What is a trading platform?
Trading platforms are software that act as an intermediary between the investor and the markets to which their broker offers access. They offer order management, portfolio management and – in increasingly frequent cases – additional advanced instrumentation .
They are typical of online trading and all investment systems that allow you to invest on your own account, without having to go to a bank or contact a financial advisor. A tool therefore necessary for anyone who wants to deal directly with their investments . Now that we have given a “ scholastic ” definition, let’s see how a trading platform is made and how we can use it.
- Software
When choosing a trading platform, we are choosing software first and foremost. It may need to be installed on your computer, it may be directly accessible online, or it may be an app for smartphones and tablets. In any case we are talking about software in the strict sense, that is, computer programs with specific functionality for online investing.
- Intermediary between us and the markets
The platform can also be considered a window between us and the markets. It is always the online trading platform that takes care of recording our orders and forwarding them to the broker. The broker will then have the task of transforming those orders into trades, buying or selling the security we have requested.
- Portfolio Management
Trading platforms, even the most basic ones, offer portfolio management. All open positions are typically placed in a specific section of the platform where we can consult, close, and possibly modify them.
- Additional tools
The functionalities described so far are the basic ones. Today almost no platform limits itself to this type of offer. They are in fact present tools and additional services , some common to many platforms, others instead specific of a certain platform or a certain broker.
- GRAPH
The graph is a source of very important information regarding the price trend, as well as for the application of indicators and forecasting tools on the future trend of a specific asset. Every trading platform interprets this type of information in specific ways and with the possible integration of plug-ins or other analysis tools.
- NEWS
Many of the more advanced trading platforms incorporate news related to the financial markets. Sometimes this is simply investors news, while in other cases it is also commented to help understand the impact it may have on the markets.
- SOCIAL AND SENTIMENT
The most popular brokers manage the portfolios of thousands of investors and can thus analyze market trends on any specific asset. Many trading platforms today allow for a social approach, with indicators that signal how other traders and investors are doing.
- COPY AND MIRROR TRADING SYSTEMS
These systems are also becoming increasingly popular and can be integrated into specific trading platforms, both with third-party management, and directly integrated by the broker that manages the platform. They are advanced systems that allow you to copy the positions of other traders who are getting results, with a simple and fast procedure.
- SCRIPTING AND PROGRAMMING LANGUAGES
Professional trading platforms such as MetaTrader include in their offer a programming and scripting language, either to handle routine operations or to have advanced programs that can trade for us.
- FUNDAMENTAL ANALYSIS
Trading platforms can include useful data for fundamental analysis such as turnover, revenue, dividends and P/E Ratio of various companies and stocks. Information that can certainly be found elsewhere but it is convenient to find it integrated directly on the platform.
- FREE DEMO ACCOUNT
Today, all quality trading platforms also offer a demo mode that allows you to test the platform without risk. The importance of the demo account is high, because in addition to offering a “ training ground ” for trading, it allows you to touch all the features of a platform.
- LIVE STREAM OF PRICES
Trading platforms also commonly offer a live streaming of prices on all assets they offer in their listings. This allows you to consult at any time or the spot price of the market, or even the price charged by our broker of reference.
Online Trading Platforms How They Work
Online trading platforms can have very different ways of operating, despite having a set of basic functions that are generally common and cross-cutting .
- They are linked to the reference broker.
When choosing an online trading platform, we are simultaneously choosing the broker that offers it. In some cases, the broker creates its own exclusive platform. In other cases, there are platforms, such as Metatrader, which are adopted by different brokers. You should choose your broker and your trading platform simultaneously, evaluating the ways in which one influences the other.
- They are the tool for setting orders.
Whatever type of functionality our broker should offer, from leverage to short selling, from take profit to stop loss, it is through the trading platform that we will be able to use these features. Even if the action of buying and selling assets is performed by the broker, the platform is how we send our orders to the broker of our choice.