CFD trading is not the easiest way to invest your hard-earned cash. For the absolute beginner, it can be very confusing and maybe even a little overwhelming. There are a number of important decisions you will have to make in the course of your journey, and one of them is picking the best CFD trading platform for your needs. Every CFD broker will have its own preference, although there are a number of platforms you will encounter more than others. But itâ€™s really down to you to decide which one youâ€™d prefer. Donâ€™t worry if youâ€™re already panicking because we will give you all the pertinent information so you are better prepared for this vital decision. But letâ€™s start at the very beginning and explain what a CFD trading platform does.
What is a trading platform?
Also known as an electronic trading platform or an online trading platform, it is basically a computer software program which you use to place your orders with a CFD broker. This computer software is what you use to open, close and manage your market positions. Most of the best CFD software is provided for free, but there are brokers who offer more specialized software at a discounted rate, provided you meet certain conditions. Generally, a trading platform allows you to place trades and monitor your trading accounts. But it is also possible it incorporates certain analysis software as well. Because there are a number of different trading platforms to choose from, now might be the right time to consider the aspects which are most important when comparing one platform with another.
What to look for in the best CFD trading platforms
The trading platforms available for you to choose from are all very similar, but there are a number of factors you should consider when picking the best CFD software.
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- Customer service – Are you going to need someone holding your hand every step of the way? Or are you confident youâ€™ll be able to find your way around and only need some assistance should you have a problem? Everyone will be different, but it will be good to know there is someone you can contact, however often it will be. The level of customer service offered by brokers varies, along with the support provided for more technical issues surrounding whatever trading platform is offered. Part of our site will be dedicated to CFD broker reviews, and we always spend some time assessing the level of customer service offered and include the details, whether good or bad. Because CFD trading can take place 24 hours a day, it is also important for support to be available around the clock. If you encounter a problem in the middle of the night you need to be sure there is support available. Rather than waiting until office hours the next day and potentially missing a profitable trading opportunity.
- Trust – When it comes to investing your hard-earned cash would you rather invest it with a trustworthy provider or some fly-by-night operation that promises untold wealth? We know which weâ€™d prefer and as youâ€™re sensible as well itâ€™s trust which is of paramount importance. When it comes to choosing the best CFD trading platform trust also has an important part to play. When you place an order you want to be certain itâ€™s being executed promptly and efficiently. But trusting a trading platform is a little more than that. Itâ€™s about the company providing the software having well-grounded ethics and principles, as well as being beyond reproach.
- Services offered – A well-developed trading platform is one that allows you to access most markets and execute most types of trade. While your sights may be limited in the beginning, it wonâ€™t be long before youâ€™re looking to expand your trading. Rather than find yourself needing to look for a trading platform with more to offer, pick one that offers the widest range of services in the beginning.
- User-friendly – What would you rather? A trading platform that has been well-designed with the customer in mind and is easy to navigate? Or one that is so complicated youâ€™d need a degree in computer software to find your way around? We know which one weâ€™d prefer. The best CFD software should be intuitive and easy to understand. The only time you should ever need to call out for help is if there is a systemic failure or some technical issue you donâ€™t know how to handle. And these occasions should be few and far between. Otherwise, what is the point if youâ€™ve constantly got to stay in touch for the programmers to guide you every step of the way.
- Cost – Weâ€™ve already mentioned that a number of the best CFD trading platforms are offered for free. However, if you decide you want to pay for the software because you think youâ€™ll be getting a better deal, itâ€™s important to realize the importance of low fees, and no hidden costs. Just because youâ€™ve paid for the software doesnâ€™t automatically mean itâ€™s going to be better than anything that was free. And remember to factor any such costs into your trading figures.
- Additional tools – The more tools the better, because it will mean you are better informed and able to make sounder decisions. But you want all that information to be available at your fingertips, not tucked away or badly organized. The information and tools should be clear, logical and carefully organized. And you need those tools to be ones that you need.
- Availability – Where are you planning to do your trading? When CFD trading was first introduced you needed to spend hours sat at your desktop or at best your laptop. Nowadays, we all want and think we need, access to all kinds of services wherever we might be. And that means sat at the top of a mountain, riding the bus to work, waiting in a queue at the grocery store, or relaxing on the beach. If you want the ability to trade whenever and wherever you might be you need to be certain the trading platform you are using is mobile-friendly. If you choose a platform that doesnâ€™t have a mobile option there is a chance you are going to miss an opportunity.
- Security – How many times have you picked up a newspaper or listened to a news report that mentioned data breaches? It seems that anyone and everyone is vulnerable to hackers. Hackers seem to be upping their game year after year and are increasing in number and level of sophistication. When it comes to choosing a trading platform you need to be sure that the best digital security protocols are in place. As this is the only way to reduce the likelihood of your personal or financial details getting into the wrong hands.
Top CFD Trading Platforms
MetaTrader 4 is the industry standard for CFD trading software
Just type â€˜CFD trading softwareâ€™ into your search bar and the most popular hit will be MetaTrader 4, or MT4 as it is generally known. But what is it that makes Metatrader 4 stand out from all the others and how has it managed to stay popular for so long? The fact it was the first trading software available for online market trading is certainly one of the major reasons. But there are a number of others we feel it only right to mention.
- MT4 is very user-friendly – This is especially important for beginners. It has a user-friendly interface that is very easy to work with whether you are a complete novice or a seasoned CFD trader.
- MT4 supports all major languages – With CFD traders located all over the world, it has been an important aspect in its evolution that users are able to benefit from all the data being in their own language.
- Advanced charting capabilities – This allows you to perform trades and analyze technical elements of the markets at the same time. Also worthy of a mention is the ability to use Expert Advisors. And letâ€™s face it you can only benefit from the assistance of such useful tools.
- Advanced communication tools – MT4 software allows brokers to post messages and communicate with clients in real-time, thereby reducing the need for long and complicated emails and making communication much easier for you.
- Requires minimal resources to run – A number of other trading platforms require huge amounts of resource in order to provide a seamless trading experience. But not so with MetaTrader 4. Which means you also get to benefit because it means you can open positions and have requests processed straightaway.
- All account information is clearly visible – You can view your trading history, open and closed positions, access account information, view your trading balance and password information.
- High level of security – CFD trading involved the disclosure of sensitive and private information which is important to keep safe from hackers and attacks. MT4 uses the highest level of security which encrypts the data sent between you and the brokerâ€™s server. Further protection is provided as it conceals your IP address.
- Easily customizable – If you choose MT4 you will be able to tailor the platform to meet your own trading needs and practices. Including the ability to develop and program your own Expert Advisors and technical indicators. Which is made possible by MT4â€™s advanced MQL programming language.
MetaTrader 4 obviously has a lot of beneficial features. All of which will enhance your trading experience and hopefully lead to more successful trades. But MetaQuotes has chosen to release a new and updated version, cleverly called MetaTrader 5.
Is MetaTrader 5 any better for CFD trading?
So far, MT5 has been unable to reach the giddy heights of popularity its predecessor continues to achieve. But there is hope for this latest version, particularly if you are looking for the best CFD trading platform. Letâ€™s give you the lowdown on some of its special features.
- Interface – MT5 is perfect if you choose to generate more than one account, as the new accounts window in the â€˜Navigatorâ€™ feature allows you to move between accounts very quickly. Which in turn provides you with the opportunity to make use of different strategies across various accounts, as well as save you valuable time.
- Swap effortlessly between carry trades and scalping – Should you decide to have two accounts and trade in these different ways it is easy to switch between them and respond to unexpected market events.
- A range of new indicators – CFD indicators are divided into four different categories: trends, volumes, oscillators, and Bill Williams. MT5 also supports custom indicators too. The categories of indicator also allow for the easy classification of a range of analytical tools.
- Improved support of Expert Advisors – It has become very popular for CFD traders to use Expert Advisors and MT5 makes this even easier with a newly developed trading script and powerful Expert Advisor. All the bugs and errors from the previous MT4 seem to have been ironed out and the programming language enhanced and condensed. You will find it far more efficient and even more user-friendly.
Choosing the best CFD software is very important, and while MetaQuotes may seem to have the market completely sewn up, there are still a number of other trading platforms available to choose from, if you fancy trying something a little different. Before you jump in and start trading weâ€™d thought we briefly look at the different types of CFD order, as this is one of the first things you will need to understand before you think about making a trade.
The different types of orders used in CFD trading
When youâ€™ve decided you want to open and close investment positions you will then have to decide what type of order you want to place. There are a number of options.
- Market order – This is the most common type of order, and by far the easiest. Whether you place a market order to buy or sell it will be executed immediately at the best possible price. But be aware the price could be better or worse than the price you intended. It should, however, be the best available market price.
- Stop order – This type of order will help you to control your losses. Should the position you open start to lose money a stop order will enable you to get out cleanly. A stop order should be set as soon as you enter a position. The order will be executed as soon as the price falls to your exit/stop price.
- Limit order – This tells your broker to sell when the price of the asset hits your preset threshold. Limit orders can also be used to close out a position and take profits.
- One-cancels-the-other-order – This is a combination of the features of a stop order and a limit order. You set your stop price and limit price that allows you to take profits on a trade. This is a good type of order to make if you donâ€™t have the time to monitor all your trading positions.
- If done order – This is very similar to the previous type of order but is more a way of linking two trades together. The second trade will depend on you closing out the first.
- Buy or sell on stop orders – This is a way you can take advantage of a sudden rise or fall in prices. The idea behind these types of order is that a sudden change in price is very likely to signal the beginning of bigger changes. Meaning it will be possible for you to make huge profits or mitigate any losses because you will be taking advantage of an assets momentum.
To finish weâ€™ll look at the development of electronic trading platforms, and why they became a necessary part of online trading.
A brief history of electronic trading platforms
Transactions between brokers and clients were traditionally handled manually. But like many other aspects of our lives, the introduction of computers made a significant impact. In the 1970s a large number of trading transactions were transferred to electronic trading platforms. The first platforms were used by stock exchanges and enabled brokers to place orders remotely. Rather than having to be present at the exchange or communicate via telephone orders were placed using private dedicated networks. In the beginning, it wasnâ€™t possible for the platforms to provide live streamed prices. Instead, brokers and clients had to place orders and wait for them to be confirmed later. This system was known as a request for quote. Inevitably systems evolved and live streaming became possible, along with almost instant execution of orders. Location also became far less relevant as the underlying network came to rely on the internet. Some of the electronic trading platforms also had built-in scripting tools and APIs which meant traders were able to develop automatic or algorithmic trading systems and robots. Quite a novelty weâ€™re sure in the beginning, but now things the modern trader has come to rely on more and more. Between the years of 2001 and 2005, trading platforms developed further and more were introduced to the trading world and there was the setting up of dedicated online trading portals. This meant that rather than having to be restricted to one particular trading platform it was possible to widen the choice.