While there is no guarantee that you will make profits when investing your money on the markets, selecting the right trading platform and broker for your trading style and needs can make all the difference.
Therefore, deciding which trading platform to choose plays a key role for any investor wanting to give themselves the best opportunity to be profitable. As all trading platforms are not created equal, this simple guide will help you to choose the right trading platform from among the best trading platforms, in just 4 steps.
Step 1 – Determine your trading goals, strategy, and needs
The first thing to do is to create your trading strategy. Once you outline your strategy, you will know how to best implement your trading plan to meet your goals. With that in mind, you’ll be able to create a short-list of brokers that meet your requirements.
For example, if your investment strategy is primarily based on technical analysis, the trading platform you are going to use must offer a wide variety of trading and drawing tools, as well as a wide variety of technical indicators.
Pro tip: It is important to always follow a trading plan, based on your personality, your capital, your financial goals, and how comfortable you feel when dealing with risk. Thus, you will have a set of precise rules to follow when trading, to avoid making spontaneous and irreversible decisions based on emotions.
Step 2 – Only select regulated brokers
It is important to check the authorizations and regulations that a broker must observe. After all, you should only work with a trusted broker that complies with the rules set by the regulatory authorities.
This way, you will avoid scams, your funds will be protected, and you will be able to defend yourself in the event of a dispute.
Pro tip: Since the regulation of online brokers is one of the best ways to ensure that the brokers you’ve selected are high quality, you should always check the regulatory authorities that regulate the brokers you’ve selected. Among the most important regulatory bodies are the National Futures Association and the Commodity Futures Trading Commission in the U.S.A. or the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) in Canada.
Step 3 – Compare fees, types of accounts, trading features and customer service
While some brokerage features and options could be more important for you than for other investors, there are things any reputable and reliable online broker should offer – for example, a fast and secure trading environment.
Always compare trading conditions and features to pick the broker that best fits your needs, while also offering the most convenient trading environment. To start with, here are a few elements you can compare:
- Trading fees and other commissions,
- Deposit and withdrawal methods,
- Initial deposit,
- Order execution speed,
- Types of trading accounts,
- Markets available,
- Trading platforms,
- Availability and quality of the customer service,
- Kind of insurance and other protections in case the company fails,
- Popularity and what customers are saying.
Pro tip: Without knowing what trading strategy to adopt or which goals to reach, it can be difficult to compare brokers to determine what the best offer is for you – the best offer is not necessarily the cheapest.
For instance, if you’re a news trader, you need a very reactive trading platform with fast execution speed to be able to take advantage of fast-moving markets. In addition, you might prefer fixed spreads, so then you can predict your trading costs.
Step 4 – Try out the trading platforms with a demo account
Almost all brokers offer a demo account you can use to test the trading platform before creating a live trading account. This step is crucial to know how to use the platform and to be sure the broker’s services are up to your expectations and fit your trading strategy.
Pro tip: Transitioning from a demo account to a live account isn’t always easy, but using a demo account is strongly recommended before trading with real money. It’s important to remember that demo accounts do not always offer the same trading conditions as live trading accounts. You might experience slippage, re-quotes, latency time, or liquidity gaps in live accounts, for instance.
Once you’ve compared online brokerage services, picked the one that is right for your trading, and tested its trading platform, the next step is to open a live account and start trading for real – good luck!
Disclaimer: This content does not necessarily represent the views of IWB.