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For people who want to start investing in the stock market, an online investment platform will be a good option. What until recently was reserved for large investors is now available to basically everyone. This platform allows trading in stocks, oil, gold or currencies. The investor has various financial instruments at his disposal.
Online investment platform – what exactly is it?
People who have not yet encountered the concept of an investment platform are probably curious about what it is and what it is based on. An online investment platform is a professional application that allows you to make transactions in the currency and commodity markets.
Beginners may confuse it with brokers, who are intermediaries that provide their clients with an application through which they transact. An investment platform is an application that allows you to use a variety of financial instruments.
Who is a broker?
A broker is an institution that operates in the financial markets. It acts on behalf of its clients and performs transactions for the purchase and sale of selected financial instruments. Thus, it acts as an intermediary between the client and, for example, the Stock Exchange – purchases and sales of shares are made there. The activities of brokers are not limited to the stock market – insurance brokers can also be distinguished. Forex and CFD brokers are the most popular.
Who is a trader?
Who is a Forex trader? It is a person who trades on the foreign exchange market. Any person can become a trader, regardless of age (however, you must be of legal age). You can be a trader on a personal level, by opening a personal account with one of the brokers, as well as on a professional level.
What is the Forex market?
Forex is an international currency market that does not have a stationary location, unlike the classic stock market. The forex platform allows you to buy and sell the currency of your choice. All transactions are carried out directly between buyers and sellers, and are finalized over the Internet, 24 hours a day – 5 days a week.
What is a CFD?
CFDs for Contracts for Difference. These are contracts that allow clients to trade on the price changes of underlying instruments, i.e. stocks, commodities, indices, commodities, ETFs, cryptocurrencies and currencies. It is characteristic of contracts that traders can speculate on price increases as well as decreases. Importantly, clients who trade CFDs do not physically own the underlying instruments.
Also read: How to read stock charts
Traders do not have to pay the costs that are associated with physical ownership of assets, i.e. stamp duties and account management fees, but they also do not have the right to certain products. Clients can only speculate on prices in the markets, and this is where they see their chances of gaining or losing from certain investments. Although the price of CFDs usually reflects the price of the underlying instrument, this is not always the rule.
How does an online investment platform work?
Setting up an account can be handled by any novice investor. Modern trading apps are very easy to use and are usually available either through a browser or as an Android or iOS app.
Investing in the stock market involves opening an account, and it only takes a few minutes. To start trading, you need to fund your deposit in one of several available ways. Minimum deposits vary depending on the service provider. On average, it is between 100 and 500 euros. There are also those that allow a deposit of 20 euros.
Is it free to use online investment platforms?
Of course, brokers make money by providing an investment platform and financial instruments. However, the high level of competition in the market of service providers is related to the reduction of costs for using their services, which vary depending on the trading platform provider. The customer should pay attention to:
- Spread – this is the difference between the bid and ask price. The smaller the spread is, the better for the trader,
- Order fees – in addition to spreads, some brokers charge order fees. There can be big differences depending on the service provider. Some may perform it free of charge, while others charge additional commissions,
- Account maintenance fee – it is worth checking whether a monthly application fee is charged. It is very common that forex brokers do not charge any account fees,
- Withdrawal costs – in a situation where a trader wants to withdraw his profits, there may be fees involved. These are usually fixed and are not incurred frequently, as withdrawals can usually be made once a month.
Online investment platform – why choosing the right one is so important?
An online investment platform allows a trader to trade forex and CDF, through access to different markets, as well as financial instruments. In addition, it’s also access to a wide range of instruments and the ability to use built-in features, such as technical analysis tools.
Beginners should know that choosing the right investment platform is meant to make trading and trading easier for them. In particular, people who do not have much experience need software that is easy to use. Of course, a trading platform alone will not ensure success and the expected results, but it can be of great help. A beginner can benefit from the knowledge and educational part, which was created by specialists of this market.
At the outset, a good solution and choice is to test a certain platform on a demo account, which is available for free and is equivalent to a real account. Beginner traders have a good opportunity on the demo account to try out their trading capabilities on virtual funds and learn about the functionality, as well as the interface of the platform.
What to pay attention to when choosing an online investment platform?
A person who intends to start trading assets on digital markets should know which brokerage services to use. First of all, you should compare the offers of several providers. It is worth paying attention to the following criteria:
- Fees – every trader aims to maximize his profits. However, high commissions and fees can significantly reduce them. These, in turn, are often charged as a percentage of the value of profitable transactions. A beginner trader should pay attention to the table of commissions and fees, as well as the amount of the withdrawal fee,
- Support – it is worth checking whether the chosen online investment platform provides support. If the broker is of high quality, it offers support available every day of the week, available in Polish (not only English), and available by phone and video chat,
- Ease of use – if the broker’s platform will be used in either a computer browser or a smartphone app, it should be easy to use and intuitive. If a trading opportunity arises, the trader should be able to execute it in the shortest possible time and with as few steps as possible. After all, time is money,
- Asset selection – trading is done with a wide variety of assets. A trader should be able to take advantage of the widest possible range of opportunities. The best investment platforms will allow trading on many assets: stocks, currencies, commodities, CFDs, cryptocurrencies. In addition, the user base should be large enough to provide liquidity for quick execution of orders,
- Demo account – regardless of the asset class, trading forex, is associated with some risk. Concerned about the success of customers, many brokers have a demo account, through which the trader can test the functions of the investment platform and various tools. This way he does not risk losing real money, deposited in the account,
- Social trading function – social trading allows you to review and automatically copy the trading decisions of other traders who are more experienced. This function allows you to set automatic acceptance of buy or sell orders from a specific trader to your portfolio,
- Number of domestic markets or international markets – a person using an investment platform, should be able to trade on various global markets. One should not be limited to one or two market exchanges. The more markets and assets available on the chosen platform, the greater the chance to take advantage of a favorable trading offer.
The best investment platforms
The following are the most popular and best investment platforms to consider
This broker has been on the market since 2007. Therefore, it can be assumed that it is a trustworthy broker. Currently, eToro enjoys more than 5 million active users. It operates in a century of countries, and the company’s main location is in Cyprus. Therefore, these eToro are regulated and licensed by the financial supervisory institution CySEC. For the customer, this is a guarantee of the broker’s integrity. This online investment platform guarantees traders security and withdrawal of funds in case of bankruptcy of the company.
It allows you to invest in the stock market in almost all simply financial. What distinguishes eToro from other platforms is social trading, which allows you to copy the movements of other traders. One can also not complain about the functionality and design of the platform. The downside of this broker may be the somewhat neglected learning system. A trader will find fewer training materials here.
This brand has been on the market since 1997, and its headquarters are also located in Cyprus. Libertex is regulated by financial institutions, which systematically check that it operates in accordance with the law.
The online investment platform that Libertex broker provides can be tried free of charge, as it gives access to a demo account. And for trading in front of a computer, Libertex provides the Meta Trader 4 platform, which is valued by traders for its plethora of functionalities.
The ranking of the best investment platforms includes the one offered by ForexTB broker. It is regulated by the financial institution CySEC. The margin rates take into account the restrictions that are imposed by European Union law, which proves security.
This broker has been on the market since 2012. It provides a very clear and intuitive platform, which will not pose any problem for beginners. It can also be tested on a demo account. Professionals, on the other hand, have access to the Meta Trader 4 trading platform.
ForexTB broker gives access to basically all assets. In addition, it provides a large number of investment tools, as well as additional help. The trader can take advantage of trading courses. Multilingual customer service is also available.
The downside that users point out is the large differences in spreads, which depend on the type of account. It is most profitable to trade on a VIP account.
How to use investment platforms?
If a person is new to trading, he should use the following step-by-step instructions on how to take his first position in the stock market.
This online investment platform allows for very intuitive trading, which boils down to 3 simple steps:
Selecting the financial instrument of interest to the trader from the list. A window will open in which the trader will see all the most important information about the product. At the very top, he chooses whether he wants to buy or sell a specific asset,
Then set the quantity, leverage, stop loss and also profit and click on the button to open the position. If the trader does not have funds in the account, at this time the broker will ask him to make a transfer,
If the trader wants to close the position prematurely, he can click the red “X”. Before he confirms the decision, the online investment platform will show him what profits or losses he can expect.
Libertex is a broker that also focuses on simplicity. Trading of assets is also based on 3 simple steps:
- Selecting either a currency pair or a financial instrument from the available list. Moving to a window with detailed information about it. Then the trader must click on the button to open a position,
- Another window will open, where the amount of investment, leverage and other options must be set. At this point, the trader can also determine whether to establish a short or long position,
- Profits and losses the trader can observe in the “open positions” tab. If he wants to end the trade, he can click on one of his assets, and in a new window confirm the closing of the position.
ForexTB broker’s online investment platform is one of the most transparent trading platforms. Assets can be bought and sold in a few simple steps:
- Search for or select a specific financial instrument from the list. After clicking on it, a window with information about it will appear. At the bottom of the data window, the trader has a choice between buying or selling the asset,
- When the trader decides on one of them, a window will appear for selecting the value of the investment, as well as additional options. Finally, you need to confirm your decision,
- Open positions can be checked in the corresponding tab. There you can also stop trading on a specific asset or modify the details of the trade.
How to check whether a trading platform is trustworthy (you may also read: How to start investing in the stock market)?
The trustworthiness of a specific investment platform can be checked in two ways. The first is the financial institutions to which the broker is subject. If it adheres to the controls and regulations of the competent authorities, the investor can be sure that he is not dealing with a scammer.
The second way to check whether an online investment platform is trustworthy is to check user reviews. It is worth checking on the Internet what traders say about a particular broker. Then the investor can see if it meets his expectations.
It is a good idea to check whether the online trading platform:
- does not have hidden fees,
- whether the broker clearly states where it is based and whether it is licensed,
- how customer service works,
- whether the offer corresponds to the investor’s needs,
- how many deposit and withdrawal methods the broker offers.
It is important to remember that even the best online investment platform is subject to the risk of losing funds. The knowledge and tools offered by the trading platform, allow you to minimize the risk of losing funds.
With the help of leverage, an investor can trade much more capital than his deposit. Retail investors record losses if they ignore the topic of the risks of trading with leverage. Therefore, many retail investors’ accounts are closed.
However, leverage also works the other way. It makes it possible to generate significant profits. Everything depends on luck along with knowledge and skill.
What should characterize a good online investment platform?
Choosing the right investment platform is not a simple task, as there are really a lot of tools for trading financial instruments. What features should a good trading platform have?
A forex platform should be so intuitive that even beginners can handle it without any problems. The interface should be clear, which is why most modern systems allow you to edit it.
On the other hand, a design tailored to the investor’s needs allows efficient navigation through all the tabs. The best investment platforms have links to key sub-pages on the homepage, but their operation at the same time is simple and pleasant.
Web-based platforms are gaining popularity, as the trader can always use them – all that is needed to operate them is an Internet connection. After all, a trader needs to be able to control and react quickly at all times, since changes in the capital markets happen very quickly. If a trader does not like to use a computer or often travels, a phone application will be a good solution for him.
When deciding on a system, it is best to choose one that is available in both web, software and mobile versions. This will allow use on any device and provide a high level of user comfort. Investing in the stock market should not just be about buying one financial instrument. Therefore, when choosing a platform, pay attention to the available markets.
Quick access to markets
Traders with extensive experience realize that minimizing losses is related to proper portfolio diversification. Tools allow you to invest in CFDs on stocks, indices or the increasingly popular cryptocurrencies. For traders who want to diversify their portfolio, an online investment platform with access to the OTC market will be a good choice.
Advanced analytical tools
Professional traders rely on a lot of analysis, as how the financial market behaves depends on many different factors. In particular, analyses should be based on historical data. The best trading platforms allow you to open up to dozens of charts at the same time.
This feature makes it easy to compare different rates. When analyzing the market situation, you should take into account the latest information from the sphere of politics and the economy. It is also necessary to pay attention to important events, which is why the best investment platforms give traders access to news and analytical services.
When analyzing the market, it is worth using the reports generated by trading platforms, and when choosing a tool, it is best to opt for one in which they are presented in the form of expanded tables. These, in turn, provide a great deal of valuable information that is also easy to read.
Advanced summaries allow you to work especially for those who base their investment decisions on hard information and data. For the novice trader, basic reports that provide less information will work well.
Speed and reliability
Often, decisions in the financial market must be made instantly. Therefore, it is important to guarantee that the chosen online investment platform will work quickly and reliably. Success or failure is very often determined by making the right decisions, without undue delay on the part of the operation of the trading platform.
An important parameter that determines the choice of a particular trading platform can be precisely the availability of various orders, from immediate through pending orders, as well as profit, trailing stop or stop loss, but also whether they allow placing and modifying these orders straight from the charts.
Best Forex platform
The MetaTrader 4 platform has the best reputation, but this does not mean that it will be good for everyone. It will work best for beginner traders. It has an intuitive interface, as well as easy access, which will make it much easier to take the first steps. If you have problems, you can find toturials online that show you how to use the platform (you may also read: How to invest in the stock market).
However, for experienced traders, a newer version – MetaTrader 5 – may be a better option. This online investment platform works well for market analysis, as it offers quite a few more tools. If the demo version of either MT4 or MT5 will be too complicated for a trader, he can try his hand at the Plus500 platform. There are a limited number of features there, and moreover, the interface is in Polish, which will be quite an advantage for novice traders.
Read also: Playing the stock market
An online investment platform definitely makes investing in the stock market easier. However, it is worth taking a few moments to choose the right one, which will suit the investor’s abilities, skills and expectations. Beginners should bet on trading platforms that are not too complex, which they will easily navigate and which will not cause them major problems.