How to Choose the Best Trading Platform

Previous to the advent of electronic trading platforms, trade orders had to be called in by phone and the fulfilment of the trade orders were left in the hands of the broker. The cost of placing a trade was much higher and the barriers of entry for traders was much higher and a bigger capital investment was required to get direct lines to brokerage desks that could guarantee fast executions for trade orders.

The market architecture at this period of history can be summed up in this chart provided by the Bank of International Settlements:
voice_trading
FX market architecture prior to the advent of trading platforms. © Bank of International Settlement (BIS)

Then came the electronic trading platforms, which were made possible by the innovations in information technology at the turn of the new millennium. The introduction of online trading platforms changed the landscape of forex trading. Out went the interaction with the “voice brokers” and in came trading with electronic brokerage systems.
e-Trading
FX market architecture after the introduction of electronic trading platforms. © Bank of International Settlement (BIS)

Trading platforms deepened the market, widened the market architecture and increased the volume of trades that could be conducted in a day dramatically. Electronic trading platforms also improved the efficiency and transparency of the forex market. They also reduced trading costs and lowered the startup capital requirements for traders and made it much easier for retail traders to enter the market.

In order to get access to the world of online forex trading today, all a trader needs is a computer, a good internet connection and to choose an online broker to trade with.

There are many trading platforms, with many brokers offering their own proprietary platform like LCG WebTrader, Plus500 WebTrader and eToro WebTrader alongside the industry standard MT4 Trading platform. So how does the trader choose the best trading platform?

What is a Trading Platform?

A trading platform is a piece of software that acts as a conduit of data between the trader and the broker.

For the trader, the trading platform provides:
Access to price quotes of currency pairs. A trader should be able to get price quotes for currencies in a manner that is visually discernible.
Chart information: Traders should be able to have access to charts (line, bar, candlestick), which can support the placement of tools and other add-on software for technical analysis.
Tools for technical analysis. It is standard now for trading platforms to have access to technical indicators of various kinds for effective technical analysis.
Placement of orders. Platforms offer several ways to place an order including instant and pending trade orders.
Tabs which provide access to news and for some platform users, access to a market for indicators, expert advisers and scripts.

Trading platforms have undergone several innovative changes in the last 10 years. They now come in several formats:
Downloadable clients which can run on various operating systems including Windows and Macs.
Web-based versions (webtrader) which run on JAVA
Mobile trading apps, which work on Android and iOs devices.

Most retail trading platforms are offered to traders at no cost. However, more advanced platforms are available to institutional traders at a cost (IBIS from Interactive Brokers is an example) that contain advanced trading tools.

Choosing the Best Trading Platform

One question many new traders have is this: is there any such thing as the “best” trading platform? What constitutes the best platform for one person may not necessarily be the best for another trader. So it is better to find the trading platform that is best for you at an individual level.

Here are some questions that traders have as they got about to search for what will constitute the best trading platform for them. These questions usually border on cost of usage, features, functionality as well as visual appeal.

Availability

Is the platform available in your country?
Are the markets you want to trade offered on the platform?

Cost of Usage

Is the trading platform free to use or does it cost some money to use?
Are there two versions of the software (free and paid)?
What are the extras that the paid software has over the free one?

Features

Does the trading platform present charts?
Are the charts customisable?
What are the available technical indicators?
Is it possible to customise the chart offering?
Is there a demo account?

Function

What versions of the trading platform are available (desktop, web-based or mobile)?
Does the desktop version work with a Mac or are all the software Windows-based?
Is it possible to trade from the charts?
Is one-click trading available?
How are the order types presented?
Is it possible to use expert advisors?
Is there a strategy tester?
How easy is it to navigate around the trading platform?

User friendly

Is the GUI (graphical user interface) visually appealing?
Does the GUI provide a conducive atmosphere for scanning several sections of the interface without eye fatigue?
Is the platform easy to understand?

Extras

Are there extras such as access to a marketplace?
Are platform updates automatic or do they have to be done manually?
How stable is the platform generally? Can it stay function hitch-free for hours or does it occasionally “freeze” and require restarts?
How much of a pull on the computer’s resources does the platform have?
How secure is the platform against cyber threats?

Summary

These are some of the questions that go through the mind of traders when trying to choose the best trading platform. The best trading platform will therefore be the platform that answers most, if not all the questions that have been listed above.
You may need to compare several platforms before arriving at a final choice. You may also need to change platforms once in awhile as newer versions of different categories of trading platforms become available or your trading requirements develop and change over time.

Disclaimer: Some of the links in this article may use affiliate links, meaning that we receive a commission if you setup an account with a broker after visiting them through our link. These commissions help to cover the costs of running this website, and do not add any extra cost to you (in some cases, it provides you with better rates), as our commission is covered by the broker.