Trading Platforms Guide

Richard Montana | October 21, 2022

What is an Online Trading Platform?

An online trading platform allows traders to access different global markets for speculating on the price movements of various trading instruments. This can include Forex, Commodities, Cryptocurrency, Stocks, Shares, Indices, Metals, Energies, Options, Bonds, ETFs and CFDs.

In the past, investors and traders would have had to go through an offline broker which meant that the markets were less accessible than they are today. As technology has improved over the years, there are now many online brokerages to choose from. Anyone aspiring to be a successful trader can open a trading account with an online broker and gain access to the brokers trading platforms for online trading from anywhere in the world with an internet connection. Most brokers provide these platforms free of charge and for use on desktop and mobile devices.

Through a trading platform you can view real time bid/ask prices of various assets and load charts that show the historical and current prices of chosen assets over multiple timeframes ranging from tick to yearly charts. You can add technical indicators to these charts to help identify potential trending and ranging market conditions. These indicators can provide trading signals and are often used as part of an overall trading strategy that involves technical, fundamental, sentiment and price action analysis. When you find a suitable trading opportunity, you can execute, manage and close your buy or sell position directly through the trading platform.

Choosing a Trading Platform

We will now look at what trading platforms are used for and the most important factors to consider when looking for a reliable trading platform.

Regulation

When you choose an online trading platform it is very important to ensure that the brokerage providing the platform is regulated by a respected government authority. Investors have more protection when using a regulated broker as they have to conduct business according to strict rules and regulations put in place to protect investors. If a broker claims to be regulated, you can verify this by checking the broker’s license number with the relevant authorities to ensure the regulation is legitimate and up to date. Some of the most well known regulatory authorities to look for include the Australian Securities and Investment Commission (ASIC), Cyprus Securities and Exchange Commission (CySEC) and the Financial Conduct Authority (FCA) in the United Kingdom.

Instruments

Each broker will offer you a range of different markets and trading instruments to trade via their online trading platforms. If you wish to trade a particular asset class such as forex, stocks, cryptos, futures, etc, you should check whether the broker offers that market through its platforms. It may also be wise to consider if you plan to diversify your investment portfolio in the future. If so, the more trading products and markets offered by the broker, the easier it could be to expand your portfolio when the time is right. You can choose from brokers who offer a combination of financial instruments.

Tools

All trading platforms come with a range of free built in trading tools to assist with your online trading, helping to improve overall efficiency and performance. These can include technical indicators for analysing charts such as a moving average, MACD, Bollinger Bands, RSI, CCI and many more. Some platforms offer fundamental analysis tools such as built in economic calendars to efficiently keep track of the latest market news releases. They may also have trading calculators to help with planning your trades. The more advanced platforms will have depth of market (DOM) with level 2 pricing and sentiment tools that show how many traders are buying/selling a particular instrument.

If you require a specific set of trading tools or would like access to as many as possible, you should check what trading platforms the broker offers along with the trading tools included. Some trading tools are stand alone and thus will not be incorporated into the platforms but can still be very useful.

Fees

Most brokers will provide traders with free online trading platforms although there are some who charge monthly and volume-based fees, usually for specialised trading platforms that have specific features a professional investor may need. That being said, the free platforms will most likely be sufficient enough for the average retail trader.

Commissions

In addition to potential fees for gaining access to the brokers trading platforms, you should consider other online trading costs. Most online brokerages will charge a commission for placing trades in addition to the spread and overnight swap fee. These costs can vary significantly from broker to broker so it is important to consider the overall costs you will incur and the affect that will have on your money management.

Spreads

The spread is the difference between the buy and sell (bid/ask) price which can vary depending on the volume of liquidity and quality of liquidity providers that an online broker has. Some brokers offer fixed and variable spread accounts, some will offer commission free accounts but instead mark up the spread to make up for this. In general, the more liquidity that the broker has, the tighter the spreads can be. It is important to account for the spread when planning your trading strategy, especially if you are planning on using scalping strategy.

Swaps

If you hold a position with your online broker overnight then you will probably need to pay a swap fee. This is an interest fee for the procedure of moving open positions from one day to another, also known as the rollover. This is another cost to factor in to your money management planning. Some brokers offer swap free Islamic trading accounts that conform with Sharia law which allows Muslims to engage in online trading through their platforms.

Other Fees

Along with trading platforms, spread, commission and swap fees, most online brokers will charge additional fees that should be checked and clearly understood. Other fees that are worth considering include withdrawal and inactivity fees. Discount brokers should have some of the lowest fees which can help you to save on trading costs in the long term.

Usability

If you are already familiar with a specific trading platform then it could be a good idea to choose an online broker that offers that platform. However, if you have yet to use a trading platform then it may be a good idea to start with a broker that offers a user-friendly trading platform which has plenty of tutorials available to help you learn how to trade online. MetaTrader 4 (MT4) platform is often considered as one of the most intuitive and easy to use trading platforms which makes it a popular choice amongst new traders. You will find that there are lots of MetaTrader brokers which gives convenient market access for manual and automated trading strategies. If you don’t have the time or skills to trade and want to copy trading signals, you should look for a social trading platform.

Leverage

Nearly all online brokers offer leveraged trading via their platforms. Leverage basically means that you can open a position larger than you could without it. If for example you had leverage of 1:50 and a trading account balance of $1,000, you could effectively open a position size of $50,000 (1,000 x 50 = 50,000). Although leverage can increase profit potential, it also increases trading risk and thus, can lead to large losses. It is imperative that you have a thorough understanding of leverage and the significant risks involved before you start trading online. Check the broker offers a leverage that you require via your preferred trading platform.

Education

Some brokers also provide traders with educational resources such as videos and trading guides to help them improve their trading knowledge and skills. They may include detailed tutorials on how to use trading platforms which could be helpful for those who are new to online trading and need help to familiarise themselves with the different platforms available to them. If you are new to trading and need as much guidance as possible, you might want to explore our best brokers for beginners.

Requirements

You will need to make sure that the trading platform will run on your computer, VPS or mobile device by checking the specification requirements. Each online broker trading platform will have a minimum deposit requirement which is worth considering.

Funding

Each online broker will offer different options for making deposits and withdrawals to and from the trading platform. Most brokers accept bank wire transfers and credit/debit cards but some traders prefer online payment processors such as Skrill, PayPal, Neteller, etc. Ensure that the trading platform supports your preferred funding method.

Support

If you have an issue with your trading platform that you need help with, it is important that the broker has a prompt and efficient customer service team. Online chat is often the quickest way to speak with someone whilst other options include telephone and email. The more hours the brokerage support team is available, the better. Some run 24/5 whilst others are available 24/7. You should also consider the brokers office locations as they may be in a different time zone to you which could affect the response time. Check that the broker has a method of contacting support that is most convenient for you and available in your language.

Conclusion

In this trading platforms guide, we have covered what we consider to be the best trading platforms and some of the things that you can look out for when choosing the best trading platform for your own individual needs.

Whilst there are many trading platforms to choose from, you will find that most brokers provide a similar choice, MetaTrader being one of the most common platforms. You will find it being offered by the majority of brokers whilst others may have their own proprietary platform or other industry standard platforms such as cTrader.

It is important to remember that you choose a trading broker and platform that meets your requirements and use this information only for educational purposes and not as advice. Take your time to research and conduct your own due diligence.

You can even test a trading platform with a free demo account to see if they are suitable before making a commitment. Please feel free to view our best trading platforms if you need some further inspiration.

About the Author

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Richard Montana
Richard has many years of experience in broker research, testing, analysis and reviews. He knows what to look for through years of trading himself with different brokers and listening to the feedback of others.

Review Methodology

For all of our broker reviews, we research, validate, analyse and compare what we deem to be the most important factors to consider when choosing a broker. This includes pros, cons and an overall rating based on our findings. We aim to help you find the best broker according to your own needs. You can read more about our review process.


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