When you start trading, or learning about trading, when you browse for a broker, and in many other cases, you will find mentioned Trading Platform or Trading Software. What is exactly a Forex Trading Platform? What is a Forex Trading Software? Are they the same? In this article we will explain what a Trading Platform and a Trading Software are.
What is a Forex Trading Platform?
A Trading Platform is a software that allows the trader to perform analysis on the market and manage their trades. Basically a Trading Platform assists the trader in reading the market and acts as intermediary between the trader and the broker. When we talk about Forex Trading Platforms we mean Trading Platforms that are dedicated to Foreign Exchange, which is, trade currencies. These days however most Trading Platforms allow you to trade many instruments, including stocks, currencies, indexes, commodities and so on.
What is a Forex Trading Software?
Usually the terms Forex Trading Platform and Forex Trading Software are used as synonyms, and this is not wrong. We said that a Trading Platfomr is a Software so we can accept the two terms to be exchanged between them in a normal conversation. If we want to be extermely precise though we should make a distinction between the two. I like to define the Forex Trading Platform as that complex system managed by the broker to allow the trades. A Forex Trading Software instead is the software used by the trader to execute the trades and usually it has to be installed on a computer or a mobile device. As we will see in the next paragraphs in some cases the trader doesn’t need to install anything, so he/she is not using a trading software.
What can you do with a Trading Platform?
A Trading Platform is usually a complete suite for the trader, including full features for market analysis and trade management. We can see some of the major features are:
- Charts and Indicators, to see the trend of the prices and perform technical analysis
- News feed, to follow local and worldwide news which could affect exchange rates and prices
- Trade Management, to submit, edit and close orders
- Historical Trades, to view the past orders
- Automated Trading, to run automated strategies and make your trading automatic
- Backtesting, to test your automated strategies on historical data before run it on Demo or Real Account
- Market Place, to buy proprietary or third party software to improve your analysis and trading
- Funds Management, to check your balance, deposit and withdraw funds
The above feature can change depending on the Trading Platform and the Broker so when you choose yours the recommendation is to understand what features you really need and ALWAYS test what is in offer.
What is the relationship between the Trading Platform and the Broker?
It is important to understand that not always a trading software is related to a broker. We can identify two main situations:
- Broker with proprietary trading platform, in this case the broker develops its own trading platform making it available to the traders. This allows the broker to manage all the aspects of the platform.
- Broker using third party trading platform, in which case the broker decides to use someone else’s platform. In this case usually the broker can perform some customization of the trading software but the core of the software is developed by some other company not linked to the broker.
The difference between the two situations should be quite clear, it would be hard to say which one is the best, it really depends on the trader and the features required.
Some Examples of Trading Platforms
It is beyond the goal of this article to compare the different Forex trading platforms but it is useful to know the name of some of the most popular. Excluding the proprietary platforms developed by the brokers we can mention:
Most trading platforms, proprietary and third party, include clients for Windows, Mac and Mobile Devices.
Management of the Funds
We mentioned before that one of the features included in a trading platform is the management of your funds. It is actually nothing surprising. All major brokers allow you to open a Demo Account to test the offer and features, but if you want to trade real money you will need to be able to deposit funds and withdraw your gains. Without going too much into details I wanted to introduce some of the most popular methods to deposit and withdraw money:
Although the above are the most popular you may find other methods offered by the Broker you are going to choose, especially locally for the country you are based in. Remember when you choose a broker to always check the conditions of deposit and withdraw, read them carefully and if anything is not clear contact the customer service of the broker.
Social Trading Platform
I believe it is worth to spend a word on Social Trading Platforms as they have become quite popular and it could be a good way to start trading if you never traded before. Social Trading is a phenomenon that has become very popular in the last few years. If we deconstruct it Social Trading can be seen as Social – Society and Trading – well, trading, basically social trading is a type of trading where you can follow what other traders are doing. You can “follow” other traders, which is see when the open and close orders and for what instruments. You can also “copy” traders so that all the trades executed by a trader are copied to your account, basically someone else is trading for you. We will go into more details in future articles but be aware of the existance of Social Trading, the most popular are eToro, ZuluTrade and Ayondo.
At this point you should have a clear idea of what a Forex Trading Platform is and what are its functionalities, if you have any doubt or question please do not hesitate to comment below or contact us. One of the most popular platforms is MetaTrader 4 and we work a lot with it in our Trading Automation, you can see more details or event test it out.
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