Choosing the right trading platform is like finding the right life partner. The perfect decision will bring you a prosperous future.
Whether a novice trader or a seasoned veteran, you want to trade using an easy-to-navigate platform.
The platform must have all the trading tools necessary to help you make informed trading decisions.
Trading platforms come in all shapes and sizes. Some are downloadable platforms you need to install on your laptop.
While others are browser-based platforms on which you can trade and research financial statistics anywhere you can access the internet.
Some platforms are very sophisticated and cumbersome, while others are straightforward to navigate.
When choosing the right trading platform, you also find the type of broker you want to use and the suitable trading instruments.
You must decide if you want to trade stocks, bonds, forex, commodities, or futures contracts.
Also, decide that you want to trade financial products such as contracts for differences that allow you to invest in the price of all the above.
Here are a few steps you might consider before choosing a trading platform.
What is a Trading Platform?
Before going deep into the article, first, we will study the basics. A trading platform is a piece of software program either in the form of a mobile app, web interface (or) a standalone application to install on your PC or Laptop.
By installing this software system, any individual can start trading online. The investors and businesses require funds for their business and so they open, close, and manage their market positions through these platforms.
Usually, online trading platforms are offered by brokers. People who are interested in trading have to create an account on these portals for a small fee or a subscription.
There are various types of trading methods are available. In this article, we will study some effective tips in choosing the right trading platform to start investing in.
Many people find it difficult to find a reliable trading platform to invest their money. This article may help those people to come up with finding the best online resource.
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Where Do You Start?
After you have determined the types of products you want to trade, start researching the available brokers and platforms out there.
Whether you are trading equities, CFDs, futures, or bonds, you want to ensure that the broker you choose is regulated.
A regulated broker must be willing to submit documents and experience regular audits to the oversight board that regulates the industry within the country or union.
Most regulated brokers must adhere to specific criteria to remain regulated and can be flagged by the oversight committee if they experience any misconduct.
Most countries take the regulation of traded products very seriously. Any brokers who have had issues will likely be listed with a note next to their failure.
On the other hand, unregulated brokers do not have to submit to a regular audit. They do not have to follow the rules laid out by the regulatory authorities.
These kinds of brokers run trading businesses on their own rules that seem to fit into their comfort.
1. Evaluate Before Choosing the Right Trading Platform
After you have done your due diligence, you should test some of the platforms of brokers that you believe are trustworthy.
Most brokers will allow you to open an account and see all the offerings before you begin trading.
You want to ensure that the deposit and withdrawal process is easy to understand. There will be a time when you want to withdraw your money for whatever reason.
While most brokers allow for simple, straightforward withdrawals, some will have specific rules about when you can take your money and how long it will take.
In most cases, you will be able to withdraw capital that is listed as cash immediately.
If you have your money invested in a financial product, you will need to sell it first, wait until it settles, and then withdraw your capital from your account.
You might be suspicious of a broker with a reputation for holding on to your money.
If there are complaints online about a broker not releasing capital on time, that should raise a red flag.
2. Use a Demo Account Before Starting
If you trust that the deposit and withdrawal process works smoothly, you can try to use a demonstration account to see if the platform is easy to use.
A demonstration account is an account that allows you to use your broker’s platform and trade in real-time using demonstration capital.
You will not make or lose money while using your demonstration account.
The demo account will allow you to determine if the platform is easy to navigate. You can also test your trading strategies to determine if they work in real-time.
Before you start trading using a demonstration account, your broker will provide you with a specific amount of demonstration capital.
Demonstration accounts are often offered by a wide range of trading platforms like forex, stock, and CFD brokers.
The strategies you choose and your risk management tactics can work in real time with a demonstration account.
After you have tested the strategy to see if you like the general layout of the platform, you might then consider trading using real capital.
3. Look at the Knowledge Section
If you have not yet come up with a trading strategy, you might consider looking to see if the trading platform you are choosing has a knowledge section.
Some of the topics might help you determine what is forex trading, or how I can trade using moving averages.
Choose the right trading platform that has extensive educational sections where you can take advantage of specific tactics when you trade capital markets.
The academic section can work hand in hand with a demonstration account or your real-trading account.
Trading is a never-ending educational process. You have to keep learning the latest techniques to win the trading game.
At first, you might only use macroeconomic information to trade the markets. Over time you might consider learning about technical analysis.
Technical analysis is the study of past price movements to gain insight into future price movements.
Several technical analysis strategies include trends, momentum, and mean reverting methods. It’s also constructive if your broker has educational materials they can offer on their trading platform.
For example, suppose your broker describes how to evaluate a trend using a moving average crossover strategy.
In that case, you want to make sure they have moving averages on the charts they provide on their platform.
4. Analyze the Fees Structure
Above all the factors when it comes to choosing the right trading platform, you must know the fees and charges. Because the online trading business survives from the fees and charges paid by the traders.
By doing a thorough research and reading other people’s reviews, you can find the charges and fees. Most online trading websites have separate pages where they mention their charges.
It’s okay to pay some extra fees for utilizing some specialized trading tools. However, you must start out with a clear plan on how much you are going to pay to use any particular brokerage.
In general, every trader has to compensate a small part of their profits by paying brokerage fees. It includes accounting fees, transaction charges, website portal maintenance, etc.
Also, keep in mind to check for minimum investment requirements. Not all trading platforms allow their users to start from $1.
Therefore, you must deposit a minimum amount of cash just to create a trading account.
A few online trading brokers charge a monthly maintenance fee additionally. Therefore, it is important for every trader to know where they pay additional money for trading.
5. Don’t Try Copying Other Trader’s Techniques
Many newbie traders are making big mistakes when it comes to choosing the right trading platform.
That is, they simply join because other traders from their network were using it or have suggested the trading company.
If you are the one, it’s time to rethink why did you pick this platform? Because every trader’s intent is different and they use various mediums of trade securities.
Some traders trade on mutual funds, commodities, fixed-income securities, and stocks. Therefore you must understand what best you can do and stop copying other traders.
In the further section of this article, you will learn four effective tips for choosing the right online trading platforms.
This guide helps you avoid common pitfalls, lessen the risks and help you generate some decent profit from trades.
The Bottom Line
In summary, before you start trading on a platform, you want to ensure that you perform some due diligence on a broker.
Make sure there are no red flags. It’s also beneficial if your broker is regulated. If a worst-case scenario occurred, at least you would have a regulatory body that could intervene on your behalf.
After you have found a few reputable brokers, you should test-drive the platform before you start to trade real capital.
Many brokers will offer a demo account, allowing you to test how easy it is to navigate the platform and if your strategies work in real time.
Once you have decided to trust a platform, check out their educational section to see if you can learn about some of the tools they offer.
You then want to see if the deposit and withdrawal process works smoothly. Taking these steps will likely help you choosing the right trading platform.