Trading Platform Definition

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Trading Platform Definition

What Is a Trading Platform?

A trading platform is a software system that allows people to trade securities. It enables investors to establish, liquidate, and maintain market positions online by using a financial intermediary, such as an online broker.

Brokers typically provide online trading platforms for free or at a discount in return for keeping a funded account and/or performing a certain number of transactions per month. The finest trading platforms combine powerful functionality with affordable costs.

Key Takeaways

  • Trading platforms are software tools that allow traders to execute and manage market orders.
  • For new investors, trading systems may provide an easy-to-use interface with simple order input screens.
  • They may also provide more complex capabilities including real-time streaming quotations, advanced charting tools, live news feeds, instructional materials, and access to proprietary research.
  • When evaluating trading platforms, traders and investors should evaluate costs and benefits.
  • Interactive Brokers is widely regarded as a trading platform/online broker for experienced traders.

Understanding Trading Platforms

A trading platform is a software system provided by financial organizations such as brokerages and banks to investors and traders. Trading platforms, in essence, allow investors and traders to make deals and manage their accounts.

Other tools that assist investors make investing choices are often included in trading systems. Real-time quotations, interactive charts, a variety of graphing tools, streaming news feeds, and premium research are examples of these services. Platforms may also be customized for individual markets, such as equities, currencies, options, or futures.

Commercial platforms and proprietary platforms are the two kinds of trading platforms. Day traders and regular investors use commercial platforms. They are distinguished by their simplicity of use and a plethora of useful features, such as real-time quotations, worldwide news feeds, live, interactive infographics, instructional information, and research tools.

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Proprietary platforms, on the other hand, are customized platforms designed by big brokerages and other financial institutions for their own trading activity. These are not accessible to the general population.

Charles Schwab will formally buy TD Ameritrade for around $22 billion in 2020. The transaction resulted in over $6 trillion in customer assets and over 28 million brokerage accounts.

Special Considerations

Features

Traders and investors should assess if the features supplied satisfy their trading demands when selecting a trading platform. To help them time their orders, day traders and other short-term traders may need capabilities such as Level 2 quotes and access to market depth information such as price levels, order size, and volume.

They can need technical analysis tools like live charts with a variety of technical indicators. Options traders may need tools built expressly to assist them in researching, analyzing, and testing their trading methods.

Fees

Fees are another factor to consider when selecting a trading platform. Traders that use scalping as a trading method, for example, will flock toward platforms with cheap costs. Lower fees are usually desirable in general, but there may be trade-offs to consider. Low costs, for example, may not be desirable if they imply fewer or less powerful features.

Provider

Some trading platforms are not linked to any particular middleman or broker. Other trading platforms, on the other hand, are only accessible if you engage with a certain middleman or broker. As a consequence, before committing to a certain trading platform to execute transactions and manage their accounts, investors should carefully assess the reputation of the middleman or broker. Make certain that a supplier stands firmly behind whatever a platform provides.

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Requirements

Finally, special criteria may apply to trading platforms before you may establish an account and/or trade. Day trading platforms, for example, may require traders to have at least $25,000 in equity in their accounts and be authorized for leverage trading. Before traders may utilize options platforms, they may need to be authorized to trade certain kinds of options.

Popular Trading Platforms

There are hundreds, if not thousands, of various trading platforms available, including the four most popular:

  • Interactive Brokers: With cheap costs and access to markets all around the globe, Interactive Brokers is the most popular trading platform for professionals.
  • TradeStation: TradeStation is a popular trading platform for algorithmic traders who want to execute trading strategies using EasyLanguage scripts.
  • TD Ameritrade: Since its purchase of thinkorswim, TD Ameritrade has been a popular broker for both traders and investors.
  • Robinhood is a commission-free trading platform aimed towards millennials. It began as a mobile app and has now evolved into a web interface. The platform generates revenue from a variety of sources, including interest on funds in its accounts and selling order flow to big brokerages.

MetaTrader, a trading platform that connects with many different brokers, is the most preferred platform for many foreign exchange (forex) market players. Its MQL programming language has become a popular tool for currency traders wishing to automate their trading.

What’s a Trading Platform?

A trading platform is essentially a software system that is often provided by a brokerage or other financial institution that allows you to trade online on your own. A trading platform provides investors with an online interface to access multiple markets, conduct trades, monitor positions, and manage their accounts.

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Trading platforms may also include a variety of other services. Real-time quotations, live business and financial news feeds, rapid access to a variety of streaming and historical financial data, technical analysis tools, investment research, and educational materials are just a few examples.

Is There a Good Trading Platform for Beginning Traders?

E*Trade and TD Ameritrade are two options for novices to consider. Before initiating trades, beginner traders may use TD Ameritrade’s outstanding instructional tools to better understand the markets and get more comfortable with trading. The user-friendly design of E*Trade helps alleviate the inconveniences that a novice may have while navigating a trading platform.

What Is a Day Trader?

A day trader is someone who makes many deals in one day and seldom (if ever) holds a position overnight. To earn money, day traders strive to take advantage of intraday price changes and market inefficiencies. They often use technical analysis to assist them time market entry and exits. Day trading demands concentration, effort, and discipline.

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