Forex trading is an art which you must learn if you want to be a master trader. Unlike common belief, forex traders do not simply get into a trading floor and start selling or buying currency. For starters, beginners need to know that the forex market, by its nature, is virtual. In order to trade, you have to select a trading platform and open an account with them. After obtaining the login details, you can then start trading on the specific platform.
Learning the ropes is important for anyone who wishes to be a master trader. Understanding the nature of the trading platform that you choose is particularly crucial. The reality is that there are various types of platforms, and they come with their own peculiar versions and characteristics. Grasping the differences with these platforms will enable you to appreciate what each of them offers. Based on these characteristics, your experience of the outcomes will also vary.
Here is a breakdown of some of the various classifications of trading platforms and their trading models.
Classification of Forex Platforms
There are various types of classifications under which forex platforms fall.
1. Web-based (Non-Downloadable) or Downloadable Platforms
One of the common classifications of forex platforms is on the basis whether they are web-based or not. A web-based forex platform is one that is run by software that is found online, and which cannot be downloaded on the trading device. Downloadable platforms, on the other hand, involve software that can be downloaded on your trading device. For the latter type of platform, software comes in the form of executable files which have to be unpacked before being compiled on the trading platform.
2. Programming Language Used
The other common classification of forex trading platforms is based on the programming language used.
MetaTrader was designed by Metaquotes Inc. MetaTrader 5 (MT5), which is one of the most popular platform is not only user-friendly, but also preferred by most forex brokers for its ease of use.
ActTrader, on the other hand, is a product of ActForex Ltd. It has been used by many brokers because of its ease of use. Brokers like AvaFX have used the platform for many years now. While its layout and features are quite different from MetaTrader, ActTrader comes with both downloadable and web-based versions.
Currenex is a trading platform that features two versions. Currenex Viking platform is an electronic communications network platform, while Currenex Classic is a dealing desk. The latter platform is operated under strict market maker conditions. If you are a professional trader, Currenex Viking would be more suitable to use. Newbies prefer Currenex Classic, which is a bit easier to navigate.
A product of TradeStation Technologies Inc, Trade Station uses the Lua programming language. Interbank FX and Forex Capital Markets Ltd use the platform for their trading needs.
cTrader is one of the best examples of electronic communications network platforms. It not only provides direct market access for forex traders, but also allows algorithmic trading on its platform. cTrader is a product of Spotware Systems Ltd.
3. Trading Model
Forex trading platforms are also classified according to the trading model they adopt. There are two main trading models: dealing desk and non-dealing desk platforms. Dealing desk platforms are usually run by market makers. For this type of trading model, the trader must go through the dealing desk for any type of execution. MetaTrader, TradeStation, Currenex Classic and ActTrader fall under this category.
Non-dealing desk platforms are also known as ECN models or direct access platforms. For these platforms, pricing usually comes directly from liquidity providers. They will then be displayed on the specific platform for the trader to exercise their choice based on their own trade objectives. Institutional traders prefer this model to the dealing desk one. Platforms that fall under this category include cTrader, Currenex Viking and cAlgo.
Learning how to trade is crucial for anyone who would like to make a good investment. Knowing the pros and cons of the various trading platforms, and the trading models which they use is therefore important. The good news is that there is a wealth of information online to help any beginner or seasoned trader to get a good grasp of the trading process.