Trading Technology & Platform

A trading platform is a software system that is used to trade securities. It allows investors to open, close, and manage market positions online through a financial intermediary, such as an online broker. Trading platforms are frequently offered by brokers for free or at a discount in exchange for maintaining a funded account and/or making a specified number of trades per month. The best trading platforms offer a mix of robust features and low fees.

Understanding Trading Platforms

A trading platform is a software system offered to investors and traders by financial institutions, such as brokerages and banks. They essentially enable investors and traders to place trades and monitor their accounts.

Platforms allow investors to open a variety of brokerage or trading accounts, including margin accounts, cash accounts, retirement accounts, and self-directed accounts. Through these accounts, traders can make buy and sell orders for stocks, bonds, exchange-traded funds (ETFs), and mutual funds among others.

Trading platforms often include other features that help investors make important investment decisions. These features can include real-time quotes and interactive charts along with a range of charting tools, streaming news feeds, and premium research. Platforms also may be tailored to specific markets, such as stocks, currencies, options, or futures markets.

Types of Trading Platforms

Commercial Platforms

Commercial trading platforms are designed for a range of investors, including day traders and retail investors. These sites are easy to use and provide traders with useful features, such as real-time quotes, international news feeds, live, interactive charts, educational content, and research tools. Many popular sites are commercial platforms.

Proprietary Platforms

These trading platforms are customized and developed by large brokerages and other financial institutions for themselves. Using proprietary platforms allows institutions to gain direct access to the markets, which gives them a competitive advantage. Since these platforms are designed for institutional use, they are not available to the public.

Look for in a Trading Platform

Features

Traders and investors should consider whether the features offered meet their trading needs when choosing a trading platform. Day traders and other short-term traders may require features like Level 2 quotes and access to market information, such as price levels, order size, and volume to assist them in timing their orders.

Traders may also need technical analysis tools such as live charts with a range of technical indicators. Options traders may need tools that are specifically designed to help them research, analyze, and test their trading strategies.

Fees

Fees are also important to consider when choosing a trading platform. For example, traders who employ scalping as a trading strategy will gravitate towards platforms with low fees.

Lower fees are generally always preferable but there may be trade-offs to consider. For example, low fees may not be advantageous if they translate to fewer or less powerful features.

Provider

Some trading platforms aren't connected to a specific intermediary or broker while others are only available when you work with a particular intermediary or broker. As a result, investors should consider carefully the reputation of the intermediary or broker before committing to a specific trading platform to execute trades and manage their accounts. Be sure a provider stands solidly behind all that a platform offers.

Requirements

Trading platforms may have specific requirements that must be met before you can open an account and/or trade. For example, day trading platforms may require that traders have at least $25,000 in equity in their accounts and be approved for margin trading. Options platforms may require that traders be approved to trade various types of options before they can use the trading platform.