What should I look for when choosing a forex trading platform?

By Ayton MacEachern AAA
A:

A trading platform is a piece of software that acts as a conduit for information between a trader and a broker. A trading platform provides information such as quotes and charts, and includes an interface for entering orders to be executed by the broker. Trading platform software can be locally based, meaning it is installed on the trader's computer and can be used with Windows, Mac and Linux systems - different brokers offer different options in this respect. Alternatively, some brokers offer software that is web based. These platforms often run using Java, a dynamic web language. The advantage of web-based trading platforms is that they can be used by almost any computer with internet access. Trading platforms are often available free-of-charge, but some brokers allow traders to purchase platforms that have a higher functionality for a fee. Other brokers provide platforms with different levels of functionality for traders who are more active.

Online Forex Trading
Online forex trading requires the same things from a trading platform that are required for trading any other type of security. The platform must act as a go-between for the retail forex broker and the forex trader. Platforms must also provide real-time and historical data to the trader and provide the him or her with access to all of the types of orders that need to be available to trade forex efficiently. (For more on this, read Place Forex Orders Properly.)

Third-party forex trading software is also often used, as many retail forex brokers' platforms have an application program interface (API), which allows traders to integrate third-party or even proprietary software into the platform.

Some factors to consider when looking for forex software are:

  • Is it free? If there is a nominal charge, what additional features are made available?
  • What technical indicators are available in the charting component?
  • Is the software Windows, Mac or internet (Java or HTML) based?
  • Can you trade from the charts?
  • What is the order interface? What types of orders are available?
  • Is historical data made available through the software?
  • Does the platform allow for backtesting of strategies?
  • Is the graphical user interface (GUI) pleasing to look at?
  • Is the GUI conducive to monitoring a lot of information at once?
  • Does the platform have an API that allows additional software or programming?

Most forex brokers allow customers to open a demo account prior to funding a full account or mini account. Be sure to try out each broker's software during their trial periods to help determine which forex trading software is best.

For more on this topic, see our Forex Market Tutorial.

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