Forex Trading Software:
A major appeal to trading currency on the Foreign Exchange Currency (Forex) market is the low initial investment. This is primarily due to the high number of brokers competing for Forex traders’ business. Forex brokers keep the required minimum deposit and minimum trade sizes almost ludicrously small in many instances. Most people considering trading currencies already have computers of one kind or another, including tablets and mobile phones, along with internet connections for connecting to Forex broker servers. Most brokers offer extensive education resources, so the monetary outlay here can be nil, at least for those just getting started or of an intermediate skill level. One final piece of the picture is Forex software, which again is usually free for client use with a funded trading account. Known in the industry as a “trading platform” there are many versions of trading software and helping you find the very best forex trading platform is the subject this article focuses on.
Unlimited Choices of Forex Software/Trading Platforms
Most Forex traders only use one, or at most two, Forex platforms. Before settling on these one or two, however, they will utilise Forex broker demo accounts to compare various broker Forex software. Doing this, two things become readily apparent. One, there are more similarities than differences in trading platforms, and two, there will be some that seem to work better than others on a particular device and simply appeal to the user for mainly subjective reasons.
Another pleasant discovery will be that Forex brokers go to great lengths to make fast, powerful and reliable Forex software that does not require an expensive device to function properly.
Popular Forex Software Programs
An investigation into trading platforms shows that some Forex brokers offer as many as 100 options. That may seem to be a bewildering number, one that would require months or even years to evaluate. That same investigation, however, will reveal that almost every Forex broker offers a version of the world’s leading Forex software, MetaTrader 4 and its most recent version, MetaTrader 5.
MetaTrader 4 and MetaTrader 5
There are thousands of traders of all levels of experience who would not consider using any other trading platform. Forex brokers license this software from the developer, MetaQuotes Software. Brokers sometimes tweak the software, but for the most part, use it as is to provide clients with live streams of currency prices and charts, account management functions and the ability to place orders and manage trades. Both MetaTrader versions are based on the Windows operating system, making it easy for Windows users to get up to speed quickly with Forex trading, at least in as far as the Forex software is concerned. Some brokers have customised MetaTrader to be compatible with the Mac operating system. Since 2007, when the first smart phone arrived on the scene and fundamentally altered the way people approach computing, most brokers have developed mobile friendly versions of MetaTrader.
The primary appeal to traders using MetaTrader is the ability to write trading scripts and Forex robots to automate the entire trading process. This ability is particularly valuable to traders who live in time zones well beyond the zones where most trading takes place.
MetaTrader 4 has been around since 2005. MetaTrader 5 came along in 2010, but it has not come close to supplanting MetaTrader 4 in terms of the number of brokers offering this software or the number of traders. MetaTrader 5 has generally received favourable reviews, but it seems to be a case of providers and users deciding that a reinvention of the wheel was not needed.
One of the primary reasons that MetaQuotes Software released MetaTrader 5 was to provide access to financial markets beyond those that could be traded on MetaTrader 4. For a Forex trader, this is a moot point. Another reason was the “no hedging” rule that the main U.S. regulatory body, the National Futures Association (NFA) placed on the currency markets to prevent traders from being long and short in a currency pair at the same time. Traders quickly learned a simple workaround to the no hedging rule, which was to have sub-accounts where they could be long and short simultaneously without running afoul of the NFA.
The conclusion regarding MetaTrader versions of trading software is that thousands of traders and over 10 years as the leader in Forex platforms is clear indication of its value. It is fast, stable and fairly easy to learn. This allows traders to concentrate their energy on trade setups, trade entry, trade management and trade exit as opposed to managing software.
The cTrader Forex Trading Platform
The first, most important, maybe even the only thing, anyone needs to know regarding cTrader Forex software is that it is designed to facilitate Straight Through Processing (STP) trading. This means that buy and sell orders for currency pairs are routed straight to the currency markets via an Electronic Communications Network (ECN). For traders, that mouthful of Forex jargon simply means that the trader’s Forex broker does not handle the order at a dealing desk, where the broker could change the price quotes to the broker’s advantage. Avoiding a broker dealing desk is paramount, but it is mostly a matter of broker selection.
cTrader was designed by a company called Spotware. This software is still dwarfed by MetaTrader for the number of brokers and traders using it, but it is growing in adoption as the growth of automated trading makes its strengths apparent. One of those is the intuitive nature of the platform that makes using it so simple. Spotware has made continuous upgrades and enhancements to cTrader and users who have switched from other platforms enjoy a larger charting area and more trading tools and indicators. Traders interested in automated trading use the equivalent of MetaTrader’s Expert Advisors, a system called “Calgo,” which stands for c-algorithm.
cTrader is also valuable to traders who prefer manual trading and do not wish to devote the time to developing Forex trading robots and algorithms. As far as a comparison between these two Forex software platforms, cTrader has an innovative Depth of Market feature that enables traders to make trading decisions based on three different depth of market criteria, which is valuable for understanding market liquidity, more precise trade entries and the ability to anticipate the buy/sell spreads for brokers that use dynamic spreads for their quotes. cTrader also has versions for Mac and mobile devices of all types.
Traders who change Forex brokers, and many do change, will benefit from both these platforms because these platforms go with the trader, meaning that changing brokers will not require traders to learn new Forex software. Beyond that, the choice is mainly one of preference and many traders gladly use both platforms with very little disruption when switching between the two.