Insights

What Trading Platform Should Brokers Offer their Customers

October 4, 2016

When starting a brokerage business, choosing the trading platform to offer can be a difficult task. A broker should take into account many factors when it comes to the trading platform to offer: to build a new one, to use one that is most popular, or to invent a new concept when it comes to forex trading and incorporate trading alongside that platform.

There are advantages and disadvantages for each of the above-mentioned possibilities, and the idea of this article is to offer a guidance to solve this task.

Develop a Newly-Built Trading Platform

This should be the last option for a new broker! Well, established forex brokers may choose for this possibility, as at this moment in time such brokers will have a solid customer base and probably enough revenues to justify such an investment.

Even in this case, though, such a thing is not recommended as traders will be confused and the broker will need to use a lot of resources in order to educate customers on how to use the new trading platform.

On top of that, when it comes to traders, there are two main groups that use a trading platform in two different ways: one group is trading solely on a fundamental basis, namely interpreting the economic news. For this group, what matters is to only know how to enter and exit the market, so changing the trading platform is not that important.

However, there are traders that use technical analysis, like counting waves with Elliott Waves theory, or other technical indicators that need to be used on a daily basis. These traders need to know all the shortcuts the new trading platform has to offer and will most likely turn their back to the broker and make their analysis on other trading accounts.

Therefore, building a new trading platform is both costly and will result in losing some of the client’s base in the case of established brokers.

As for new brokers, when you start a business, the aim is to gain a customer’s base first and then to look for other directions to differentiate your services. If you add the high costs for such a task, then it is strongly recommended to use a well-established trading platform in the trading community

MetaTrader 4 and 5

MetaTrader is the most popular trading platform among forex traders and it comes in two editions: 4 and 5. As a broker, it is easy to offer this trading platform as it has the advantage that it is known by the vast majority of forex traders and even if some analysis are being made on other brokers, they can be easily imported to the new trading account.

The main difference between the MetaTrader 4 and 5 platforms is that the first one allows hedging and the last one functions on the base of the FIFO rule (First In, First Out). This is anyway a mandatory thing in the United States, so if the broker is looking for US clients, then the MetaTrader 5 should be considered as well.

Build a New Trading Platform Concept

There is a tendency nowadays to incorporate social media with trading, and this means to give traders a place where they can both trade and share ideas, trades, etc. Some brokers invested in this direction and it is simply too early to tell if this is the right thing to do or not.

From my point of view, trading is not going well with sharing ideas, and therefore I am a bit reluctant. However, it doesn’t mean it is not the right direction for the overall business, but I would recommend this to come as a next step after having a running business in this field.

Out of the three possibilities listed in this article, the one that fits the most the needs of any broker, either a new or a well-established one, is the MetaTrader platform. The advantages for using it outpace any other inventive one broker may have for offering another trading platform.

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