Last updated on August 27, 2020 by Vincent Nyagaka
The market is flooded with a variety of currency trading platforms, but several factors need to be considered before choosing any one of them. These include fee structure, functionality, product quality, speed, types of services provided, etc.
Trading platforms are basically software that helps you to trade the market directly and do charting analysis in real-time. Most brokers offer them free and they have various advantages.
Forex brokers allow clients to open a free demo account before ever trading life, which is great for you to explore and practice trading before you go live. The best way to choose a good trading platform is to try out the software during the trial period to make sure you are comfortable with it and it is user friendly.
While checking the efficiency or the suitability of a trading platform, one should look for the following features:
Key Feature: The most important functions you will ever do on a trading platform are a) executing trades, and b) chart analysis. Thus, it is critical the platform is intuitive and user-friendly with the general ease of use, and that everything makes sense when looking at it.
Good Charts: Since most traders base their trading decisions on technical analysis, they prefer to use a platform that offers them good charts with a variety of options. This helps you in identifying trading opportunities and placing quick orders.
Up Time: The efficiency of the Forex trading platform can also be judged by its uptime record. A system that fails often will result in traders losing good investment opportunities. So opt for a trading platform that has a high uptime during trading hours.
The rest is basically up to style and preference.
There are various types of charting styles and preferences, so let’s go through them so you can understand their differences.
These charts are generally used to provide a quick view of the overall market trend. These are highly useful in identifying support and resistance levels. They are created by connecting a line from the high, low, or close price of one period to the next forming a line that represents the price movement over time.
These charts show us the price bar for a specific period of time. An individual price bar shows the open, high, low, and close values of a currency pair. The bar in this case simply represents one segment of time which can be a day, a week, one hour, four hours, or any other time period. These charts are also called OHLC charts because they indicate the high, low, and close for a particular currency pair.
These charts provide the same information as a bar chart but the graphical format of these charts is more nuanced and unique.
Candlestick charts give what I believe is a more informative and graphical representation of the price action via the color of the candle (which represents the close) along with the wide part called its real body. This body represents the range between the open and close of that day’s trading. When this portion is filled with black it indicates the close was lower than the open. But if the body is blank or white, it means the close price was higher than the open. These colors can be tailored to your preference.
Candlestick charts are the most popular because of their simplicity and visual appeal. Good for beginners, these charts help in identifying the turning points like a reversal of an uptrend or a downtrend. I personally use candlestick charts in my trading as they most easily convey the critical information regarding the price action and movement over time.