Trading platforms may offer the same functions, but not all are created the same way. Some are faster, more efficient, and more reliable than others. A trading platform is a software that allows traders and investors to trade securities through a financial intermediary like a broker.
Financial products that can be traded on trading platforms include; stock, bonds, derivatives, commodities, and currencies.
Brokers provide traders and investors with trading platforms. Some brokers have developed their proprietary platforms while others use commercial platforms like MetaTrader 4 (MT4) and MetaTrader 5 (MT5). Whichever way, the broker offering the platform should be registered and licensed. The platform you choose should depend on your trading style and personality.
Visual appeal and Interface
Irrespective of your trading style, simplicity should be key when choosing a trading platform. You should pay attention to how visually appealing and easy to navigate the interface is. Go for platforms that are easy to use, and professional.
A platform with a well-designed order entry box, easy-to-access performance data, and colorful and obvious buttons, makes trading easier and faster even for a novice and reduces the chances of making a mistake.
The importance of graphics and colors cannot be overemphasized. They can help you pay attention while trading, bring important information to your attention, and have an impact on your reaction that you may not know until it is absent.
Online trading comes with a lot of tension, so choosing a platform that has clear access to data visually can help. However, some critics have accused platforms of overly simplifying and gamifying trading.
RobinHood, a commission-free brokerage based in the U.S. had to discontinue its signature ‘virtual confetti’ animation each time a new user made a trade. This was partly because the Massachusetts Securities regulator, and other critics, accused them of gamifying the trading process. However visual appeal when done right, can make the trading experience more interactive.
When choosing a safe and secure trading platform you should consider platforms that offer demo accounts. A demo account is a trading account that allows traders to trade for free using virtual money.
Demo trading will help you understand market movement, and develop some level of tact and skill in trading before you proceed to trade with real money. It will help you figure out the best time to trade, and prepare you for possible challenges you may face when you start trading with real money.
Don’t be in a hurry to make money that you fail to practice long enough (at least four to six months of making virtual profits).
Demo accounts are not only useful to novice traders, but professionals and intermediate traders can also use demo accounts to test out new trading strategies before implementing them in reality.
Speed & Stability
When chatting with friends, you begin to feel uneasy when your message is taking a long time to deliver, so why make an exception for your trading platform? Go for platforms that execute trade orders at the speed of light. This would save you the stress and time of re-quoting.
Although milliseconds can be regarded as fast, with the improvement in technology and the introduction of 5G and 4G you can execute a trade order in microseconds.
Another thing you should consider is the stability of the platform. Avoid platforms that are notorious for crashing and requiring you to restart. Slow and unstable trading platforms would give you a poor user experience.
Two-Factor Authentication (2FA)
2FA is a form of multifactor authentication that requires you to enter two pieces of evidence before you can be granted access to a system or facility.
Aside from passwords, it is a form of extra protection used by trading platforms to ensure the security of your trading account. A hacker could steal your password by creating a phishing email targeted toward retail traders. But this can be prevented if your broker has some form of 2FA like a software-based token which can be Google Authenticator or OTP sent to your phone.
It is important in such a case to never share your 2FA with anyone.
Two-factor authentication is important because it reduces the chances of unauthorized access to your trading platform and can protect you from hackers and scammers.
Two-factor authentication is usually a combination of any two of the following:
- An OTP is sent to your phone or Google Authenticator.
- Your password.
- Biometrics such as the face, fingerprints, and retina.
Push notifications are important because they alert you on what the current market condition is. Through push notifications, you can stay updated with what is happening even without opening your trading app. It can help you keep track of the market condition for when you plan to open or close a position.
Should support candlestick charting & other chart types
A Candlestick chart is a technical analysis chart that is used to display the movement of the price of securities, currencies, and derivatives. A candlestick displays four pieces of information for the time frame you chose. This information includes:
- Open price.
- Close price.
When a candlestick is green, it indicates that the market is bullish and a bearish market is indicated by a red candlestick. If a green candlestick has a long wick at the button, it means the market has the tendency of being bullish, but when the wick is at the top, it is a sign of the possibility of a bearish market.
These visuals and different color codes that a candlestick chart contains make it easier for traders to track the market and understand price movement. Candlestick provides multiple time frame analyses.
Should show you the top gainers and losers by sectors
Top gainers are stocks, derivatives, or currencies that close the market day at a higher price than what they opened with. Top losers close at a lower price than the open price. Information about the ‘Top gainer and losers’ influences investor sentiment and market direction.
Should support the assets you want to trade
Before choosing a trading platform, you should go through the list of assets and instruments they offer. If you are interested in trading forex, then your platform should support that. There are various online trading platforms that support a range of assets including forex CFDs. Equity CFDs, indices CFDs etc.. Platforms that offer a wide range of assets and instruments are usually more valuable.
These trading platforms charge different amounts of fees, so ensure that you are comfortable with the fees structure. You can compare fees that other brokers charge, especially when it comes to spread and commission per round turn.
Social trading is a form of trading that enables investors to observe the trading behavior of other traders including experts. These methods of trading aim to help traders copy or mirror the actions of others.
One of the types of social trading traders and investors consider is ‘copy trading’. Copy trading allows you to automatically or manually copy the trades of other traders. Automatic copy trading links your account to that of the master trader you are coping with, such that any action taken on the copied trade will be executed on your account.
Some of the advantages of copy trading include:
- It helps new traders learn by observation.
- Helps busy traders who do not have time to monitor chart trade.
- It presents an opportunity for both beginners and experts to share ideas and strategies.
- Copy trading is available for the different asset classes.
Just like trading with your speculations, social trading is not risk-free as it can also result in a loss. Another type of social trading is mirror trading, but unlike copy trading, in mirror trading, traders copy only specific strategies.
Should have large Data Feeds
When choosing a safe and secure trading platform, you should consider platforms that show market data. Market data comprises the price and all information relating to financial instruments as reported by data sources.
With the help of market data, traders and investors can gain insights into the latest price and historical trends of financial assets and Instruments like equity, derivatives, currencies, and fixed-income.
Several financial data vendors specialize in collecting market data. Your preferred trading platform should connect to these data sources via API.
Application Programming Interface (API) is an intermediary software that allows applications to talk to each other. Through API, trading platforms can live stream data feed and historical data useful for backtesting.
No matter how easy to use, secure and safe the trading platform you choose is, there is always a tendency that you may run into challenges and need help from the broker offering the platform. As such, it is important that you select a trading platform that offers customer service.
The customer service agent of the platform should be swift to respond to complaints and offer help through channels like emails and live chat.
You also want to consider trading platforms that have easy-to-access help centers, you should not have to navigate through the app for so long before finding help.
What people, especially experts, have to say about your trading platform is important. Before choosing a trading platform, create time to read the reviews online. You can find reviews on the Play Store and other sources across the web.
The platform you choose should be renowned for its excellent service and have won some awards. It’s also ideal if your broker is listed on a public exchange as this means the public has confidence in their brand.
Be intentional about the trading platform you choose because it goes a long way in determining your trading success. Before settling for a particular trading platform, you may want to consider opening a small account with more than one broker to test if they have these features.