Broker to Trading

While the trader trades Forex through a broker (or more properly a CFD provider), they will do so on the trading platforms provided by the broker. This page has a list of 10 Forex trading platforms, which offers different kinds of features for the trader.

Forex trading is speculating on the change of value of Forex pairs, that is pairs of currencies valued against each other. For example, EUR/USD is Euro against Dollar. As these are relative valuations, the value of these pairs can change, resulting in volatile movements on a chart. Each currency is influenced by economic factors in the country it is tied to. Thus changes in US interest rates (the Fed Funds rate) could potentially result in Dollar relatively moving upwards, against Euro, if EU interest rates are not moving up as quickly. The economic conditions of the country ground each side of the currency pair, providing a basis for fundamental analysis, which is important in Forex.

However the complexity of relative valuations and the amplifying effect of leverage can result in a lack of clarity in Forex fundamental analysis. Thus many use technical analysis, which looks directly at the woods (instead of the trees), as it were and tries to gauge clues for the direction a pair might move in. So a Forex trading platform needs to have both technical and fundamental analysis tools. However, platforms generally do as they are a staple of trading.

The trader may find that technical analysis is also unreliable, as it essentially uses past patterns in the market to predict a future direction, or potential for direction. The market is prone to many influences, such as news and data, which can alter movement in unpredictable ways.

While it is open, the Forex market operates continuously (i.e. from late Sunday to Friday GMT). This means it can be difficult for the trader to track potential market action, by whatever analytical method they follow. To try and solve these problems, traders automate their trading and use robots. Robots are computer programs which are integrated into some trading platforms. Robots can trade around the clock without getting tired. So the trader can either use one already programmed (by downloading it, usually for a fee) or write their own program, that is an algorithm that chooses when to enter and exit the market (and how to manage the trade). Robots however can result in losses, sometimes very rapidly in the trader's account.

Some traders may wish to use the knowledge of other traders, and copy their trades, and copy trading is a big part of markets, including Forex trading. However the platforms on the table seek to capture Forex trading itself, that is the trading which copy traders may follow, so it looks for platforms which seek to capture the core parts of Forex trading, either in their entirety or one or more type of trading.

The reality is the two main types of Forex trading, robot trading and non-robot trading are very different in practice (while conceptually related) and the non-robot trading may have fundamentally different requirements. Platforms supporting robots (automated) trading tend to be focused on features for this kind of trading, while those for humans, aim to provides a clear interface for the human trader. This dichotomy is reflected in the choice of platforms above. Providers who aim to cater to both types of trading may offer different types of platforms, however some platforms do provide for both types of trading.

It may be the case, that a trader starts with a user friendly, human centric platform and moves to a platform supporting robots, but it may also be the case that this does not happen, and it is possible to trade Forex without using robots ever. However, the trader may find that the demands of the type of trading they wish to persue may require a more automated approach, and thus they may find that such a platform is necessary, to at least try.

All platforms can be tried out on a demo at first, including platforms with online trading robots. A demo account provides virtual money (not real money) which can be used to test out the platform, ideas and robots. A demo account is a good place to start and can provide a sense of what type of platform and tools the trader is ready for.