Online stock trading is growing in popularity, and traders are leveraging the convenience it brings to make a profit. But it can also be a risky investment because you can only predict how stock prices will move.
7 Things To Consider When Choosing The Best Stock Trading Platforms
There are no certainties to it, regardless of whether you’re a day or active trader. However, some things help along with the process, such as using the right trading platform.
Finding the right platform isn’t always an easy process. For that, you need to expend quite a bit of time and effort in researching, studying, and analyzing the reliability, features, and general usability of these platforms to be able to pick the best. This is because trading platforms aren’t all equal or reliable, and the likelihood of losing your investment has real-life consequences.
So how do you identify a good trading platform? This article shares seven things you need to consider when choosing a stock trading platform.
What Are Trading Platforms?
Trading platforms are software or apps that you use for stock trading. That is, open, close, and manage market positions through intermediaries, such as online stock brokers.
These platforms are often offered by brokers at a fee or sometimes at discounted rates. It all depends on the intermediary.
Trading platforms that offer a blend of low fees and robust features are the best. The two main types of trading platforms are a prop and commercial websites. Commercial websites target retail and day traders, and their simple user interfaces are one way to identify them. They also come with numerous features to educate investors on stock trading.
As for prop trading platforms, they’re made by large brokerages and customized to match their specific trading style and trading demands. Depending on your trading style and the amounts you’re trading, you can interact with various trading apps, like in the case of these apps in Canada.
Things To Consider When Choosing The Best Stock Trading Platforms
As mentioned earlier, when trying to pick a trading platform, the first things to consider are the platform features and the fees involved. Here are other critical things to be mindful of:
Your Trading Needs
Notably, your trading needs will determine what kind of trading platform features you’ll need. For instance, features like level 2 quotes or market depth charts are a must-have if you’re a short-term or day trader. If you’re an options trader, your choice of the trading platform must help you visualize options strategies.
That which you’re looking to achieve with your investment should help you determine the best platform for you. Basically, you need to consider the frequency of your trades and volume in your decision.
Platform’s Track Record Of Reliability
The dependability of a platform is one crucial factor you shouldn’t overlook. There’s an array of stock trading platforms. Some are well-known and established, and others are new and upcoming. While it doesn’t necessarily mean that newcomer platforms are unreliable and untrustworthy, it means that they’re yet unproven in various stock market situations.
Well-established platforms, on the other hand, have been tested through many economic changes and challenges. It’s necessary to ensure that the trading platform you pick doesn’t keep freezing or restrict trading in the wake of some economic events. The reliability of a platform comes before its appearance and user interface.
This is particularly important if you’re an aggressive trader. A platform with numerous downtimes can lead to immense losses in addition to giving you horrible trading experiences.
One of the best ways to determine the reliability of a trading platform is by reading user reviews. Find out what the ones that have gone before you have to say about it to get a good picture of your experience.
A Friendly User Interface
In stock trading, a friendly user interface ensures that placing or closing orders happens immediately. This is a beneficial feature as it assures that your request is received and executed almost instantaneously.
The trading and management of limits, stop-loss, and any other order you place must be instant to benefit you or help you achieve what you wanted in the trade.
In addition, working with a user-friendly interface makes trading more seamless. If the platform has some extra features that boost the experience, such as tools and analysis charts, they should also be easily accessible.
No matter how useful the features of a platform are, they’re useless if you can’t easily apply them in your trades.
The user-friendliness and applicability of features in a platform are particularly crucial when you’re a heavy trader. This is because you have a greater dependency on the trading platform than other traders with low trade volumes.
Excellent Analytical Tools
Stock trading relies heavily on effective and timely trend analysis on the trending stocks by beginners and pro traders alike. A good trading platform should offer you excellent and insightful analyses to power your trades. Generally, a good trading app or platform should provide you with graphs, charts, and other analytical tools that offer ways for you to know what’s happening in the stock market.
The two types of analytical tools you should look out for are those that perform fundamental analysis and technical analysis. The two tools can help you in deciding when and how to place your trade orders. This gives you the reason why analytical tools are so essential when choosing the best trading platform.
Here’s a look at what both types entail:
- Fundamental analysis: These are tools that try to evaluate the intrinsic value of stocks. They give the general analysis, including industry conditions, the financial strength of individual stocks, and overall economic state. To analyze the financial stability of respective companies, factors such as assets, earnings, expenses, and liabilities are under strict scrutiny.
- Technical analysis: This type attempts to predict the future price of shares or stocks in an active stock market. These predictions are typically based on the previous statistics and performance of the stocks. This helps to predict how the stock prices change in the future.
Powerful and successful stock trading involves getting your hands on a lot of information on the stock market and the stocks you want to trade. This includes current affairs, historical data, as well as predictions for the future. The platform you choose needs to provide this information whenever you may need it.
The Platform’s Security Measures
Stock trading in an online world comes with many challenges, and security is one of them. When registering on a trading platform, there’s an array of personal and sensitive information you need to provide. Online security has become a huge issue, and it’s crucial to ensure that your data won’t be compromised.
If you don’t know how to check these things, you can ask customer support what security measures the platform employs.
Here are some of the questions you can ask:
- Are your money and data protected on the platform?
- How many people have access to the details you share on the platform?
- What type of security and encryption does the platform use?
Knowing your information is safe is an excellent way to help you gain confidence with the platform. You must pick a platform that’ll keep your money and data away from cyber criminals or fraudsters.
Variety Of Trading Stocks
For you to make good profits from stock trading, you need access to a wide variety of stocks to move about the stock market. When choosing a trading platform, you need to consider how many stocks you can trade in a platform. Some platforms have only a limited number of stocks, restricting your trade to what they offer and the amount of profit you can make.
To earn quick and profitable returns, you need a more versatile trading platform. They should also be able to add new stocks quickly that stock traders can benefit from. Don’t be afraid to shop around for a platform that offers a broader offering in their portfolio.
Excellent Customer Support
Finally, ask yourself whom you’re dealing with on the other side of your device. The platform you choose to trade your stocks must have reliable and available customer support. You need to have your concerns and queries answered promptly. It’s, therefore, necessary that you pick a trading platform that has a reputation for providing excellent customer support.
Problems occur all the time due to errors or technical hitches. You need to know that you have a reliable partner on your side to assist you any time you need it. The best stock trading platforms are those with proper customer support.
What are your trading needs, and what features do you need? The above provides the crucial things you need to consider when choosing the best stock trading platform.
Keep in mind that the trading platform you pick can make your trading experience profitable or lead to unimaginable losses. Conduct proper research, read reviews, compare features, focus on your trading needs, and ask questions.