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When contemplating the choice of a trading platform, an investor should consider both the underlying features and the required fees. It is important since different types of traders need different features to make trading decisions.
To illustrate, features such as market depth charts and Level 2 quotes are essential requisites for day traders and other short-term traders. Conversely, tools specifically tailored to visualize options strategies are useful for options traders.
In terms of fees as a selection criterion, most traders prefer low-priced trading platforms. A case in point is a trader who adopts a scalping trading strategy. Although lower fees are generally preferable, there are usually trade-offs in the offering for consideration. For example, a trading platform that charges a lower price but only offers a few features and limited research, may not be advantageous.
Other ways to assess and compare different platforms are to review various mechanisms like feedback ratings and customer reviews; however, one must keep in mind that all reviewers may not be free from bias or not independent.
Other Requirements for Trading Platforms
Some trading platforms may only be available when specific brokers are involved, while others may be skeptical of certain intermediaries. It means that a broker or an intermediary’s reputation is a factor to be considered before settling for a particular trading platform.
In other instances, trading platforms may require traders to meet certain eligibility requirements before using them. A typical example is a minimum of $25,000 in equity that day trading platforms require traders to be available in their accounts. Options trading platforms may need traders to use their platforms with the approval to trade different options classes.
Examples of Popular Trading Platforms
Various trading platforms use electronic transactions for trade. Some popular ones include:
- Robinhood: Robinhood offers a free trading environment as a way of targeting young adults. The trading platform reflects a revolution from a mobile application to a network-based platform. Its sources of revenue include interests on customer account balances and earnings from order flow to large intermediaries.
- Interactive Brokers: Interactive Brokers is an interest-based trading platform for investors with professional knowledge in investing. It provides investors with access to global markets at low fees.
- TD Ameritrade: One of the popular trading platforms, TD Ameritrade offers brokerage services to investors and traders. The platform’s since developed the Trade Architect platform after acquiring ThinkoSwim.
- TradeStation: TradeStation is another trading platform that is popular with trading algorithms. It executes trades using Easy-Language automated scripts.
