There are a number of forex trading platforms available, both at no charge and for a fee, and sometimes traders may have a choice of more than one at a particular brokerage. What to look for in a forex trading platform can depend on the trader's interests and practices.
However, there are certain basic and advanced features that all traders will want to look for to make their experience as smooth and profitable as possible.
Variety Of Assets Available For Trading
Ideally, brokerages and their trading platforms should offer a wide array of assets for trading to allow traders to take advantage of a diversified portfolio and work with varying conditions across several markets. These should include major and minor currency pairs, and if possible other assets such as indices or key commodities like crude oil and gold.
Customisable User Interface And Seamless Trading
Trading platforms should also be easily customisable to fit the needs of individual traders. Platforms should come with adaptable layout options that allow traders to monitor and, if desirable, trade several currency pairs or other assets while also maintaining full awareness of their trading and account balances.
A self-explanatory and easy-to-use trading platform offers obvious advantages. It should be simple enough to use that it doesn't distract from your trading or lead you into undesirable errors that will cause losses. If a trading platform appears too complex to put into use without a lengthy period of study in advance, then it may be a good idea to seek one that is more user-friendly.
Market Order/Entry Order Capability
One important feature that traders will want to look for is whether a platform will easily allow for market orders or entry orders.
Sometimes, traders are ready and willing to trade at a price offered at a going market rate. In that case, they will want to place a simple market order.
There are other times when traders are interested in planning out their trades in advance. And in these cases, they will want to use entry order capabilities.
An entry order allows the trader to set up an order ahead of time. The order will be automatically placed when the market reaches the desired entry price. Some systems will even allow traders to authorise execution of trades at a later moment when their platforms or computers are turned off.
Charting capability is an essential feature that traders will want to have at their disposal.
Many forex traders rely on technical analysis methods that require the ability to visually examine the movements of prices on charts in order to project where they may be leading, and what the best entry, stop and limit prices may be.
Some trading platforms will further allow traders to graphically enhance their charts with drawings, labels and even superimposition of well-known trading indicators (such as Fibonacci and Gann signals) and trading channels. Another related feature is being able to place trades directly on the chart from within the trading platform.
In addition to charts, some trading platforms will come with preinstalled analytical tools that can help traders make a better choice of where and when they might choose to trade. These can include moving averages, trend and trend strength indicators, oscillators, volatility indicators, and indicators of volume and support and resistance.
Most platforms will be available for installation and use online with desktop computer systems. However, with the advent of tablet and smartphone technologies, traders may also want to verify whether a trading platform is available for these types of devices. That will allow them to trade more freely and away from the confines of a desk or office setting.
Another interesting feature for trading platforms is their ability to give alerts. Some platform applications will allow users to pre-program alerts for prices, market conditions or margin levels. These will send signals to traders when they may want to enter or exit trades, or replenish their trading accounts.
News And Research Features
An important capability when following global forex markets is to have access to real-time news and information research. Some platforms come equipped with news feeds that update automatically and provide the latest developments that may affect currency prices around the world.
Trading Simulation/Demo Capability
The ability to simulate a trade is an important feature for traders who want to test their strategies ahead of time without actually using any money. Some trading platforms come with demonstration capabilities, which allow traders to set up hypothetical trades in order to test their strategies and practice trades whenever they need to.
Certain platforms allow traders to employ pre-programmed trading strategies. Traders who have some knowledge of programming can use available tools to upload their programs. Other traders can upload and employ strategies that have been devised by developers and archived on line. Some platforms have a special strategy dashboard that allows traders to store strategies they would like to use for application at a later time when conditions are appropriate.
Some related features are being able perform backtesting and optimisation of trading strategies:
Backtesting occurs when applying a defined trading strategy to a variety of actual past market conditions to verify how well it will perform if similar conditions arise.
Optimisation allows traders to refine the trading strategy parameters they arrived at through backtesting in order to increase the chances of developing a successful strategy.
In order for traders to successfully test and employ strategies, it's important that they have access to a trading platform that has ample archives of historical data. Traders may want to test strategies over periods of weeks, months or years prior to the present and over a variety of currency pairs.
One of the advantages of trading forex online is the ability to use automated trading. It allows traders to set up triggers that will automatically execute trades based on given prices and market conditions.
With automated trading, traders can maintain a presence in the market even at times they aren't available to personally monitor market movements. It also allows traders to remove some of the emotion out of trading and avoid errors in judgment by trading purely on technical factors.
Even with many available features and an easy-to-use trading platform, traders will want to make sure their broker offers accessible and thorough customer support. This is especially useful in case there are any doubts about the platform, or if any unforeseen technical glitches arise.
There are an increasing number of sophisticated trading platforms offering numerous features and diverse markets. Brokerages often allow traders to give their trading platforms a "test drive" before putting them to use on live accounts.
However, before giving priority to availability of sophisticated trading tools, traders will want to remember to account for for ease of use, seamless manoeuvring between assets and accounts, and readily accessible customer support. These factors will help assure that the platform will serve in favour of successful trading and not as an impediment.
Any opinions, news, research, analyses, prices, other information, or links to third-party sites are provided as general market commentary and do not constitute investment advice. FXCM will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
Senior Market Specialist
Russell Shor (MSTA, CFTe, MFTA) is a Senior Market Specialist at FXCM. He joined the firm in October 2017 and has an Honours Degree in Economics from the University of South Africa and holds the coveted Certified Financial Technician and Master of Financial Technical Analysis qualifications from the International Federation…