What Is a Currency Trading Platform?

A currency trading platform is a software interface provided by currency brokers to their customers to give them access as traders in the Forex markets. This may be an online, web-based portal, mobile app, a standalone downloadable program, or any combination of the three.

These platforms may also provide tools for research in addition to tools for order processing.

Key Takeaways

  • A currency trading platform provides forex market access to traders.
  • Some clients prefer brokerages and platforms that give them access to all asset classes and integrate trading into a single platform.
  • Metatrader 4 (MT4) has become a de facto standard among forex trading platforms.
  • Automated trading via these platforms can remove psychological and emotional factors from trading strategies.

Understanding Currency Trading Platforms

Currency trading platforms provide tools to traders for executing buy and sell orders in the Forex markets. The platforms are made available by Forex brokers for the use of clients. Some Forex brokers offer their own custom trading platforms for order processing and research, but many provide order access through integrated trading and research programs.

Many Brokerages offer a wide array of currency trading platform solutions for both retail and institutional clients. In the institutional markets, banking or brokerage companies may also build proprietary currency trading platforms to meet their internal needs with trades executed through institutional trading channels.

Many platforms also offer forex charting packages to determine the likely direction on a given currency pair in conjunction with other technologies such as predictive forecasting software and online trading to get an edge in forex markets. Choosing the best charting software generally depends on a trader’s personal needs and experience. Considerations include the type of technical analysis they wish to undertake, the volume or duration of their trades, and the kind of device they want to use to view the charts. Knowledgeable traders will make note of the data sources from which charting solutions pull their prices and other information, ensuring that those sources are up to date, reliable, and accurate.

Example: Metatrader (MT4)

By far the most ubiquitous of these is MetaTrader 4 (MT4). MT4 is not open source software, but is an openly extensible and customizable platform that allows trading system developers the ability to create scripts and automated trading algorithms that execute within its framework.

This platform is widely used among retail traders, so much so that many brokers that offer their own platforms also offer MT4 integration so that those retail traders familiar with the platform will have the ability to migrate their own tools to the new brokerage with ease.

Forex Trading Platform Features and Considerations

Retail forex traders typically look for some popular features when identifying and using a currency trading platform. Traders look for ease of installation and use which can lead to comparisons of web-based platforms versus downloadable platforms. In this area, traders may have the option to choose a platform from their brokerage directly or go with an independent service.

Fees can be an important consideration as well because the costs can range broadly depending on individual systems. Functionality is a key aspect for most traders since they will typically rely on ingrained charts and order-taking methods built-in from the system. A key aspect of a forex trading platform will be the brokerage trading platform with which it is integrated.

Brokers such as Interactive Brokers or TD Ameritrade are popular brokerage options because they offer access to all asset classes, but firms such as IG or Oanda are popular among forex traders because of their specialization in that market and their competitive rates.

Most forex platforms will allow a trader to open a demo account prior to funding a full account. Trying out several forex software trading platforms through a trial period can help a trader decide on the best one for their trading needs.

Automated Forex Trading

Automated forex trading software runs on a program that analyzes currency price charts and other market activity over multiple timeframes. The software identifies the signals – including spread discrepancies, price trends, and news that may impact the market – to locate potentially profitable currency pair trades.

For example, if a software program using criteria the user sets identifies a currency pair trade that satisfies the predetermined parameters for profitability, it broadcasts a buy or sell alert and automatically makes the trade.

A major advantage of automated forex trading software is the elimination of emotional and psychological influences determining your trading decisions in favor of a cold, logical approach to the market. Beginners and even experienced traders may sometimes make a trade based on some psychological trigger that defies the logic of market conditions. With automated trading, such all-too-human lapses of judgment just don't occur. That's because automated software is intended to make your trading decisions unemotional and consistent, using the parameters you've pre-established or the settings you've pre-installed.