Trading Platforms: How Do They Work And How To Choose The Best One

Trading Platforms: How Do They Work And How To Choose The Best One

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Capital markets attract people who turn to them for higher returns. If you’ve decided to become an investor, a reliable trading platform is one of the first things you need to look for. In this article, we will discuss why traders and investors need trading platforms, give some tips on choosing the most suitable one to meet your trading goals and provide you with a list of the best trading platforms for different trading objectives. 

Key Takeaways

  1. A trading platform is software aimed at getting online access to different markets.
  2. Trading platforms can be of two types: proprietary (or prop) and commercial.
  3. Trading platforms can also be categorised by the device they are used on: desktop, web browser, or mobile phone.
  4. There are a lot of aspects to consider when choosing a platform, such as trading goals, fees system and customer support.

What Is A Trading Platform, And How Does It Work?

A trading platform is software traders use to access international and over-the-counter financial markets online. It is an online trading system that uses computer software to complete transactions in a network environment. 

With the help of trading platforms, traders and investors can maintain savings accounts and conduct transactions with securities. Leading trading platforms use complex database architectures to enhance security, transparency and liquidity in the secondary markets.

The intermediary between the market and the trader is a broker; a trading platform is a broker’s tool provided to the trader for obtaining information and making transactions.

Trading platforms can provide you with valuable trading information, such as:

  • Price quotations – Brokers receive the current prices of assets in real-time and from the liquidity providers and convey them to the trading platform. A trading platform also stores historical price data, market-related news and more.
  • Market analysis – A trading platform comes with advanced tools for conducting fundamental analysis and technical analysis aimed at assessing the market condition at the current moment and in previous periods.
  • Transactions management – Each trading platform lets you place and close orders in full or partially, depending on the order type.
  • Managing accounts – You can open any number of accounts, including demo accounts, on a trading platform and switch between your accounts for order placement or conveying analysis.
  • Analysis of your trading results – Trading platforms typically store the history of your trades that can be used for generating a statement report. You can download the report and use it to analyse your trading activity and the efficiency of your trades.

Most trading platforms have additional features, such as market news feeds, research information from expert traders, real-time quotes, or charting tools.

Trading platforms are also designed to suit the particular needs of specific markets, such as futures markets, cryptocurrencies, stocks, or options.

Types Of Trading Platforms

Trading platforms can be grouped into two categories: proprietary (or prop) and commercial. 

Prop trading platforms are applications designed by large brokerages or other financial institutions for their own activities; prop platforms are used to imitate the trading style and requirements of electronic brokerage models. Such platforms are not available to the public.

Commercial trading platforms target day traders and retail investors. Platforms of this type are easy to use; they commonly include numerous helpful features, such as charts, educational materials or research tools, to help improve the trading experience for investors and traders.

Trading platforms can also be categorised according to the device they are used on. 

  • Desktop trading platforms – These platforms are installed as PC software on your computer. They have the most comprehensive set of functions and are regularly updated by their developers, so they are compatible with almost any operational system.
  • Web-based trading platforms – These platforms do not require installation and can be accessed via a browser. They are relatively fast working, especially compared to desktop versions; however, they have limited features. 
  • Mobile trading platforms – These apps are installed on Android or iOS devices. This type of platform is very convenient since you can trade from anywhere with a stable Internet connection. However, such platforms have a very limited set of features and are not suitable for efficient and comprehensive trading. 

Aspects To Consider When Choosing A Platform For Trading

A trading platform is a tool that traders and investors use to gain their profit. The market offers plenty of platforms comprising various features, but like any tool, the platforms have their pros and cons. Choosing the right platform is vital to making trading more straightforward. However, finding the one that will work best for you can be challenging. Here are some key considerations that you can take into account when selecting the best trading platform.

  1. Define your trading goals – Different platforms offer different sets of features. It is essential to understand your trading goals to pick the platform that provides functions that will facilitate achieving your objectives, whether you are an active or passive investor or an experienced trader looking for advanced trading tools. For instance, if your goal is successful day trading in the Forex market and profiting from currency pair speculations, the best choice for you would be a Forex trading platform offering many pairs of currencies.
  2. Explore the tools offered on the platform – Trading platforms commonly come with many tools for trading that can boost your trading activity. Carefully study the suggested investment options and pick the ones that will maximise your chances of success. Some of the standard features offered by platform providers are:
  • Trading charts and technical indicators that can help you decide when to enter or exit trades. 
  • Customisable alerts that will notify you about market events according to the set parameters.  
  • Indicators that can assist you in identifying market trends.
  • Trading analytics that provides you with all the necessary data to improve your trading performance. 
  1. Demo account – If you are a beginner trader, the demo account option can be very useful since it lets you familiarise yourself with the platform and test your strategies. Thus you can practice trades and tune your trading without losing money. Also, check if the share trading account option is available.
  2. Commissions and fees – Another crucial aspect to consider is how much it will cost to trade with the selected platform provider. It’s important to know what these fees and commissions are. For example, creating investment accounts on some platforms is free, while others charge a commission for opening an account or require a deposit to validate it. Also, many brokers may charge fees when you deposit the funds you want to invest or trade with. Additionally, consider transaction and trading fees you might be charged, and check if the platform provider offers free trade when meeting pre-defined conditions. Some platforms also might charge an inactivity fee if you do not trade for a certain amount of time.
  3. Ease of use – Another critical aspect of choosing your trading platform is how intuitive and user-friendly the platform is. A platform with a good user experience makes trading more straightforward and less stressful. The platform interface should be intuitive so that you can easily navigate the information in various modules; fundamental icons and settings should be clear when you open the website.
  4. Risk management – Trading is inseparably associated with risks, especially if you are new to trading. That is why it is essential to ensure that the trading platform you selected has adequate risk management functionality. Reliable platforms have features in place that help mitigate risks related to funds loss and boost your investment performance. 
  5. Customer support – Select a trading platform that offers various variants of customer service: phone, email and live online chat support. Good client support is vital for beginners since trading is complicated, and novice traders might need comprehensive and 24/7 support. 
  6. Security – When selecting a platform for trading, pay attention to security. The best trading platforms ensure your personal and financial information is safe and secure. The security of your funds is a top priority, so investigate the standards and algorithms the platform uses to keep your money safe. Also, check whether the platform is encrypted and registered with the SEC or other equivalent organisations.
  7. Connecting to Global Markets – Trading in the global capital markets is beneficial. Make sure that the trading platform of your choice offers international market access; for example, it enables trading in the New York Stock Exchange or NASDAQ.
  8. Regulations – Select a platform regulated by a reputable governing body, such as SIPC, SEC or FSRA. Regulations add to the platform’s security since it complies with specific standards that protect traders from unfair or exploitative practices. Also, make sure you will have access to Financial Services Compensation Scheme in case of some issues with your trading platform provider.
  9. Payment methods – Some platforms may only provide a single way for money transfers, while others offer a variety of payment methods, such as credit cards, PayPal, or local payment methods. The more payment methods a platform provides, the better.

Top 5 Trading Platform Providers

Considering the above, choosing a proper trading platform might seem tricky, especially if you are a beginner investor. Here is a list of the top 5 best trading platform providers to help you start trading and become a successful investor.

Spotware Systems

Spotware Systems is a FinTech company founded in 2010. It is a financial technology provider focusing on e-FX STP and direct-access trading. Spotware Systems offers solutions for brokers, banks and their clients. One such solution is the cTrader platform.

cTrader is a comprehensive trading platform solution for FX and CFD brokers to offer their traders. 

The cTrader trading platform provides full access to the STP Forex currency market both for professional and novice traders.

cTrader offers an extensive range of trading instruments, like 83 currency pairs on the FX and precious metals market.

The cTrader terminal is multifunctional, meaning that you can create unlimited charts with various modes, layouts and templates configured for them. Also, in cTrader, you can open charts in separate windows while maintaining all the platform’s functionality.

The platform offers a complete set of tools necessary for effective technical analysis, including more than 50 indicators with the possibility of combining and optimising them, as well as developing your scripts.

cTrader also offers different trading options, such as one-click trading or trading from the transaction panel, so that traders can choose the most convenient method.

cTrader has an intuitive and user-friendly interface; the platform is suitable for beginner medium-term traders and professional algorithmic traders who write algorithmic strategies on their own.

MetaQuotes 

MetaQuotes was established in 2000. It is considered one of the leading developers of software applications for banks, exchanges and brokerages.

The company has developed a series of popular software products, among which are popular trading platforms MetaTrader4 and MetaTrader5.

MetTrader (MT) is one of the most popular Forex trading platforms developed by MetaQuotes.

MetaTrader4 offers the option of downloading quote history from multiple sources and the option of a strategy tester with which you can manually test strategies and algorithmic systems.

It also features MQL. Community service and a robust hedging system for order execution. 

With MetaTrader4, you can create custom tools for trading in the dedicated MetaEditor environment. 

MetaTrader5 is a modified and improved version of MT4 with the following changes:

  • An order book that displays market volumes has been added. However, it works on the stock exchange market.
  • A netting system has been added to the hedging system. The netting system sums all open orders into one to calculate the average price.
  • Added an option of partial order execution; that is, an order can be partially fulfilled at the current price if there is not enough volume in the order book; the remaining part of the order is left in the order book until more volume appears at a different price.
  • Added the option of Buy Stop Limit and Sell Stop Limit orders.

Despite the improvements in MT5, it has not become as popular as MT4, even though MT4 has no automated feature for the web platform, and the installation process can be rather challenging.

B2Broker

B2Broker is one of the leading liquidity and technology providers of solutions for the crypto and foreign exchange industry. The company was founded in 2014 and is now a renowned provider of brokerage solutions, such as B2Core.

B2Core is a reliable CRM trading solution for traders and investors. This Forex CRM system provides a wide range of options, among which:

  • An adaptive dashboard with numerous widgets that are easy to manage.
  • Access to real-time financial data generated in a convenient and easy-to-use format.
  • The options of trading activity analysis allow you to keep track of clients’ data.
  • Easy KYC trading account verification procedures.

B2Core supports multilingual options and a user-friendly and intuitive interface. 

B2Core includes an integrated payment processing module that enables you to take deposits and withdrawals from your customers without the need to work with a third-party processor. The module allows you to manage multiple currencies and set up automated payments.

The reporting feature of the CRM system allows you to generate various reports based on the activities of your clients, your partners’ performance and your financial data. 

Another advantage of B2Core is exceptional customer support.

The B2Core CRM solution offers more than 80 payment options, making adjusting the solution to suit your needs simple.

All these advantages make B2Core a flexible and effective CRM that surpasses competing products on the market.

Interactive Brokers (IBKR)

IBKR has one of the largest choices of investment products. It also provides white label solutions for brokers, such as Trader Workstation (or TWS).

TWS is a multi-purpose trading platform where users can work with stock, derivatives and currency exchanges in 23 countries. The platform can be downloaded both as a desktop version or a mobile application on iOS and Android devices.

The obvious advantage of the TWS terminal is a huge number of trading tools. The platform also features a demo account that you can use to try your trading strategies without any risks.

TWS technologies support third-party programs, smart routing, and even sending orders by voice command via IBot technology.

The TWS’s interface is easy-to-use and intuitive: you can find basic controls above the chart window. You can either expand the graph or select a multiple windows option. 

The platform’s main disadvantage is that a huge number of users make instant feedback impossible.

Leverate

Leverate is a technology company that supplies a variety of goods and services to brokers in the Internet trading sector. Their white-label solution, which enables brokers to provide trading services under their brand, is one of their most liked products. This comprehensive and completely customisable solution offers brokers a selection of trading platforms that let them successfully compete in the online trading market. Leverate’s well-known trading platform is Sirix WebTrader.

Sirix WebTrader is available both as desktop software and as a mobile application. 

The platform is based on the advanced programming language HTML 5, making it available to various customers.

The Sirix Web platform is intended for trade in currencies, indices, stocks and commodities. The platform’s key feature is that it doesn’t need loading and installation, as it works only on the Internet.

The convenient location of all trading instruments adds to the easy usage of the trading platform. The platform’s improved usability and user-friendly layout make Sirix an ideal option for beginner traders.

Additionally, there is support for social trading, which enables users to view how other traders manage their trades. 

You can add numerous charting instruments to the platform, such as Fibonacci extensions. 

Though the interface is straightforward and customisable,  the charting area is rather small. 

Conclusion

Active trading requires many trading tools and techniques, and selecting a perfect online trading platform might be confusing due to the variety of options available in the market. Convey extensive research on what the market offers and take time to compare various online trading platforms to make sure you select the one that works best for you and complies with your trading goals.

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