If you want to open, close, or manage trades, you’ll need to use a trading platform. As technology develops, trading tools are becoming increasingly powerful. Often, the decision of which platform to use can feel overwhelming. That’s a totally normal feeling — it’s a crowded space, and there are so many trading platforms out there that it’s impossible to try them all. To make matters even more complicated, some of these platforms are developed by online brokerages, while others are developed entirely by third-party companies.
Before you commit to whichever platform you’re going to use, you should make sure you’re clear on the answers to a few key questions:
1. What are you going to be using it for?
Trading can be scary and intimidating. It requires you to process large quantities of information within a very short space of time.
If you’re just starting out, it’s probably best to focus on features that will help you learn, such as educational resources, staff that are friendly and will respond to you quickly, and the option to practice a few trades before you fully dive in with your own money. You’ll also want to choose a platform with a very low account minimum balance.
If you’ve been trading for a while, you might want something that gives you access to insider tips from experts and advanced charting capabilities. Some platforms offer interviews with seasoned traders that can be extremely insightful and provide useful information.
2. What are the fees?
This is a balancing act. Lower fees might look appealing at first, but it will often mean that you will get access to fewer features.
But if you’re going to be scalping — a method in which traders profit off small price changes for a large volume of stock — you’re going to want to look for a platform with very low fees, because this will end up having a huge impact on your margins.
3. Does it have a good reputation?
There are so many reviews all over the web that it can be difficult to tell which ones are genuine and which ones are only there because companies have forked out a ton of money for people to write them. One of the best ways to choose a platform — or, well, anything — is to take a look at reviews by other real people who have used it.
Objective reviews written by other users on platforms such as Investimonials — think TripAdvisor, but for trading platforms, brokers and other financial products — can give you a good idea of the benefits and drawbacks of each platform. This can save lots of time, as platforms with lots of low ratings can be quickly discarded. Meanwhile, you can probably trust that platforms with lots of high ratings from multiple users are worth looking into.
4. Does it have a demo?
Once you’ve read some reviews and decided on a few potential platforms, it’s time to check out their demos. Any professional trading platform that you’re considering should have a demo that you can use to try it out. If you’re a complete beginner, you might also want to look for a platform that will allow you to make a few practice trades before you delve in with your own money. Once you’ve spent some time using it, you should have a good idea of whether or not it will meet your needs, and whether or not you enjoy using it.
5. How secure is the platform?
Without a doubt, this is one of the most important things to consider when you’re deciding on which trading platform to use.
Before signing up to a platform and handing over your sensitive data, make sure to check what type of data encryption it uses. A good trading platform will have both an application and server firewall, and it will have multiple synced servers to make sure any lost data is recoverable. You should also check for licenses by reputable regulators. Plus500 for example, is a CFD trading platform that is regulated by the FCA. Knowing this in advance, will give you the safety of mind about who you’re dealing with.
6. How reliable is it?
If you’re a seasoned trader who enjoys keeping up with global economic news and makes significant, frequent trades, you’ll want to make sure you’re using a stable platform that rarely crashes. If you’re just trading as a hobby, it probably won’t matter all that much.
7. What is the execution speed?
Prices can change quickly. If you’re trading on the foreign exchange markets, currency prices can change even more quickly within a split second. If you’re trading large amounts of money, this could cause big problems.
Investing will never be without risk, but answering these questions and making sure you’ve got a solid idea of what you’re looking for before you dive in will reduce your chances of losing money. Once you’ve taken a look at a few different trading platforms and weighed them up against this list, you should have a better idea of what will suit you.