When choosing a forex trading platform, traders should consider their approach, data reliability, software provided, fees, and account size. If using a computerized system, the software must interface with the broker’s order placement software. Chart pattern analysis traders should test software and verify speed and reliability. Costs are important, including hidden fees for data. Position traders may be charged a fee if the account doesn’t generate enough income. Large account holders should inquire about interest-bearing accounts.
Considerations in choosing a forex trading platform include the approach of the trader, the reliability of the data, the type of software provided by the broker, the brokerage fees and the size of the account the trader will be opening. If the trader plans to use a computerized trading system, the first requirement is that the trader’s software is capable of interfacing with the broker’s order placement software and that the interface is reliable and fast. Some brokerage reporting systems are unreliable and fail to report a portion of the trades that take place. Undeclared trades can cause a profitable computer trading system to lose money.
If chart pattern analysis is the approach used by the trader, he will want to test the software provided by each broker he is considering and see if the software meets his needs. The trader may have a software program they like, and if so, they may be interested in finding a broker who has an interface with their software. Most brokers support interfaces to at least some of the commercially available software, so the trader is likely to find a broker where he can use what works for him. The trader should also verify that the forex trading platform offers adequate speed and reliability for the trader’s needs.
Costs are an important factor in choosing a forex trading platform because the higher the trader’s costs, the more difficult it is for him to earn a profit. A paid brokerage provides a cost structure that is easy to evaluate. Finding the true costs if the brokerage does not charge commissions but instead uses a spread from actual market prices is not straightforward. Many traders can easily calculate the costs of a two pip spread, the trader can certainly calculate the costs of, say, a two pip spread, but using a pip based broker delays trade execution or prevents a accurate data flow to the trader, he should consider switching to another brokerage firm.
A forex trading platform can have other hidden costs, including brokers charging fees for free data as part of the price for using their software. The trader must specifically ask for any data that he finds important. Some brokers accumulate fees but present them piecemeal, forcing the trader to ask for exchange fees, brokerage fees, data fees, and any other fees to find out the true costs he is paying. Position traders should be aware that if a trading account fails to generate sufficient monthly brokerage income, almost all forex trading platforms will charge a fee. A trader opening a large account should inquire if the brokerage has interest-bearing accounts.
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