I highly recommend that traders who trade large share sizes contact Cobra Trading directly and see if you might be able to negotiate an even better price.

EQUITIES PER SHARE Number of Shares Traded per Month
$.0015* 10M – 20M shares per month
$.00175* 5M – 10M shares per month
$.002* 1M – 5M shares per month
$.0025* 500K – 1M shares per month
$.00275* 100K – 500K shares per month
$.003* 0 – 100K shares per month

*All trades are subject to ECN charges/rebates and regulatory fees.

OPTIONS PER CONTRACT Number of Contracts Traded per Month
$.30* 10,000 contracts +
$.40* 2,001 – 10,000 contracts per month
$.50* 0 – 2,000 contracts per month

*All trades are subject to any applicable option routing or regulatory fees. These fees can be found under the Routing Fees section of Cobra Trading’s website.


Powerful Free Trading Platforms

Cobra Trading offers three different platforms. Most of the traders in my Bear Bull Traders community, and at Peak Capital Trading, the proprietary trading firm I founded, use DAS Trader Pro, which is one of the platforms that Cobra offers. Cobra also offers Cobra TraderPro and Sterling Trader Pro, both of which are also very good platforms. Like many other brokers, Cobra does charge a platform fee to its traders (a platform fee is standard in the industry). However, active traders who generate a minimum commission can have their fee waived as part of Cobra’s customer appreciation and loyalty program.

Trading Platform Price Per Month Free if you Trade More Than:
Cobra TraderPro $100/month 200,000 shares/month
DAS Trader Pro $125/month 250,000 shares/month
Sterling Trader Pro $200-300/month 300,000 shares/month

Leverage and Shorting

Cobra Trading follows FINRA’s day trading guidelines. This means PDT accounts have 4:1 leverage as intraday buying power. Overnight leverage is reduced by half. Cash accounts are treated the same, but are limited to three day trades in a rolling five-business-day period. Some stocks and funds can have higher maintenance requirements, and thus lower leverage.

Short Locate and Trading Hard-to-Borrow Stocks

One of the primary benefits of Cobra Trading is its large inventory of stocks which, accompanied by its short locate feature, results in the possibility of being able to actually find those elusive hard-to-locate stocks. This quite simply is something that not every big broker offers and Cobra Trading accordingly gives serious traders a very competitive advantage.

Through its utilization of Wedbush Securities as its clearing firm, Cobra Trading is able to locate hard-to-borrow stocks for shorting purposes. With access to multiple locate sources, stocks can be easily located directly on Cobra’s platforms. Please note though that locating services may incur fees, which vary by stock, and it is best to check the current fees on a daily basis. These fees are in addition to any commission you might pay, however, this is a very powerful trading tool that can lead to significant profit for traders. Have you ever witnessed big drops in penny stocks and hard-to-borrow stocks? Of course you have. Unfortunately, most brokers do not have any short inventory. But Cobra Trading does!!


Summary

Why Cobra Trading?


1. Cobra Trading is Regulated in the US

Given the collapse of FTX in November 2022 – a huge, well-known, and well-respected brokerage firm in the crypto market – everyone should be first and foremost asking about the regulation of their broker of choice, whether it be for stocks, crypto, or forex. The size of the brokerage firm is irrelevant. It is also irrelevant how often you have heard its name mentioned in news articles. It is even irrelevant if there is a stadium named after the firm! Everyone in our industry had heard of Crypto Exchange FTX and yet, as I write this review in the latter part of November 2022, look at what has happened to FTX. The key question you must ask yourself about your brokerage firm is whether or not your money is safe with it.

Long before FTX collapsed, I had concluded that Cobra Trading is a well-regulated and safe broker! Cobra is registered in the United States and regulated by three bodies: FINRASIPC, and NFA. SIPC acts as a guarantor for the payment of monetary compensation to Cobra Trading clients. One of the very appealing features of Cobra is that it offers optimal trading conditions for working in the stock market. Clients have access to eight types of accounts, including corporate, joint, and individual accounts, as well as options for retirement investment. Cobra Trading provides clients with direct access to the stock market through its trading platforms, which users can customize to meet their needs.

2. Cobra Trading Offers a Competitive Pricing Structure and Powerful Execution

Cobra Trading is a powerful, easy-to-use, direct market access broker that is capable of meeting the needs of institutional and serious retail traders in the world of trading. It offers various powerful trading platforms such as Cobra TraderPro, DAS Trader Pro, and Sterling Trader Pro. As discussed above, Cobra provides traders with competitively priced stock and options trading fees in addition to personalized service. Cobra has many routing options to execute trades, helping to ensure that positions can be executed as quickly as possible, at the best possible prices, and at all times. Although Cobra is not a commission-free brokerage firm, its commissions are considered to be at the low end of the spectrum. Unlike Robinhood and many other commission-free brokers, Cobra is not selling your orders as order flow. Accordingly, its fills are good and its routings are excellent. In short, and very sincerely, Cobra Trading is better than every single one of the commission-free brokers out there.

As well, Cobra Trading has a very good short locate feature and hard-to-borrow inventory that results in a new avenue of trading strategies for traders. This in itself is a unique value proposition.

3. Cobra Trading is a Boutique Broker with Excellent Customer Support

One last important advantage in using Cobra Trading is its excellent customer support. In part because it is a smaller firm, it offers much better customer support than the big firms do. If you require assistance, you can almost always “fast and quick” reach a real “live” person by phone to help you with whatever problem has arisen. This is a major advantage over many larger firms and, truth be told, it can be a lifesaver for a new trader.

Conclusion

I highly rank Cobra Trading as one of my brokers of choice. I wholeheartedly endorse its customer support service. I strongly recommend this high-quality boutique trading firm to serious traders everywhere.

CEO Chadd Hessing

Our mission is to provide active traders the highest level of service, systems, and trade support at a very competitive price.”

Disclaimer:

Bear Bull Traders and Cobra Trading have a paid sponsorship relationship for this review in addition to one of our recent live events. However, our working relationship is independent of my review and did not have any impact on my review.