In the modern times, trading happens largely online. Online brokers have developed and offered various features and functions to traders. And most of those functions have something to do with the platforms they offer. Let’s take a quick look at trading platforms and see how they can help you with your trading.
What is a Trading Platform?
A trading platform is a software that enables traders to perform trading with ease. Through the platform, investors and traders can buy, sell, open/close positions, and execute trades.
Most of the time, the platform offers a variety of features, with functions added to it by the brokers servicing the trader.
There are platforms that are of use primarily to forex traders, while others serve traders in other financial markets.
Prop platforms are trading platforms that brokerages create and customize. These trading platforms serve specific types of clients, mostly those that are trading under the brokerage’s wings.
Commercial platforms, on the other hand, are platforms that aim to serve retail traders and investors. These platforms are easy to use and pack a lot of features like news feeds, technical tools, education, and research.
How to Choose a Trading Platform?
The two main things you should consider when you’re choosing a trading platform are the features and the fees.
Day traders, along with other short-term traders, usually need level 2 quotes and market maker depth charts. If you are a day trader, you will definitely need these tools to keep up with the market and make important trading decisions.
Fees are also of great importance. Although online trading nowadays brag about super low costs to get started, fees can pile up and eat away from your trading capital.
For instance, scalpers generally make a lot of trades in one trading session. Positions can reach at least 10 to a hundred. Every transaction requires fees. Naturally, scalpers will want trading platforms that charge low fees.
On the other hand, check out the features that come with the fee. It’s possible that lower fees translate to fewer trading features.
The MetaTrader Platform
Trading platforms also have their gold standard. In this case, we got the MetaTrader platforms. At present, there are two popular MetaTrader platforms: the MetaTrader4 (MT4) and MetaTrader5 (MT5).
The MT4 and MT5 platforms are the most popular platforms about retail traders. When it comes to choosing trading platforms, these are the first names that pop in mind.
The MT5 is the newer of the two, and it packs more features than the MT4. However, it has yet to reach the same level of fame as the MT4.
That’s because the MT5 platform packs features that are not allowed in some countries. For example, hedging.
Hedging is a strategy wherein you open a long and a short position on the same asset at the same time. This strategy isn’t allowed in the US, but it’s featured on the MT5 platform.
However, barring that, the MT5 improves on most of the weakest features of the MT4. Therefore, for those who aren’t hindered by regulations and compliance, the MT5 feels like the superior trading platform.