How to choose a forex trading platform
It can be intimidating to choose a forex trading platform when you first start trading – here are some features that any good forex trading platform should have:
Does the forex broker offer information about the security measures of its platform? Your trading and personal data should be encrypted, so that your money and identity are secure, whether you are paying and being paid through PayPal or online bank transfers.
The forex broker should also offer advice on how to increase your online security – I’d be very suspicious of one that didn’t because they might be making themselves liable if there are any problems.
Also, are there backup systems where your information can be stored in case of an IT problem?
When can you use the forex trading platform? As forex is a 24-hour a day market, 5.5 days a week, look for something that you can use constantly. Even when the market is closed, you want to be able to place orders to open when the market does.
The trading platform should also be efficient – if it is slow then the prices at which you are trading might be out of date. A good forex trading platform should update several times a second.
If a forex trading platform is unreliable, slow or prone to interruption, a trader can miss a quick opportunity. A platform that offers one-click trading will allow you to buy or sell forex contract with one click, which means there’s no need to deal a ticket, and you won’t miss the price you want.
Trading style suitability
Does the trading platform suit your trading style?
Is it easy to understand, or can it only be interpreted by a Wall St retiree? Look for a platform where it is
easy to search for your market, and, if you want to trade more than forex, look for one that also allows you to trade on shares, options and indices.
Where are you trading from? If you use a Mac, can you use the platform on it? Likewise, can the program be accessed using different browsers and different smart-phone handsets.
Basically, does it do what you need? A good forex trading platform should be customisable to suit your trading strategy – does it allow automated trading, and does it allow you to micromanage every trade. The trading platform should be able to alert you to good trading opportunities, as well as accept complex orders, including the various stops and profits that the forex broker offers, so you can easily minimise your risk while maximising your profits.
Does the forex trading platform have a separate charting platform, and how easy is it to navigate? And, if you want to trade from your iPhone or Blackberry, can you access these from your handset? And, can you trade directly from the charts, or do you need to deal a ticket?
Depending on your level of experience, you might want a charting package with a pattern recognition tool that will monitor the markets on your behalf, and could even let you know when the chart patterns are indicating trading opportunities.
And, if you want to trade forex throughout the day, it is essential that the charts are updated in real-time.
Does your forex broker offer market analyses, and is this available using their trading platform or do you need to visit their website?
A good forex trading platform should include market analysis tools, including news feeds, in-house research and third-party research. As information is power, you want to be able to access as much of it as possible, and to have access to it without crawling the internet for the information you need.
Any trading that offers market analysis should also have historical data available, so you can see how the forex was affected when a similar situation occurred.
Is the platform free? Many online forex trading platforms offered by reputable brokers are free, and your only costs will be if you make a loss.
If forex trading software isn’t free, or if there is a nominal charge, find out what the added benefits are. And, if it isn’t free, is there a money-back guarantee if you aren’t happy with the software?
Does the trading platform offer the same pip spreads as the broker has advertised, or do you need to phone to get the best deal?
A pip is a 0.0001 unit of currency, and the pip spread is the difference between the buy and sell price of your currencies – so if the AUD/USD is quoted at 1.0578/1.0579, the sell price is 1.0578 and the buy price is 1.0579. For any spread, the price of the currency needs to make up the difference of the spread before you can make a profit. So, in the example, if you buy at 1.0579, the AUD only needs to rise two pips from 1.0578 to 1.0560 for you to make a profit. If there is a three pip spread, the currency would have to move by 4 pips before you made a profit.
Is your forex broker just interested in getting you an account, or do they provide ongoing support for customers using the trading platform?
You should be able to email and/or phone your broker with questions ranging from placing trades to the button on your trading platform that isn’t doing what you want.
No matter how many questions you ask a customer support, it’s hard to know how well a forex trading platform will suit you without being able to try it, so get online and see which companies have demo accounts available. The demo account should have all the functionality of the full account, or close to it.
One of the companies I currently trade with, IG Markets, has an excellent trading platform called PureDeal. I’ve found their customer service, charting packages and market information to be very good and its interface is fairly customisable.
You can also open a free demo account through their website, with $20,000 pretend money to play with, so why take my word for it? Try it yourselves.