What is a Trading Platform and Should You Use One?

A trading platform is an online software that allows you to trade a variety of securities. Trading platforms are typically offered by a financial institution which acts as a intermediary between yourself as the investor, and the securities you invest in.

The assets you can invest in will depend on the trading platform you are using. If you are using a basic online brokerage such as Webull, you are typically limited to stocks, ETFs, and some crypo. However, if you are using a more advanced platform such as Tradestation, you will have a much larger selection. To keep things simple, you can expect to see the following assets on trading platforms:
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Charts: Charts simply display the historical data and price of how a security has performed. Within your trading platform you can choose the timeframe you would like to view this data on. Common timeframes are intraday, daily, weekly, monthly, quarterly and annual.

Technical indicators: Technical indicators are sets of anaylsis tools that you can place within your trading platform (either on your chart or below) to help you make more informed decisions. There are hundreds of available indicators, but most fall into four main categories.

1) Trend indicators: help you identify the direction of the current trend in the market. 2) Momentum indicators: help you measure the strength of a securities price movement. 3) Volatility indicators: help you measure the level of market volatility. 4) Volume indicators: help you measure the level of trading activity in a security.

Paper trading: Paper trading simply allows you to practice trading in real simulations using virtual funds. It is a great feature if you are a beginner, or if you want to test a new strategy as you don't have the risk of losing any money, but get to practice trading using real tools and real market conditions.

Fees: Fees should be a main consideration when you are choosing a trading platform. Depending on the platform, you can incur a variety of fees including commission fees, transer and withdrawal fees, and any minimum deposits required to open an account.

Platforms with high fees often offer more in depth trading tools and more tradeable securities, whereas platforms with low fees offer the opposite. Low fees or high fees are not necessarily good or bad. It comes down to what you want the platform to do for you, so take into consideration what value you are getting for the fees you pay.

Features: Your next consideration should be the features that the platform offers. Do you want something that just gives you the basics so you can test trading out, or are you in need of a platform with more in depth features? You can also opt for a well balanced platform such as Etrade if you want something that falls somewhere in the middle.

Experience Level: Thirdly, keep in mind if your platform is best for beginners, intermediate or advanced level traders. If you are a beginner and choose a platform suited for advanced traders, you are going to be miserable. The opposite is also true. A good indication if a platform is beginner friendly or not ties into the first two considerations. If the platform is affordable and offers a clean interface, it is usually a good place to start.

Requirements: Finally, take into account if the platform you want to use has any special requirements. For example, some platforms require that you must maintain a certain balance in your account in order to use the platform.

Control: Trading platforms allow you to be in complete control of the securities you invest in, how much you invest into them, and if you want to make any changes to your investment portofolio.

Convenience: Since many modern trading platforms offer web, desktop, and mobile based verisons, you can invest from almost any device, anywhere. There are even platforms such as Interactive Brokers that offer platform access on a global level.

Affordable: Most modern day trading platforms offer commission free trades of Stocks and ETFs, and relatively low fees on other securities to make investing affordable for most people.

Learning curve: There is always a learning curve when using a trading platform. Getting used to the features, and order execution to place trades can take time and effort to learn.

Time consuming: Trading is not an investing strategy that can be mastered overnight. You have to spend consistent time on the platform analyzing the markets to find opportunities to execute profitable trades.

High stress: Trading is a very high risk investment strategy and many people end up losing money. It can become emotionally draining and stressful over time to use a trading platform to invest if you don't have a good strategy.

Before you sign up for a trading platform, you should be aware of a couple alternatives. If you don't like the high stress of choosing your own investments, as well as the time required to become a successful trader, you should consider using a robo advisor. A robo advisor is a digital financial advisor that uses complex algorithms to build and manage an investing portfolio based upon your goals and risk tolerance.

Secondly, you should consider using a certified financial advisor. Although trading platforms give you control over your investments at affordable costs, they can't create a comprehensive financial plan for you. If you want additional financial help such as tax advice, retirement planning, and budgeting it is best to seek out a financial planner as opposed to just using a trading platform.