CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

How to Find the Best Forex and CFD Trading Platform?

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Success on the Forex and CFD markets is influenced by many factors. One of them is the trading platform, also known as a commercial platform, transaction platform, or investment platform. In this article, we take a look at what the Forex market is, how it works, and how to find the best CFD and Forex trading platform.

A high quality trading platform needs to suit the investor’s individual preferences, be efficient, fast and reliable, offer access to numerous instruments, as well as offer some additional features for facilitating more accurate analysis. Finding just the right platform for your needs, therefore, is not an easy task.

Before we dig deeper into how to recognise and find the right Forex and CFD platform for your needs, let’s first get to know the Forex market a bit better. In the following section, you can learn how to start trading in the Forex market, what you need to pay attention to when selecting the right broker, and how to know which trading platform might be the right one for you.

The Forex Market

The Forex market, or the currency exchange market, is the largest market in the world. It’s characterised by:

  • High liquidity
  • Easy access
  • Quick order execution
  • Application of financial leverage

The Forex market operates 24 hours a day, 5 days a week, and includes international corporations, commercial banks, central banks, and investment funds, as well as individual clients.

Let’s take a look at how you can begin trading CFDs based on currency pair exchange rates. First of all, you will need to find a company that can provide you with access to the Forex market. Most often, this will be either a brokerage house, or a similar financial institution, dealing with the currency market.

Brokers are the entities which play a key role in currency trading. They act as intermediaries between the market and the investor. Among the multitude of information and various tempting offers, finding the right broker for you can seem like a daunting task. However, this doesn’t have to be the case.

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When you’re looking for the right broker for you, it’s important to pay attention to whether or not they care for their clients’ welfare, what kind of products they offer, and how broad the range of their high standard services is.

What Is a Forex and CFD Trading Platform?

CFDs - Contracts for Difference 

Before we start, it’s important to note that Forex platforms are not actually used for physical purchases and the sale of currencies, as they do not operate as currency exchange offices. The basis of activity of Forex platforms for retail clients is granting access to CFDs for currency pairs.

CFD denotes a contract for an exchange rate difference. A CFD is a specific kind of agreement among two transaction parties, obliged to reconcile an amount being the difference between the position’s opening and closing price.

CFD is a derivative instrument taking advantage of financial leverage and enabling trading both on increase or decrease in the price of the given financial instrument or currency pair it is based on. The important thing to remember about leverage, however, is that while it can magnify your profits, your losses are also magnified in the same way. So if prices move against you, you may be closed out of your position by a margin call, or will have to top up your funds to keep it open. This is why it’s important to understand how to manage your risk.

Contemporary Forex platforms offer much more than CFDs based on currency pairs - they also offer CFDs based on indices, raw materials, shares, or ETFs. Moreover, they enable buying real stocks from all over the world, or units of extremely popular ETF funds. All that can be easily accessed from a single platform.

What Is a Trading Platform?

Let’s continue by explaining what a trading platform actually is. A trading platform is a piece of software, either an online application, mobile application or a computer programme, which enables trading on the financial markets wherever internet connection is available.

On a trading platform, you can either buy or sell financial instruments offered by the broker in real time, on the exchange and over-the-counter markets. Trading platforms include charts with instruments offered by the broker, based on real time quotations.

Because of the highly competitive nature of the industry, brokers often do their very best to offer state-of-the-art technology and functionalities to their traders. A high quality broker can be easily recognised, as they will continuously follow new trends, and make sure they are not outpaced by others, and thus eliminated by the market. Brokers strive towards client satisfaction, which is why they are dedicated to continuous development and constant improvement of their offers.

Industry discussion forums and consumer review websites, such as Trustpilot, are excellent places for finding opinions and rankings from other clients, traders and investors, who have already tried and tested a certain broker.

A quality trading platform will offer a number of tools and functionalities for facilitating analyses. Such tools often include, but are not limited to:

  • Technical analysis ratios
  • Tools for drawing on graphs
  • Up-to-date market information
  • Access to analyses and statistics

Moreover, users are often offered highly sophisticated advanced functionalities, such as the possibility to implement their own, non-standard solutions, or to use and test automatic investment strategies.

A quality broker will often provide their platform users with constant access to educational materials, such as courses and trainings. An interesting way of offering assistance to investors is to provide them with access to individual investment consultations with market experts.

One of the most important tools for investors, regardless of their level of experience, is the trading platform. A platform allows traders to freely submit their orders, execute transactions, analyse graphs, or manage their portfolios, in a convenient manner.

How to Start Trading Forex

When a trader first decides that they want to start investing on the Forex and CFD markets, they need to choose a:

  • Broker
  • Trading account, offered by the broker
  • Trading platform, also offered by the broker

For first-time traders, finding the right platform is especially important. Moreover, new traders often find this choice much more difficult than experienced traders, who know exactly what they need to pay attention to, and which functions of trading platforms are most important and useful.

Often, brokers will offer beginners and those interested in learning how to trade access to a free demo account, where users can become acquainted with the appearance, functions and tools available on the trading platform. Thanks to this solution, the user not only has an opportunity to get to know the platform, but also to try their skills and see how they would feel as a real investor.

Any investor, regardless of their level of experience, should keep in mind that a trading platform needs to be functional. Quick, reliable and efficient platforms often make trading easier for their users. This is especially true for platforms designed for trading in currencies, raw materials and other financial instruments, as they require quick taking of positions.

Hitting the right moment for investing is an important factor when it comes to the Forex and CFD markets, which means a trader needs to be able to rely on their platform being highly responsive. A desirable trading platform is also intuitive, with a user friendly interface that does not make it difficult to find a specific option. Moreover, the wider the range of functions and additional tools is, the more advanced the analyses executed by the investors can be, which is an indisputable advantage.

Trading platforms offered by brokers can be divided into two types:

  1. Platforms created by the broker, also known as ‘original platforms’, e.g. xStation
  2. Platforms developed by third parties, made available to brokers under a licence, e.g. MetaTrader 4

Traders often prefer platforms developed by the broker, as they tend to be more focussed on meeting the specific needs and expectations of their clients. 

Such platforms may be tailored to a specific group of recipients, taking into account their individual preferences. Trading platforms provided by third parties contain universal solutions, which may not be fully adapted to clients’ needs and the broker’s extensive offer. Update and innovation related processes may proceed slightly slower, which, however, is no disadvantage as the software itself may be good.

Types of Trading Platforms

Brokers offer platforms in 3 versions: as computer software, online platform or mobile application.

  • Computer software involves downloading the installation file to a computer, proceeding with the installation process and launching the platform. This solution allows operating the platform in the most stable, fastest and reliable manner. One of its disadvantages, however, may be that sometimes all the platform settings will be accessible from a specific computer only.  This is the main reason why in today’s mobile world, this solution is losing popularity among retail traders.
  • Online platforms are currently a very trendy solution. They allow displaying of growing quantities of data, while decreasing the burden on the browser. Thanks to that, such technologically advanced platforms can be easily displayed in an internet browser’s window, with the data and settings stored in the cloud. This allows access to the whole account and all settings from any device upon logging in.
  • Mobile applications are quickly gaining in popularity. Mobile trading apps enable investors to have access to their account whenever and wherever they need it.  One of their biggest downsides is that they require more time and resources to develop, especially when the goal is to combine state-of-the-art features and an intuitive design. As a rule, mobile applications are used for viewing the market situation or open transactions, and not really for conducting advanced analyses.

The best Forex and CFD market trading platform would typically be described as fast, easy to operate, always containing up-to-date information, and offering the required functions and tools. Currently, one of the most popular trading platforms worldwide, enabling trading on the Forex market and on CFDs, is MetaTrader 4.

Popular MetaTrader 4 Platform

The MetaTrader 4 trading platform, available on the market since 1 July 2005,  is among the most frequently used currency market platforms. It is made available to many brokers by MetaQuotes Software; a Russian software company that specialises in the development of software for foreign exchange trading.

MetaTrader 4 is favoured by both professional and less experienced investors, as it is very simple to use, legible and intuitive. This is not a platform enriched with numerous advanced functions. Instead, it focuses on basic tools which are available instantly.

Another reason underlying the platform’s popularity is the fact that, using the simple MQL programming language, anyone can write a trading automat. There are many of those available on the Internet which, in the opinion of many, is expected to improve or automate the decision making process. The automat identified as Expert Advisor (EA) makes decisions to buy/sell itself, based on a predefined algorithm.

Original xStation Platform

Another popular platform for trading the Forex and CFD markets is xStation. This is an original platform, developed by XTB in 2011. Currently, the latest version of the platform, xStation 5, is widely accepted by users from around the world.

This state-of-the-art platform has obtained numerous awards and distinctions. The platform provides the user with access to extensive tools of technical analysis, market analyses, commentaries, macroeconomic calendar and statistics.

xStation 5 has an advanced share and an ETF scanner. This allows anyone to filter over 1000 of available shares, taking into account popular parameters, within seconds. xStation is available in three formats: as computer software, a mobile application and an online platform. This is an innovative platform with a number of advanced functions, window systems, and with an extensive personalisation space. The creators of xStation provide the user with a 21st century trading platform, which anyone can adapt to meet their own needs.

Key parameters important for selection of a CFD market and Forex trading platform

Most CFD and Forex brokers offer their clients various trading platforms. These may be the brokers’ own platforms, or those made available by third parties. Both kinds of platforms are designed to fulfil the same objective – they let investors participate in the market.

Current trading platforms have similar functions and tools, and they mainly differ in terms of technologies, interface and details, which is what often determines their success. A properly designed trading platform is supposed to anticipate the expectations of even the most demanding clients. The tool ought to be developed and improved bearing in mind investors’ needs and be characterised by transparency, innovation and, above all, ease of use.

Selecting the best trading platform is based on, among other criteria:

  • Speed and reliability
  • Functionality and ease of operation
  • Technical analysis tools
  • Free additional features
  • Access to an extensive product offer and mobility

Let’s take a look at each of these points in greater detail below.

Quick operation and reliability

In many cases, decisions on the financial market must be made instantly. Thus, it is necessary to guarantee that the platform will operate quickly and reliably. In many cases, success or failure is indeed determined by making the right decisions without undue delay caused by operation of the trading platform. An important parameter when choosing a platform may be the availability of various kinds of orders – from instant orders to waiting orders, take profit, stop loss or trailing stop orders – and whether or not it offers the possibility to submit and modify orders directly from graphs.

Functionality and easy operation

Easy operation makes the user feel comfortable. This is why platform authors make sure their platforms are user friendly and intuitive. Nothing is more annoying than looking for simple functions which ought to be ‘at hand’ and wasting time on that. The client expects not having to bother with getting to know the platform and learning its functionalities.

Technical analysis tools

Conducting a market analysis without the right tools available on the platform is impossible. Brokers should make sure that their clients have access, at the very least, to technical analysis tools. This includes drawing of trend lines, trend channels, Fibonacci retracements or expansions.

Moreover, a high quality trading platform should provide the user with even more tools, as each investor has specific preferences. Some will take advantage of Elliott waves, some of Gann tools, while others may want to have access to already labelled and measured harmonic patterns.

A broad range of technical analysis tools is a necessary requirement for any good trading platform. Along with that, traders are also expected to find a multitude of technical analysis ratios for any selection. As with everything else, each trader has their favourite choices of ratios and, as a lot of them have been developed over the years, brokers are expected to add them to make them available on their platforms.

Brokers should continuously expand and enrich their existing offer of available tools with new financial instruments. This is why it’s necessary to have respective scanners and filters. A broker with access to, for example, thousands of shares must make sure that the client is able to filter them based on predefined parameters within a very short time frame. The same applies to account statistics. In this manner, many investors may trace their past behaviours and use such tools to draw conclusions for the future, regarding their investment decisions.

The more tools, the better, especially if the personalisation capability is added in order to choose only those options which the investor wants to see on the platform.

Free of charge additional functions

Access to the training platform ought to be free of charge. Therefore, regardless of whether the tools are used in trading, commentaries, analyses or education, they should all be contained in a single package for each client.

Access to extensive product offers

Thanks to a broad spectrum of products and services, an offer coming directly from the broker will resonate better with the client, and they may be more likely to consider it. If the client gets everything they need in one place, namely access to numerous instruments of the Forex and CFD markets from all over the world at an affordable price, they most likely won’t feel the need to look any further. 

Mobile trading platform

Nowadays, it is beneficial if the trading platform is also available for mobile devices, including mobile phones and tablets. Consequently, the flexibility and comfort of unrestricted trading and management of one’s portfolio whenever you want and on any device, offer a significant advantage.

Conclusion

While selecting the best trading platform, you should pay attention to the above criteria. However, you should always first consider your own preferences, tastes and expectations of the product, choosing the one that you feel might work best for you.User comfort is important. While a trading platform is important for achieving success and gaining an advantage, you mustn't forget that it’s only a tool.

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This content has been created by X-Trade Brokers Dom Maklerski S.A. This service is provided by X-Trade Brokers Dom Maklerski S.A. (X-Trade Brokers Brokerage House joint-stock company), with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. X-Trade Brokers Dom Maklerski S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.