What is a Trading Platform?

A trading platform is a type of software used by traders to place trades and manage their accounts. These platforms provide access to various financial markets and instruments, such as stocks, forex, commodities, and cryptocurrencies.

In this article, we will provide information about the functions of trading platforms and examine popular trading platforms in detail.

How Does a Trading Platform Operate?

A trading platform connects traders to the market through a series of processes designed to ensure efficient and accurate trade execution. Here's a breakdown of how it works:

Price Feed

Prices are provided by liquidity providers, including banks and financial institutions. These providers pass through the current buy and sell prices for various financial instruments to brokers.

Broker Commission

Brokers add their spreads at this phase. The spread is the difference between the bid (buy) and ask (sell) price, which serves as the broker's commission.

Order Routing

When a trader places an order, it is routed through the broker to the market or liquidity provider offering the best price. This ensures that the trader gets the most favorable execution.

Execution

Once the order is matched with a corresponding buy or sell order in the market, it is executed. The trading platform then notifies the trader of the completed transaction, and the trader’s account is updated accordingly.

Example:

When trading EUR/USD, the price feed comes from multiple liquidity providers. If a trader places a buy order at the current price, the platform routes this order to the provider offering the best price. For instance, if the best bid price is 1.08281, the order is matched and executed at that price. The trader’s account is then updated to reflect the new position, and they are notified of the execution.

Main Functions of a Trading Platform

A trading platform serves as an intermediary tool between investors and financial institutions. It simply enables investors to trade various instruments, perform trading analysis, and manage their accounts.

These platforms typically offer a wide range of features that facilitate the investment process:

• Real-Time Market Data: Provides up-to-date prices and market information.
• Order Execution: Facilitates the buying and selling of financial instruments.
• Charts, Graphs, Tools: Includes charts, indicators, and drawing tools for market analysis.
• Account Management: Allows traders to monitor and manage their trading accounts and funds.

Types of Trading Platforms

Trading platforms can be divided into desktop apps, mobile apps, and web-based platforms.

Web-Based Platforms

Web-based platforms can be accessed directly through internet browsers without the need for any software installation. These platforms offer the convenience of trading from any device with an internet connection, providing flexibility for traders. 

They are typically user-friendly and feature-rich, offering real-time data, charts, and trading tools. MT4 and MT5 WebTrader are the most popular web-based trading platforms among traders.

Mobile Trading Apps

Mobile trading apps are designed for smartphones and tablets, enabling traders to manage their trades on the go. These apps offer the essential functionalities of a trading platform, including placing orders, accessing real-time market data, and using charting tools. 

Mobile apps provide the flexibility to monitor and execute trades anywhere, anytime. Popular mobile trading apps include MetaTrader 5 Mobile and cTrader Mobile.

Desktop Apps

Desktop trading platforms are downloadable applications that provide robust functionality and advanced trading features. These platforms are often preferred by professional traders due to their powerful analytical tools, faster execution speeds, and the ability to customize the interface. 

Desktop apps typically offer a comprehensive trading experience with advanced charting tools, automated trading capabilities, and extensive market analysis features. Examples include MetaTrader 5 Desktop and cTrader Desktop.

Most Popular Trading Platforms

Although it is possible to mention hundreds of trading platforms, below we will focus on the two key tools we offer to our users:

MetaTrader 5

MetaTrader 5 is one of the most popular platforms among traders globally. It stands out with its trading functions, technical analysis tools, and automated trading capabilities.

The key features of MT5 can be listed as follows:

• Allows trading in Forex, CFDs, indices, stocks, and future contracts.
• Provides a comprehensive view of multiple currencies with its advanced Forex matrix.
• Reflects traders' inclination towards specific instruments with the sentiment trader feature.
• Enables uninterrupted trading strategies 24/7 via VPS.
• Allows trading with multiple open positions.
• Contains numerous fundamental and technical analysis tools that can be used to predict market movements.
• Offers 21 different timeframes.
• The Market Depth feature provides information on market liquidity and the number of buy and sell orders at different price levels.
• With the automated trading feature, the platform can trade on your behalf with little or no intervention. It can execute trades by monitoring prices with trading robots known as Expert Advisors (EA).

cTrader

Developed by Spotware Systems, cTrader offers a comprehensive trading platform for traders. Accessible via web, desktop, and mobile devices, the platform allows trading in Forex, indices, CFDs, and stocks.

Some of the features of cTrader are as follows:

• cTrader has an easy-to-understand and user-friendly interface, suitable for both beginners and experienced traders.
• The platform provides extensive charting features and technical analysis tools. It enables analysis across different timeframes and various chart types.
• It allows for algorithmic trading with a feature called cAlgo. This enables users to create and run their own trading bots and algorithms.
• It offers fast trade execution with low latency.
• The platform can be integrated with various third-party tools and plugins, allowing users to customize their trading experience.

Step-by-Step Guide to Using a Trading Platform

To use a trading platform, you first need to create an account. After logging into the platform, you will see various tabs and menus on the main screen. These menus typically include options such as market watch, charts, buy/sell orders, portfolio status, and account settings.

To open a position, you must first decide which financial instrument you want to trade. You can track the prices and market data of the instruments from the charts on the main screen.

To execute a trade, you need to place a buy or sell order. When placing these orders, you can choose from options like market price, limit price, or stop price. After selecting the order type, you can enter the quantity and other required inputs before submitting it.

You can analyze market movements using the charts and technical analysis tools on the platform. You can view charts in various timeframes and add indicators such as moving averages, RSI, and MACD to further detail your analysis.

Let’s summarize all of those steps from scratch:

Step 1: Create an Account

• Visit zforex website and register for a new account.
• Complete the following verification processes.

Step 2: Log In and Explore the Interface

• Download a trading platform from our website
• Enter your credentials to access your account.

Step 3: Choose a Product

• Decide which financial instrument you want to trade, such as forex, stocks, or commodities.
• Use the charts on the main screen to monitor prices and market data.

Step 4: Open a Position

• Choose between buy or sell orders.
• Select from market price, limit price, or stop price orders.
• Specify the quantity and other relevant information.
• Review and confirm your order to execute the trade.

Step 5: Analyze Market Movements

• Access various timeframes on the charts to analyze market trends.
• Add indicators like moving averages, RSI, and MACD to enhance your analysis.

What to Consider When Choosing a Trading Platform?

When choosing a trading platform, there are some factors you should consider to find the one that meets your needs and goals:

• A platform with an easy-to-use and understandable interface is a great advantage, especially for beginners.
• A platform that offers advanced charting and analysis tools helps you better analyze market trends and price movements. These tools include indicators like moving averages, RSI, MACD, and various chart types.
• Low latency and fast execution capabilities are essential for optimizing your advantage from price changes.
• Having access to the platform via desktop, web, and mobile devices allows you to trade anytime and anywhere.
• Platforms that offer demo accounts enable you to try out the platform and test your trading strategies without risking real money.
• Additional features such as VPS support, algorithmic trading capabilities, and automated trading robots allow you to develop trading strategies with less intervention and uninterruptedly.
• It is important to choose a platform that offers low-cost and transparent pricing policies (spreads, commissions, etc.)

FAQs Regarding Usage of Platforms

What is a demo account and why is it important?

A demo account allows you to trade with virtual money without the risk of losing real money. It is important for beginners to learn the platform and strategies.

What is algorithmic trading and which platforms offer this feature?

Algorithmic trading involves using software to execute trades based on pre-defined rules. Platforms like MetaTrader and cTrader offer this feature.

Why is VPS (Virtual Private Server) support important?

VPS support ensures that trading operations are carried out continuously and quickly 24/7. This feature is essential when using automated trading strategies.

What is spread and how does it work on trading platforms?

Spread is the difference between the bid price and the ask price. On trading platforms, spread determines your trading cost and reflects liquidity.

Which trading platform is best for beginners?

MetaTrader 5 (MT5) and cTrader are suitable platforms for beginners due to their user-friendly interfaces and extensive educational materials. As traders deepen their knowledge of markets and tools, they can also benefit from the advanced features offered by these platforms.

Which trading platform is best for scalping?

For scalpers, low latency is crucial for executing quick trades. MetaTrader 5 and cTrader, supported by VPS, are good choices for this purpose.