Profitable investing and trading requires that you choose a platform that aligns with your goals, needs, and learning curve. The problem is that there are so many platforms available that it can become confusing to choose the right trading platform, especially for beginners. While you cannot guarantee success when doing trades, you can improve your odds of success by partnering with the right trading platform. Below, we will look at the main factors you should consider when looking for a trading platform so you can find one that suits you best.
Understand What You Need
To ensure that you are paired with the best trading platform for you, you need to understand your needs. The answer to what is important to you in a trading platform will vary depending on your goals and where you are on the trading learning curve.
When starting, you want to consider platforms with lots of educational materials and that makes it easy to find help when you need it. If you have been trading for a while, then a platform with opinionated strategies, investment resources, and education may be right for you.
Experienced traders should prioritize conditional orders, advanced charting, and the ability to trade specialized assets such as mutual funds, a diverse range of securities and stocks as well as trade derivatives.
Think About the Type of Trader You Are
There are different things that tell which type of trader you are. One is whether you are an active or passive trader. For the former, you might want investments and trades that call for day-to-day interaction, and the latter might like to invest in a few solid investments that they check up on from time to time.
Second, you need to decide if you want to handle the trades yourself or if you need a broker to handle things for you. You might also want to trade yourself but have someone else advise you on the best opportunities when you decide to enter a market.
Lastly, think about your investment goals. These will determine whether you get into long-term or short-term positions, where there is a regular income from your trades, and whether your movements will help you build some wealth for the future.
Types of Securities on the Platform
Now that you know what you are looking for in a trading platform and the type of trader and investor you are, it is time to start thinking about platform features. There are several platform features that you should consider when choosing a trading platform. One of these is the diversification of the types of securities, commodities, and other investment options available on the platform. You should not only be ruling out platforms that do not only offer the options you are looking for, but also platforms that have a small list of investment options.
The platforms under consideration should allow you to trade IPOs, preferred shares, futures, fixed-income securities, and newer options such as cryptocurrencies and even bitcoin ETFs. Compared to the other options in that list, bitcoin ETFs are relatively unknown.
A bitcoin ETF is similar to other Exchange Traded funds but instead of tracking the price of a stock, it tracks the price of a cryptocurrency. WealthSimple has an amazing guide that explains what a bitcoin ETF is and how you can invest in it or similar options. Wealthsimple provides investors with the tools they need to grow their money, be it investing in traditional stocks or cryptocurrencies. Tools like Wealthsimple Invest, which helps you invest on autopilot, or Wealthsimple Trade, which allows for commission-free stock trading, have been lauded as must-have investment tools in any investor’s arsenal.
Ask How Quotes Are Pulled
The second feature that you should ask about is how the quotes on the platforms you are considered are pulled. This is because, while there are lots of ways to pull this data, you need the platform to pull and provide you with the latest data. The best option is real-time streaming, ideally with no manual refreshes required. Refreshes can delay trades, at which time a great opportunity may be gone.
See If You Can Set Up Customized Alerts and Watchlists
If you are going to be a serious trader, then you might want to set up some alerts and notifications to know when certain things happen, such as when a stock you are watching hits a certain price. A good platform should allow you to set email alerts at the very least, with text alerts being a welcome addition. You should also be able to set up multiple watchlists depending on what you need to be alerted about.
Types of Orders You Can Place
The last platform feature you should check out, at least as a beginner, is the types of trades allowed on the platform. Basic platforms should offer, at the very least, stop limit, limit, stop, and market orders. More advanced platforms allow you to place trailing stop orders and market-on-close orders.
If you are not looking to get into day trading, then the larger number of order types may not be such a huge consideration for you. If you are looking into serious investments and trades, then you should choose a platform that offers as many options as possible. Ideally, advanced traders should be able to set up different types of trades that trigger under specific circumstances and when specific conditions are met.
Figure Out The Fees
Even when you find a great platform, you still need to ensure that the fees are affordable. You need a clear idea of what you will be paying for the platform, if any, and the features that come with that. You also need to find out how much you will be charged per trade.
When you decide to pay for a platform, the cost will be justifiable if the platform has features that other cheaper platforms do not have. You also want to check out the broker and account fee, where applicable, to ensure you are losing as little as possible on your trades and investments.
One of the costs that might trip you up is the account opening fee. This is usually charged by some platforms that handle certain types of trades. These are completely different from investment minimums, which is the least amount of money you need to have in your account before you start trading.
You also need to think about monthly or annual account maintenance fees. If you are a beginner who needs some help, try to find out if the broker access fee is part of your free account. For experienced investors, you may need to pay to get access to advanced tools and features that make you execute more intricate and complicated trades. This is something you should know about.
Other factors to think about are commissions or trade-based fees, whether there are bonuses and discounts for certain trades or trade volumes, whether commissions increase depending on trade volume and whether brokers charge for their advisory services.
Test The Platform
At this point, you should only have one to three trading platforms left. While it is good to know what to expect from a platform at a higher level, nothing beats going in and testing the platform yourself. For trading platforms that allow you to open an account, ideally all of them at this point, you should take advantage of the opportunity and open the account. If they have demo accounts, that is even better!
Going through the sign-up process will also tell you if there is any pain or sticking points on the platform that might come up in the future. In cases where experienced traders have to pay for the “Pro” tools, a lot can be gleaned from looking at what is offered on the free tiers. If there is nothing on the free tiers that hints that the paid or advanced platform has additional features, it’s likely there is nothing behind the paywall.
You should also go through the motions of depositing some funds and making a few trades. This is a great way to learn not only how the platform works, but how smoothly it does so. If you can, pull up multiple quotes for the types of trades you are interested in and try to find out the types of data the platform provides when you want to make a trade or watch a commodity or investment option.
Also, check to see whether the platform offers tools that let you filter trading options by given criteria and how good the information these tools provide is. Remember that the ability to find the right trading option and take advantage of available opportunities will be critical down the line.
Conclusion
Finding the right trading platform can seem like a lot of work, and that is because it is. You should take the time to evaluate every trading platform you think would work best for you to ensure that it actually will. Remember that this is your money and your potential future we are talking about and choosing the wrong platform may lead to regrets down the line.
Leave a Reply