How to Choose the Right Trading Platform for You

Jun 22, 2023 Reading time : 5 min

The recent growth of the financial markets has been largely driven by increased accessibility within the forex space, which grew to achieve a cumulative daily trading volume of $6.6 trillion back in 2019.

This has created a market that’s now worth approximately $2.409 quadrillion, with a rising number of retail traders now active and 27% of all participants falling in the 18 to 34 age group.

While it may be easier (and cheaper) than ever to access the forex market and incorporate this into a diverse investment portfolio, identifying reputable and functional trading platforms is key if you’re to make the most of your starting capital.

In this post, I’ll look at how you can appraise trading platforms, while offering some insight into the process of comparing the marketplace in real-time. So, let’s get started!

Getting Started – Understand Your Needs and Preferred Asset Classes

Before you can adequately compare available trading platforms, you’ll need to establish the criteria that’s most important to you as an investor.

I’d definitely recommend doing this before you start to review platforms and their methodology, as it’s all too easy to be swayed by well-designed apps or the compelling ad content that’s commonly found online.

Ultimately, there’s no right or wrong answer here, while the current range of trading platforms is broad enough to offer value to everyone. To help you create a clearer idea of your trading needs, here are some questions to keep in mind:

  • What Type of Investor are You?: While most aspiring forex traders are risk hungry and prefer the flexibility offered by speculative asset classes, you can adopt either a passive or active approach to achieving a profit. Passive traders can leverage swing or position trades to their advantage, whereas active investors may deploy scalping or day trading strategies to earn incremental, short-term profits. Both types of trading require different tools, analysis methods and levels of engagement, so you’ll need to select platforms with these factors in mind.
  • What’s Your Preferred Leverage?: One of the main advantages of forex trading is that it unlocks inflated leverage. This refers to the use of debt or borrowed funds in relation to margin (your deposit), with a view to increasing position sizes and potential returns. Of course, this also increases the risk and potential scale of loss, so you’ll need to set your leverage in line with your risk profile and starting capital. If you do want to access inflated leverage of 100x or more, you’ll need to ensure that you select a trading platform that offers this.
  • What Are Your Broader Investment Goals?: When you enter the forex market, you’ll usually be driven by one or more motivational factors, whether you simply want to supplement your full-time income or accrue significant wealth over time. Regardless, understanding these goals is crucial when building your investment portfolio and selecting trading platforms, as you’ll want to identify sites that allow you to scale your portfolio effectively and best accomplish your objectives within the relevant timeframes.

Comparing Trading Platforms – The Importance of Trust and Market Coverage

Even if you don’t have immediate plans to diversify into other markets or asset classes, this process will be key if you hope to sustain profitability over time. So, it’s always worth considering trading platforms that offer excellent market coverage across popular assets such as stocks, commodities, and indices.

Similarly, prioritize platforms that offer access to numerous investment vehicles. While you may have previously compared spread betting vs CFD trading when looking to select your ideal speculative investment vehicle, for example, your methodology may change in the future, and it’s great to have flexibility in terms of how you trade in the real-time marketplace.

Additionally, it’s important that you identify trading platforms that are reputable, regulated and fully secure.

In the UK, all forex brokers must be fully licensed and regulated by the FCA (Financial Conduct Authority), while they should also boast 128-bit SSL encryption as a minimum security standard. 

I’d also recommend reviewing each site’s policy with regards to reimbursing you in the event of fraud, as this will vary from one service provider to another and create different requirements for claiming a refund.

You’ll need to ensure that you’ll be able to meet these requirements and successfully have any lost funds reimbursed, especially if you want to combine forex positions with inherently volatile entities like cryptocurrency.

The Last Word – What Do Customers Have to Say

At this stage, you should have created a viable shortlist of trading platforms, based on your own bespoke needs and the product range, reputation and licensing that defines every potential service provider.

Finally, it’s worth seeing precisely what existing customers have to say about each brokerage or trading platform. After all, objective, first-hand reviews help users to share their unique experiences online, while comparing these in volume will create an informed first impression in your minds.

At the same time, this process may enable you to highlight recurring issues or unresolved bugs, which may prove decisive when you’re choosing between just two or three platforms.

At the end of this process, you should be able to select a reputable forex trading platform with confidence, safe in the knowledge that this will suit your broader investment goals and underlying appetite for risk. 

James Wilson
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James Wilson