4 Crucial Pointers to Help You Pick the Best Possible Online Trading Platform
Picking an online trading platform is arguably one of the most important decisions you will embark on during your online trading venture. That is because a good online trading platform plays a key role in ensuring your success as an online trader.
For instance, good platforms provide learning or education opportunities for their investors to help them become better traders than they were initially.
However, because these platforms are so many in the market, many traders, even veterans sometimes struggle in selecting a good one. Irrespective of if you are a novice or an experienced trader, here are some pointers that will help you select the best possible online trading platform.
1. Prioritise Reputation
A key mistake many traders make is picking an online trading platform whose reputation is not stellar. Often, it is not on purpose but rather as a result of not doing enough background research.
Remember, most platforms are offered by brokers in exchange for maintaining an account or making a certain number of trades per month. As a result, traders often take the deal and forget to do their research.
Therefore, prioritise reputation when electing an online trading platform. Do your due diligence; enquire from veteran traders who use the same platform, read as many reviews as possible, consult social media and test-drive the platform yourself by opening a demo account. With that done, select a platform with the best reputation.
2. Analyse The Trading Tools the Platform Offers
Essentially, a trading platform is a software that facilitates trading. As a result, it has numerous tools that will help an investor, open trades, close trades, manage positions and so on.
With that in mind, it follows that a good platform should have tools that enhance your trading experience and give you the best possible chance of making a profit.
A good example is a Stop Loss Tool. The tool allows you to stop a transaction directly if the price declines suddenly. That way you avoid a major loss. Another helpful tool is an SMS alert to inform you of significant changes regarding currency or stock allowing you to react accordingly.
Trading platforms come with numerous tools, and one cannot possibly use them all per time. However, you should go for a platform that offers an adequate amount of tools because the more experience you gain, the more you will be able to incorporate more tools into your trading.
3. Ensure The Platform Offers Maximum Connectivity
Connectivity with regards to trading platforms means the ability to trade on a global level. In essence, the platform should offer a wide reach and global connectivity.
With global connectivity, you will have the flexibility to trade on both local and international markets. With stocks, for instance, your platform should facilitate connectivity with markets such as the New York Stock Market, London Stock Exchange, NASDAQ etc.
On the other hand, with currency, then your platform should allow trading with as many currency pairs as possible or rather the currency pairs that interest you.
4. Beware of Hidden Costs
As noted earlier, brokers are mostly responsible for providing trading platforms. Note that brokers have to make money somehow. Most of these methods are transparent such as commission or fees.
However, some brokers take advantage of hidden costs that you might not be aware of and that your online trading platform is not informing you on.
To ensure that hidden costs do not cut into your profit margin; your platform should have a calculator that keeps you apprised of the cost even before you buy or sell. That way, you have a clear picture and can track your money irrespective of whether you win or lose on a particular trade.
Exhausting essential tips with regards to trading platforms is impossible. There are more peripheral pointers to consider, such as whether the platform allows backtesting or if the platform is Mac, Windows or Internet-based.
However, the above four pointers are vital and will help you choose the best online trading platform.