Deciding on the best trading platform for you is an important first step in your trading career.
This could be achieved by finding the answer to technical questions such as: do you need a trading platform that offers the ability to place conditional orders such as a trailing stop loss order?
There are many trading platforms available, the most common being MT4 & MT5.
Whilst these are considered staple trading platforms, they can be considered quite clunky and difficult to use and thus, not a good idea for those just starting out.
Using the brokers’ in-house trading platform (clients can only trade via spread betting and CFDs) is a great way to start when that particular platform offers the key ingredients that many experienced traders look for.
These are the top 3 questions every trader should ask themselves before choosing a trading platform:
1 - What is the main device I use to trade on and do I only trade at home or also on the go?
Sometimes we’ll be trading on our laptops, other times we’ll be out and need to make a trade on the mobile phone or tablet. Using the MT4 mobile trading app is certainly far less visually pleasing than most in-house trading platforms.
It’s important that the graphs you see are easy to use. For example, we don’t want to be adding trend lines to a chart, only to find them jumping across the screen without your consent.
If you are a trader who often looks at the markets on your mobile phone, make sure to pick a trading platform that offers great charting abilities. It’s also important that the mobile app offers just as many functions as the desktop or web version.
Depending on your preference, you may prefer to trade on a web version or a desktop version.
There are pros and cons to both.
A web version can be accessed from anywhere and is useful to those often out and about but a desktop version can be left open 24/7 allowing you the opportunity to use copy trading tools or automated trading tools and manage the account from a remote desktop computer for uninterrupted usage.
2 - Does my trading platform offer advanced charting tools?
If you’re simply trading once every 6 months, perhaps a basic charting tool is all you need. But for those trading several times a week or even several times a day, advanced charting tools can become essential.
So, you should ask yourself the following questions if you do trade often:
- Can I add indicators such as Fibonacci Retracement, RSI or MACD to my GBP/USD trade?
- Can I use the profit and loss tool (Fig. 1) on my EUR/USD trade?
- - Can I use the measuring tool (Fig. 2) to work out how many pips there are in a candlestick?
- Can I check the Highs, Lows, Open and Close prices of an individual candlestick with ease?
- Can I drop down from the Daily charts to see the price movements of the 8 hour, 4 hour, 1 hour, 30 minutes, 5 minutes, 1 minute and even ticks (seconds) charts?
- If I’m a fundamental news trader, how quickly can I switch from a USD/CAD chart to GBP/JPY without any delays or interruptions and quick loading speed?
- Can I add text, boxes or pictures to my charts?
- Can I switch between candle charting, area/line charting or even lesser used graphs like Renko?
If the trading platform you choose has ticked most of the above, you’re off to a good start. If you’ve found that the charting software is quite limited, it’s perfectly fine to use too. It’s all dependent on your trading style and how the platform suits you.
3 - What type of orders can you place?
For beginners, market and limit pending orders are all you may need. But when you start investing time and money into a particular strategy, you may have found that using conditional orders could be the way to go.
The most common conditional order types are:
- OCO Orders
- Stop Order
- Trailing Stop Loss
What is an OCO Order?
Placing an OCO order involves placing two limit orders in opposite directions.
You’re going long and short at the same time. When the price reaches either one of your positions, the opposite position is closed and the one that was just hit gets triggered. This is useful for example when trading during highly volatile periods.
It’s just that much quicker than placing two limit orders.
Stop orders are another useful form of trading. Stop orders, different to limit orders are orders placed, only when the price has moved through a specific target price point you’ve set.
Trailing Stop Loss orders could be a way to increase profits. It can however decrease them as well. It’s therefore important to test a trailing stop loss before implementing it into your strategy.
A trailing stop loss happens when you’re in a trade and in profit. Once the price has reached your first target, you can set a trailing stop loss that only closes your position when the price suddenly reverses.
Otherwise, if the price continues upwards, your trailing stop loss is moved higher and thus your minimum profit increases.
Can I copy trade or use automated trading?
If you haven’t yet thought this far ahead, it might be something to look out for.
Having the option to copy trade is great for those short on time.
You can rely on others to trade on your behalf at the click of a button. If the platform offers this, it may be an advantage to you.
Automated trading is a more complex feature whereby the trading platform places the trades automatically on your behalf based on a set of rules (or coding) that you’ve given it. In MT4 and MT5 these are known as EAs (Expert Advisors).
You can write or have code written for you and install the EAs to allow for automated trading.
These mechanical trades are advantageous in that they eliminate the emotional decisions that human traders make.
It’s important to choose the right trading platform that suits your trading styles.
The better trading platforms will offer advanced charting tools which are useful for intraday traders.
Then there are those trading platforms that offer copy trading and automated trading tools, these are useful for those struggling to bring in profits on their own terms.
In order to ensure you’ve chosen the right trading platform, ask yourself what type of trader you are.
Once you’ve figured that out, open up a demo account with the trading platform of your choice and place some trades before opening up a live, funded account.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage .
The vast majority of retail client accounts lose money when spread betting and/or trading CFDs.
You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Marketing for CFDs and spread betting is not intended for US citizens as prohibited under US regulation.