Trading platforms have undergone a revolution over the past few years, and there are more choices on the market than ever before.
Day trading and investing was once an expensive and cost-prohibitive business due to trading commissions and account minimums. Thanks to the birth of commission-free trading brokerages, more investors than ever are able to trade stocks, options, currencies, and more.
Since there are so many trading platforms to choose from, understanding how they work and what features fit different trading styles is vital to choose an appropriate platform.
Key Features
All trading platforms utilize technology to enable traders and investors to open, close and handle transactions across a variety of financial securities. Some trading platforms focus on stocks and mutual funds, while others specialize in forex or cryptocurrency.
All of the best online stock brokers in the UK offer a strong combination of investor resources, including low fees, educational material, security pricing charts, and more.
Costs
In the modern economy, commission-free trading is the standard. Many of the top trading platforms enable users to trade stocks, ETFs, cryptocurrencies, CFDs, and indexes for free.
While trading commissions have largely disappeared or become negligible, trading platforms have shifted to other revenue models to generate income. Many brokerages charge maintenance fees that can be directly deducted from available balances, withdrawal fees, or increased commissions on less popular or higher volume securities.
Available Securities
Although the most popular trading platforms always provide trading access to stocks, options, and some currencies, there are many that specialize in one or two securities and provide much more robust charts and data analysis tools.
For example, a forex brokerage may offer many more currency pairs and charts than a one-size-fits-all brokerage. Traders who worry about transaction execution speed may opt for a specialized brokerage tied directly to an exchange, while newer investors may choose a platform with a simple and understandable user experience.
Resources
The primary purpose of a trading platform is to enable traders to buy, sell, and hold their investments. Due to the incredible surge in new investors who demand more and more from their brokerages, additional resources such as educational videos, investment guidance, and more are becoming standard across the board.
Since many new investors do not have formal finance training, they turn to their online brokerage to learn how different investment products operate and what types of trades they should make depending on how they perceive the market.
Charts
Most trading platforms provide data detailing how a security is currently trading and how the price has changed over time. Traders who need the most in-depth charts generally utilize Level 2 data which provides the orders and most up-to-date trading information for security.
Paper Trading
Paper trading is how many traders practice and test new trading strategies without investing real money. Many online trading platforms provide access to some form of paper trading that tracks prices in real-time while providing “fake” capital with which they can deploy to see what would happen to a given investment without risking their real trading money.
Choosing A Trading Platform
Although there are many different trading platforms on the market, choosing one to work with does not need to be overly complicated.
The first step to finding a trading platform is defining your trading goals, budget, and non-negotiable features.
If you know you prefer trading stocks and do not anticipate trading currencies, make a shortlist of the top stock trading platforms that are beginner-friendly and offer the lowest trading commissions and account minimums.
On the other hand, if you are searching for a robust forex trading platform, then you may elect to ignore most equity and options trading platforms in favor of a dedicated currency exchange.
Tying Everything Together
Modern trading platforms offer more tools and features than ever before, but you can be sure that the best brokerages offer competitive commissions and reliable data for research.
Whether you are a hobbyist or a full-time investor, understanding the different types of trading platforms and how they work will pay dividends.
