If trading is the bread for traders, the trading platform is the butter. Without the right trading platform, you can never expect to make the profits you dream of.
Contrary to what many novice traders think, a trading platform often plays the determining role between profit and loss.
When you register with the wrong broker, you would often find placing your buy (market) order at a lower price, but the price gets executed at a much higher level. Similarly, in the case of a sell (market) order, the price you get will often be lower than the price you wanted while placing the order.
While this rarely affects the overall profit in case of a low investment amount, it often proves fatal when the amount invested is substantially high.
The best benefit of a modern trading platform is that it offers you several distinct features, like Python correlation, which not only makes trading easier but also improves the overall experience of stock trading.
Scroll down to get a sneak peek into modern trading platforms and discover the distinct features that make a platform ultra-modern and make trading the best profession on earth.
The Top Five Intuitive Features That You Can Spot In A Modern Trading Platform
A modern trading platform incorporates the best features of real-time data, algorithmic trading, accurate charts, best indicators, preprogrammed strategies, seamless integration between various databases and the trading account, and super-fast order execution. Depending on nature, interface, and the subscription plan, any modern trading platform will offer you the following intelligent features.
Charts help you in decoding the complex price movements of a stock.
As a trader, a chart is your most trusted friend. Charts give you an idea of predictable upswing or downswing of a stock price. They also allow you to understand the supply and demand zone of a stock.
Charts are used by both price action traders as well as technical traders.
As a price action trader, you can draw trendlines and S&R lines on the chart to understand a stock’s movement and determine the entry and exit points. As a technical trader, you can put indicators, like Moving Average, VWAP, VWMA, and Bollinger Bands, on your chart to figure out the entry and exit points.
A modern trading platform offers you the following chart options:
- Candlestick – The simplest of all, a candlestick chart shows the time-based price movement.
- Heiken Ashi – It is an advanced form of candlestick chart, which shows the trend minus noise.
- Area – An area chart is used to identify the long term trend without noise.
- Renko – Unlike other time-based charts, a Renko chart depends on the price.
- Bar – Also known as OHLC charts, this chart accurately spots the open, high, low, close price of a stock during a specific time.
By knowing the proper ways to use each of these charts, you can filter out the one that works the best for you.
Algorithmic or Algo trading is both the present as well as the future. It has revolutionized the way traders perceive the markets.
In simple terms, Algo trading is a bot-based trading mechanism, which allows you to place orders without physically scouring for stocks. The scanner automatically filters stocks that meet the predefined criteria and places buy or sell orders on its own. If appropriately used, Algo trading can take the art of profit-making to the next level.
A modern-day trading platform like Alpaca allows you to set up the API so that it sends buy or sell orders directly to the exchange, thereby eliminating the need to execute the order through a client physically. You can also use the third-party integration feature for backtesting a strategy and deploying it to make consistent profits.
The best part of a modern trading platform, which also offers commission-free Algo trading, is that you can paper trade to learn the tricks of trading and shift to the real account when you are confident about taking it head-on.
Hi-Tech Technical Indicators And Custom-Made Strategies
If you follow price action trading strategies, you would rarely require technical indicators. But, at times, especially during positional trading, you would need to use technical indicators like moving average, RSI, or MACD. Expert price action traders typically use technical indicators for double confirmation.
While almost all trading platforms provide technical indicators, the indicators’ quality and viability or the signals they generate are doubtful.
To ensure your trading platform is equipped to help you excel in the task, you should test the indicators’ quality by real-time testing and backtesting. Moreover, you may consider the platform as modern if it allows you to plot indicators in one chart and copy the same strategy on multiple time-frame charts seamlessly.
However, make sure not to overload the chart with multiple indicators. Not all indicators are made alike. What works for you might not work for another trader.
Another feature that most modern trading platforms offer is the ability to test previously-tested or newly-developed strategies.
When you find out the indicators or strategies that work for you at least 80% of the time, you can thank the trading platform for being the most modern you can lay your hands upon.
Real-Time Stock Scanner
The stock market opens up opportunities every second, but it is ultimately your skills that determine your ability to grab the opportunity.
A modern trading platform offers a real-time stock scanner, which can search thousands of stocks every second, identify the opportunities as they develop, and let you ride the wave to make a decent profit.
However, you should not trust all of the signals generated by the scanner. The market runs because of human beings of flesh and blood. Although a preprogrammed scanner can predict to some extent, a sudden news flash may change the course of the stock entirely, and it may happen too fast.
Hence, to grab the best opportunities, combine the scanner with a time-tested strategy, as that can help you to filter out the original signal from a fake one.
The hallmark of a modern trading platform is that it allows you to trade from anywhere around the world. You can identify the right broker by looking at the functionalities and features they provide on their web interface and whether there is any difference between the web and mobile platforms.
Generally, the best broker’s mobile-based trading platform is as intuitive as the web platform. As you already know, the trading platform makes all the difference between profit and loss.
With every passing day, trading is becoming more challenging. In addition to trading, a trader also needs to keep an eye on various rules and regulations, as the wash sale rule. A modern trading platform not only makes trading easier but also enables you to follow the rules easily.