Forex trading platforms are considered to be the most vital components in the financial markets that offer unprecedented access to the different financial instruments that the world has to offer. Individual investors, day traders, hedge funds, multinational banks, and other global corporations make use of different FX trading platforms to hedge against the fluctuating currency markets. While interbank liquidity providers and money exchange houses are responsible for dealing currencies in the actual FX markets, it is a broker and their trading platform that bridges the gap between a spectator and an investor.
FX trading platforms primarily offer access to the wide basket of currency pairs, commodities, and precious metals. Although commodities and metals are not an integral part of the Forex market, modern Forex brokers offer these instruments as part of a standard product portfolio. As far as market access is concerned, trading platforms mainly offer two distinct types of protocols. The hugely popular market maker protocol is designed for smaller retail traders that are looking to trade with smaller micro and mini lots by using the maximum leverage available in the FX markets. These traders start off primarily with a small trading capital, where their market orders are pitted against orders from other smaller market participants at the broker level. Direct Market Access protocols, on the contrary, offer traders with access to interbank rates and the ability to send their orders to a larger liquidity pool, where all orders are filled at market prices. Direct market access platforms are aimed at wealthier traders that have a significant amount of capital to invest in the Forex market.
Forex platforms have a huge impact on Forex trading. These platforms act as the primary gateway for a trader to access the markets in a professional and streamlined manner. A trader’s success or failure in the FX markets is not a direct result of his trading performance, but it is defined by a combination of several factors that includes a robust trading strategy, good money management skills, and an innate ability to choose the best online Forex trading platform from a top Forex broker.
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The Introduction Of Online Forex Trading Platform Into Mainstream Financial Markets
Online Forex trading platforms weren’t all that common a few decades ago. In fact, until the later parts of the 20th century, most Forex transactions were physically carried out over the counter (as OTC products) through exchange houses and brokerage firms. The difficulty of transacting actual currency for speculation and hedging purposes paved the way for creating currency contracts and futures, but it still involved a middleman that made the process of buying and selling currencies quite cumbersome. But with the introduction of the Internet and the personal computer, brokers were able to create dedicated trading interfaces that allowed investors and traders to transact currency pairs through an online medium. The development of dedicated online Forex trading platforms can be considered as the definitive ground-breaking innovation that has led to the incredible rise in popularity of FX trading among both retail and institutional traders.
Today, Forex trading platforms are among the most widely adopted trading interfaces in the entire financial market. Forex trading has an incredible amount of exposure among retail traders with a reach and visibility that far outweighs any other financial product. Modern financial companies and software development agencies are aware of the significant popularity of FX trading products, which has enabled them to design intuitive and excellent trading platforms. With improvements in performance-oriented computing and development in coding programs, trading platforms now have the most advanced features and trading functionalities for all types of amateur and professional traders.
Traders can now perform the most comprehensive market analysis using advanced analytical tools and can now invest in the different markets across the world through a single trading platform installed on their PC or mobile device. The added convenience of being able to access the market from anywhere in the world is the most revolutionary idea that changed the face of financial markets for small-time traders.
What Are The Best Forex Platforms?
The Forex market has a wide range of functional and aesthetically advanced trading platforms that are designed and developed by various platform developers and large brokerage firms. The retail FX trading market is filled with several third-party trading software that are complemented by proprietary interfaces designed by mainstream brokers and platform designers. A majority of Forex brokers choose the third-party trading platform option that allows them to customize existing trading terminals through licensed APIs, which offers more control and reduced expenditure than proprietary trading platforms. Third-party platforms are also easy for traders while switching between brokers, as it will take less time to get familiar with the platform when compared to learning all the different aspects of a brand new trading interface.
The MetaTrader is the most popular third-party Forex trading platform that has received numerous awards and accolades from international organizations, brokers, traders, and market participants from different sectors of the Forex financial industry. The MetaTrader is available in two different versions, namely the MT4 and the MT5, of which the MT4 continues to dominate the retail trading market among both market maker and direct market access brokers. ECN brokers are also fond of the cTrader platform, which comes in a close second to the popular MT4 terminal. A few brokers also offer other third-party platforms such as the NinjaTrader, the JTrader, and the Trading Station, but as far as popularity and reach are concerned, the MT4 and the cTrader continues to lead the way.
Branded trading platforms that are designed and marketed by brokers do not enjoy the same amount of popularity as third-party programs, but they may be able to offer more in terms of features and functionalities. Mainstream brokers are renowned for spending extra resources on creating visually stunning trading interfaces, which are guaranteed to capture the imagination of their clients. Therefore, it is natural that you might find it more visually appealing for your trading senses to choose a proprietary trading platform over a third-party trading program.
How To Compare The Performance of Top Forex Trading Platforms
The performance and reliability of online Forex trading platforms depend on a broad range of factors. All trading interfaces are connected to trading servers that are either hosted by a broker or by a third-party liquidity provider. Some brokers also offer a Virtual Private Server (VPS) as a standard feature for their brokerage account, which increases the reliability of the trading terminal along with a noticeable decrease in latency and trading errors. Therefore, as a trader, you can compare the performance of different trading platforms by analyzing the following aspects of a trading terminal:
Accuracy Of Price & Live Market Feeds
The best online Forex trading platform should display accurate price feeds and live charts that represent the market dynamics precisely. You have the option of testing different platforms by cross-referencing the price movements, the chart patterns, and the spreads with numerous live feeds provided by online resources or from other leading mainstream FX brokers. Some unreliable and dishonest brokers may tamper with the trading platform to display corrupt data and to gain an advantage against unsuspecting traders, but these tactics are strictly frowned upon by regulatory organizations that may impose heavy sanctions and stringent penalties on such companies.
Speed Of Transactions
Speed and accuracy are two important aspects of trading that ensure consistent success in the Forex markets. A trader must be able to enter and exit the markets at the right time or face the risk of losing a huge amount of money due to the immense volatility. Of course, slippages are a part of direct market access trading, but traders should be able to open and close their positions as fast as possible without any platform-induced delays. If you are consistently worried about the relative lack of speed of transactions on your platform, it is time for you to test your platform speed with other leading platforms in the market. You may also consider the option of a VPS that can significantly reduce the time between your trades, and give you an opportunity to run EAs 24X5 without leaving your trading terminal switched on for an extended period.
Platform Bugs & Errors
Platform reliability used to be a huge concern during the early days of trading, especially due to the performance issues that frequented the trading servers and design related bugs. But with the introduction of regulatory guidelines and an increased amount of awareness among traders, the number of errors and reliability issues decreased dramatically, leading to a safer and more robust trading experience. However, there are chances for FX trading platforms to run into some issues, which are usually taken care of during routine updates and patches.
Visibility Of Trading & Account Information On The Platform
An online Forex trading platform should offer you all the information related to your trading account and all the other aspects of trading in a single and easy to use interface. You should be able to access all tools and features with a click of a button, which most of the platforms in the market manage to do so quite well. However, due to the availability of different platforms in the market, you may come across a few complex platforms that might not be user-friendly. In such cases, spend some time with the interface to find out whether there is an option to get comfortable with the platform by learning the pros and cons of the platform. If you are unable to trade with ease, it is always a good idea to move on to another platform that suits your trading requirements.
A Brief Introduction To Desktop & Mobile Forex Trading Platforms
Mobile devices such as smartphones and tablets have made life extremely convenient for the new generation of traders and investors. Mobile trading is a new concept that has gathered immense popularity, aided in part by the dedicated mobile trading platforms that are designed in tandem with its desktop counterparts. At present, almost all platform developers and leading FX brokers develop dedicated trading platforms for both desktop and mobile trading apps, which contain all the essential features to facilitate seamless trading. Mobile trading apps are now available for iOS, Android, Mac, Linux, and Windows operating systems, which are compatible with most desktop, mobile, and tablet operating systems.
The Best Online Forex Trading Platform For Automated Trading
Automated trading is the concept of letting an automated trading bot to take control of your trading capital by opening and managing trades according to a particular set of instructions. Automated trading programs are designed to remove the human psychological factor of trading, which enters and exits trades if a predetermined set of conditions are met. Automated trading is a popular trading strategy adopted by large banks and hedge funds, which are also gaining popularity among smaller retail traders.
Automated trading can be broadly classified into two different categories. The first type of automated trading is the process of employing bots for all trading purposes, which may or may not require human intervention. These bots are designed to work with a trading platform, which can trade the markets according to the conditions prescribed by the automated program. The popular MT4 terminal has a massive database of Expert Advisors (EAs), which can be installed and modified to trade on behalf of a trader. Different platforms have different automated trading programs, some of which require extensive programming knowledge, while others can be developed using built-in EA creator programs without any coding expertise.
The other type of automated trading is the concept of social trading or trading through PAMM accounts, which is basically an investment-oriented trading strategy that essentially follows the trading performance of other established traders in the market. Professional traders often sell their services by managing client accounts that will enable them to earn a fair share of the profits as a performance fee.
Automated trading accounts are either offered by a broker directly to its clients through the company’s proprietary automated trading channels, or through third-party service providers that may offer them through online platforms or trading software plugins. Signals service providers and FX account managers may also devise dedicated third-party EAs that are available as paid or free subscription options. The MQL4 and MQL5 forum from MetaQuotes offers a fantastic resource of both open-source and paid EA programs that are compatible with the MT4 and MT5 terminals, which can help you in your search for a good automated trading strategy.
To choose the best Forex platforms for automated trading, you must first realize your investment goals and adopt a trading strategy that is more suited to your risk appetite and trading personality. You may choose an automated trading bot, or assign your fund to a dedicated account manager. Regardless of your choice, numerous brokers offer the best combination of automated trading platforms that allow you to exercise your freedom as an investor to choose the automated trading style that is suited to your own preferences. It is vital to remember that you should choose a broker that conforms to your requirements, rather than tweaking your strategies to suit your broker’s policies.
How To Test A Forex Platform Using A Demo Account
Demo trading is the ultimate tool in a trader’s arsenal that allows him or her to sample the markets before risking their money. Demo trading is not only useful in finding a good trading strategy, but it is also an excellent way of learning more about a trading platform. Demo trading is usually the best idea when it comes to getting familiar with a new trading interface, especially when it comes to opening orders, changing trading conditions, setting take profits and stop losses, and managing trades from the terminal. However, demo trading platforms don’t usually give the complete picture about the real performance of a trading platform in live trading conditions, but it does give a few indicators about the overall reliability and efficiency of the platform. Never try to trade the markets with a new platform before trading on a demo account, as even a small error in clicking the wrong button can make you buy a currency pair instead of selling it, or close a trade instead of managing it. Miniscule errors in FX trading can lead to significant losses, which is why professional traders always recommend demo trading before investing in the markets.
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