Forex Trading Platforms
Forex trading platforms help retail investors access the forex (FX) markets. From advanced platforms, to those for beginners, the best online platforms are generally free and well designed. So how can you find the best one for you? Whether you want clean and simple, or AI, robots and MT4 integration, the top choice will depend on your needs. We explain what to consider, and list a broad top 3 options as a starting point.
Top 3 Forex Trading Platforms
The software used to create, support or add functionality to trading platforms comes in many forms. So software to create a predictor or an algorithm, might differ from a program to add tools to charting screens for example.
Platforms develop all sorts of functions, but some allow user developed AI or tools to be added. Other users can then download those add-ons for free – without support of course. But this added configurability is very attractive for certain traders.
The majority of ‘off the shelf’ software falls into two camps. It is either software for creating signals, or a program to automate a trading strategy – often referred to as a robot, or ‘bot’.
Signal platforms, as the name suggests, are set up to alert the user when certain market conditions are met.
Within this type of software, there are options that allow you to dictate when you get signals and how they are sent. Speed is crucial with signals, so you need to be receive information immediately.
The major advantage to using this type of software is that you don’t have to sit in front of a market ticker watching currency fluctuations day and night or keep yourself plugged into world politics, because you’ll be alerted to price targets as they are reached. Systems can also be configured to recognise certain patterns.
This is a double-edged sword, though, because it still relies on your judgement to make the correct decision once the signal has been sent.
Signals can add some discipline to trading though, as in theory, trades will only be placed when certain conditions are met – reducing any trades made on impulse.
Automated Trading software takes signals to the next logical step. Not only will trading opportunities be identified (based on your configuration) but the trades will also be automatically placed as per your commands.
While this might sound easier than a signal platform, if you’re going to do it properly, it requires a huge amount of homework and fine-tuning before you’re ready to set the algorithm free in the markets for it to start making you money.
Put simply, the automated systems – called robots or bots – will trade your money using a pre-determined set of entry and exit criteria that you decide in advance.
There are often apps that you can download to check the progress of your bots on the move, but fundamentally it is up to them to make the right trades.
In comparison to Signal platforms, there is really no limit to the amount of trading that you can do using Automated platforms because bots can make any number of trades faster than any human – and they can make them 24/7 whenever the markets are open around the world.
This means there is far more potential to make money, but you have to be sure of your strategy because you can lose money just as quickly.
The robot will follow the trading rules until the trading balance runs out, and that can all happen vey quickly if things start going wrong. Automated forex trading platforms are a domain for the experienced trader.
Beginners – What Do You Need From A Platform?
The style of platform that you choose is really down to personal preference, how much you’d like to spend and what you plan to do.
You can get very far using the most simple, bare-bones platform to make your trades, but if you want to get into exotic markets or employ very complex strategies, there are all sorts of widgets and options to help you out or just to make trading easier and more convenient for you.
For beginners, the human element is most important, so one of the most useful things that a platform can offer is some manner of training or tutorial system that can help you out with the basics.
Regular email updates about the latest trends, tips and tricks and helpful advice can also be useful. Similarly, good customer service can help you get out to the best start, so if they have 24-hour lines or chat with a human available online with a good turnaround time, that’s also a great benefit.
The other two attributes you’ll need to watch out for as a beginner are commission and security.
Which of these you focus on will depend on what’s best for you, but it can pay to start out with a focus on security and worry more about commission once you’re up and running.
The best brokers will tell you in great detail what their security and regulatory requirements are, and the top brokers will be regulated by multiple bodies around the world, so for the easiest trading experience, it can often be best to go with these heavy hitters who have the most comprehensive knowledge behind them as well as hefty IT budgets to keep your money safe.
Low-frequency traders who are just starting out may not even notice the commission their broker charges, but as you become more advanced and begin to use automated trading facilities, those high-frequency trades can really start to mount the fees you pay per trade.
When that starts to happen, it can pay to shop around to make sure the platform that you’re using is really giving you the best deal.
If this is all sounding like too much already and you’re feeling daunted, one option that many people like to use at first is a demo account.
Many platforms will allow you to run a simulation account on the real Forex market using imaginary money to see how you would have performed had you made the decisions that you did.
This can be good for new traders looking to test the waters and ease their nerves, and it can also be good for more experienced traders looking to test strategy and new ideas in a risk-free environment, but it’s the best sort of training that you can get.
If a platform offers this function, it’s highly recommended that you consider giving it a go, and it should be counted as a real advantage.
Best Demo Forex Trading Platforms
Types Of Platform
Regardless of the platform that you use, the chances are that it will be based on one of two software packages: Metatrader 4 or Metatrader 5 (known as MT4 and MT5). While other software exists, these are by far the most popular with brokers around the world. So what’s the difference, and which should I use?
Metatrader 4 (MT4) is the older of the two platforms, and it set many of the standards we’ve come to expect today in terms of what an online analysis system can provide.
It is famous for its in-depth analytics, which go way beyond the usual graphs and charting you’d expect to show you how your trades are doing, and all in all, you can bring 31 different graphical studies to your results, including Fibonacci studies and Elliot wave drawing tools.
It was also one of the first to deliver these impressive analytics to mobile, so you can access just about all of these powerful tools on your phone just as easily as you can on desktop.
Read more in-depth analysis of MetaTrader 4 here.
It’s five years younger and sounds like an upgrade, but in fact, MT5 isn’t considered to be the better version of MT4: It really depends on what you want it for.
MT5 is geared more towards the US market and automatically complies with more US regulations than MT4 does.
While it’s true that it has more bells and whistles, like 44 graphical studies instead of 31, it’s really set up to deal better with high frequency automated trading. If that’s what you’re looking to do, then MT5 is for you, but if you’re not then you may find most of these additional features unnecessary and bulky.
The base operating software on MT4 is not thought to run any slower than MT5, so think of it more as a slimline version of the same thing with more of what you need, and less of what you don’t.
A third option for forex trading platforms, is to go down the bespoke route, and many brokers will offer their own white-label platforms alongside the usual MT4 and MT5 solutions, so these are always worth looking at too.
The great benefit of these platforms is that they’re usually designed specifically around a certain kind of market, strategy or currency pair – so if you’re really sure that you’ve got a plan in mind, a platform designed around that plan is a no-brainer.
You’ll find it’s way easier to make the trades you want this way, and they have lots of easy to use configuration options too, but at the same time, it can be less versatile in other areas.
These days, most forex trading platforms have variants that are able to run on both PC or Mac devices, but there are fewer that are actually designed to run natively on the Mac without some kind of emulator.
While this is mostly a workable compromise, you may find that some platforms not designed specifically with Macs in mind may cause you problems such as features bugging or not working at all – which can be a big problem if you’re counting on these features as part of your trading strategy.
By far the best solution is to choose a platform designed to run on the Mac OS natively, which may cut down your options a bit when it comes to specific products you can use, but it will give you all the power of a top-class Forex trading platform without the worry that it might let you down.
You should also think about the links these platforms have with external brokers, as it’s no good choosing a platform that works really well with your Mac but that nobody will use.
The best platform is one that strikes a good balance between these two considerations.
Security is a big feature that we’ve already mentioned, but let’s go into more detail.
As with any security feature, the big trade-off is usually between safety and ease of use, and you’ll find platforms that promise to specialise in one or the other – and sometimes both!
Regulation by a legitimate body is still the most important thing you should consider because it’s more important than any externally facing feature there is.
It will guarantee that your platform or a respected broker sticks to the rules in their market and won’t run off with your money or blow it on some risky venture, and it’s the most basic security feature there is – so for peace of mind it’s always best to go with one that is licensed and regulated.
Other features on top of that vary by broker and platform and can include such things as two-factor authentication, face scanning, fingerprint scanning, text and mobile security alerts and the ability to lock and release your account remotely.
Some of these you’ll think are really useful, and some you’ll just find annoying, so the level of security is really something only you can decide.
As before, high-speed traders in a trusted platform will probably feel like letting their guard down a bit for ease of use, while smaller-scale traders might prefer to set their security as high as they can.