What to Look for in a Trading Platform?

Written by Miro Nikolov

Miro Nikolov

Miro Nikolov is the co-founder of TradingPedia.com and BestBrokers.com. His mission is to help people make profitable investments by giving them access to educational resources and analytics tools.

, | Updated: October 30, 2024

First, above all we should explain what is a trading platform? – A type of trading software used to serve currency traders with Forex trading analysis and trade execution. Currency trading platforms provide charts and order-taking methods and serve as intermediaries between customers and brokers. Most can differ greatly and can vary in cost.

There are many currency trading platforms in the marketplace, but some things to look for include responsiveness, reliability, product quality and included analyzing tools.

Most Forex brokers allow you to open a demo account prior to funding a full account or mini account. Be sure to try out each brokers software during their trial periods to help you better decide which forex trading platform is the best for you.

Responsiveness

Many people who trade in the financial markets, especially in the Forex market, do not pay attention to a very important aspect in trading – the slippage. If a trader has placed a stop-loss order and a high-volatility event causes a gap, this could lead to a worse value, at which the order would be executed. Because of the increased volatility, such orders are impossible to be executed at the desired value, but will be executed at the next possible value. There will always be some differences between the prices, which sometimes we do not even notice. But if you trade with a decent broker, slippage may occur not only on your stop-loss order (negative slippage), but what is more, it could benefit your take-profit order (positive slippage).

Let us provide an example. If you decide to trade EUR/USD pair and go long at 1.3000, you place a stop-loss order at 1.2950 and a take-profit order at 1.3050. This coincides with a statement by European Central Bank President Mario Draghi and the cross experiences high-volatility. The value of EUR/USD plunges toward your stop-loss order and suddenly makes a gap between 1.2955 and 1.2940. In this case, your stop-loss order will be executed not at 1.2950, but at 1.2940, as the latter appears to be the next possible value. Thus, you will lose an additional 10 pips.

Possitive slippage works the other way around. If EUR/USD cross surges toward your take-profit order and suddenly makes a gap between 1.3045 and 1.3060, your take-profit order will be executed not at 1.3050, but at 1.3060, as the latter appears to be the next possible value. Thus, you gain an additional 10 pips.

You can also avoid large slippages in your current broker by not trading while high impact news is released or during hours with low trading volumes.

Reliability

Depending on an individuals hardware and software characteristics, one might prefer a desktop application or a web-based (java) application. Understanding which type of platform suits you best is critical for trading.

It is also important to make sure that the trading platform does not crash or freeze often, especially during times of global economic news or events, when traders need stability. The reliability of a platform should be more of a concern than its look and feel.

An aggressive trader, or one who likes to make large, frequent trades, will always have to look for a stable platform that never or very rarely crashes. On the other hand, a passive and conservative trader who does not watch the market round-the-clock could be more flexible.

User-friendly Interface

In trading terms, user-friendly means that placing an order or closing a trade can be done immediately. One-click trading and management of stop-loss, limit and other order types are advantages that a trader may want to take into account.

In addition, it is helpful for the overall navigation of a platform to be user-friendly. If a platform offers additional charts and tools, they should be fairly simple to access and apply as well as optimized for quick opening of several graphs at once.

This is a critical point for aggressive traders (scalpers), whose dependence on the trading platform is far greater than a moderate or conservative trader.

Analysis Tools

Key to learning how effective your trading system is and how to improve it is being able to analyze your trades after theyve run their course. It would be extremely difficult to make a considerable profit on a regular basis without the use of analysis tools, because you would be practically making investments in the dark.

Automatic Trading

There are some trading platforms that offer algorithms which can give you suggestions, regarding which investments to make as well as allowing you to enter your own algorithms which automatically place orders if a certain preloaded condition is met. Of course, you should double check these suggestions, but once you see that they lead to a profit, you can begin to allow the software to make your investments automatically at amounts that you define.

Security of Data

Last but not least comes the security issue. The most important thing you need to consider is not allowing your personal data to be compromised, therefore the trading platform you want to use should be as secure as possible. You need to check the type of data encryption your platform of choice uses, which will give you some insight of how well your data will be protected as it gets transferred over the internet. Reputable trading platforms use firewalls both on server and application level. They also employ the use of two separate synced servers on which the data is stored, allowing any lost information from one of the servers to be recovered by the other.

MT4

Many traders trust only one trading platform, the MetaTrader 4. This trading platform is appropriate for beginners as well as for more advanced traders. It is a powerful trading software, which requires some time to become acquainted with. One of the biggest advantages of MT4 is that it has API, which is designed for traders to implement their automated trading strategies. As a trader you may ask a technical person to compile your trading strategy, so it can be automatically executed on the MT4 terminal.

Most online Forex brokers offer different kinds of customized versions of MT4. If you think that for now MetaTrader is too complicated or time-consuming to learn there are plenty of web-based and even mobile-based options.