Whether you are still learning to trade or would consider yourself to be a seasoned trader, the importance of using a good trading platform cannot be lost on you. There are a lot of online brokers that you can consider. With the rise in demand, more platforms have been created in recent years to meet this need.
With this comes the challenge of knowing which one of these trading platforms is best suited to your needs. There are various things that one can consider before making up their minds. We have picked 7 things that every self-respecting trader should be mindful of when picking a trading platform. This article will explore why each of these things is worth considering.
Level of experience
What we need from our trading platform will usually be linked to our level of trading experience. For instance, less experienced traders may be keen on a platform that provides market analysis. This is not a need that a seasoned trader would have. They would want to handle their own analysis.
The level of experience will also play a part when considering layout and UX of a platform. While experienced traders may not mind running their eyes around to located things on a platform. The lack of familiarity makes it important that beginners have a platform that has an interface that is userfriendly. This reduces the learning curve that they would have to climb anyway.
Speaking of the level of experience, you may also want to take learning into consideration. A good trading platform is one that offers you resources to improve your trading skills. Some will need these more than others. Learning should never cease.
Your Investment Goals
What you intend to get out of your investments is another aspect to be taken into consideration. There are platforms that are best suited to the needs of day traders. One way to figure out whether a platform is right for you is to consider the platform’s commission rates on the trades that you usually make.
If you are trading stocks, most brokers will charge you per trade or per share. This will either be a percentage fee of each transaction. Day traders who enter and exit positions fairly quickly would usually want this fee to be kept low as it eats into their profits. Those who hold their stocks or shares for a while may not care about this fee as much.
If you are trading mutual funds, you should be able to find a broker that does not charge per transaction. This would leave you with any fees that the fund may charge.
Even the most seasoned traders will need a hand from time to time. Things can go wrong on occasion. In which case it is comforting to know that there is someone readily available to assist you. What do you look for when assessing customer support of the trading platform?
It is not easy to do this before you are an active trader. The best way that you can do it is by finding out what channels of communication they have open. Good help should only be a phone call away. Having said that, phone calls tend to come with waiting time. This is where you look at things such as live chat support.
Furthermore, let’s say you are trading in Singapore. Would you have a peace of mind knowing that someone is able to assist you in your country? Needless to say, it is important that the trading platform offers support in your language and country, when needed.
A good platform may also provide you with direct email contact with a broker or customer success person. Having a central person to contact establishes rapport and makes it easy for both parties to communicate. It also often means that responses are quicker.
An easy way to find out how good the support is would be to check customer reviews. There are various websites on which happy as well as disgruntled customers posts their experiences. You can usually filter them by the ratings that the customers give.
The 3 Star reviews tend to be the most balanced ones. These are the users that have liked some things about the service, but also think that the platform could be better. Reading the 1-star review will give you an idea of the worst-case scenarios. There are bound to be some for whatever platform you look up. 5 Star reviews will do the opposite, by telling you how amazing things can be.
We have briefly touched on the commission structures. These can be a blind spot for most beginners. If thought of in isolation they may not seem like much. However, they will soon add up to significant amounts that could have been in your pocket but have been pocketed by the trading platform.
While it is not always possible to completely avoid paying commission, they can be kept to a minimum. The catch is often that some platforms with low commission do not offer much support. Their features are reduced.
If you have no need for support and other features that may be important to other traders, then such a platform may be ideal for you. Those that require stellar support and additional features would happily pay a higher rate of commission to have access to these things.
The Technical Side of Things
Beginners and more experienced traders have access to a host of software in their arsenal. For the most part, this software provides data that is then utilised for decision making. It can also be used to automate trades. Before picking a trading platform, it is wise to ensure that there are no compatibility issues.
Certain trading platforms will have provision to seamlessly connect to external software through one-click logins or an API.
Barrier of Entry
When you have narrowed down the list of potential platforms, any barriers to entry must be considered. These are usually financial ones. This may be in the form of an amount that needs to be deposited for an account to become active. One way that this barrier is lowered is through the use of demo accounts.
A demo account allows new users to familiarise themselves with the trading platform before their capital is placed at risk. It gives the beginners a chance to use virtual currency to hone their skills.
Easy Access to your money
Getting your money onto the trading platform should not be difficult. Neither should withdrawals. One thing to look out for is the options that you have in each instance. A good trading platform will allow you to easily deposit and withdrawal your money.
There is a need for some security to be in place to minimise the chances of rogue withdrawals being made. However, this should not come at the expense of ease of use.
Your trading goals can be fluid. This may be due to your skills improving. It may also be down to a change in the trading style. For instance, a swing trader might decide to start investing and holding stock long term. The ideal trading platform would be one that would adapt to your needs if they are to change.
Finally, regulation cannot be stressed enough. It is important to ensure that the trading platform that you are using is regulated by an independent body. This is a key safety net that goes a long way to give you peace of mind. It will also vouch for their authenticity.