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What Is a Trading Platform?

A trading platform, also called a trading terminal, allows brokerages, investors and traders to manage their investments. The best platforms boast solid security, investor education, financial charts and low fees. 

🤔 Understanding trading platforms

Trading platforms are network-based software that enables brokers and investors to place trades and monitor investment accounts. Financial intermediaries, such as brokerage firms, may provide platforms for free in exchange for maintaining a certain balance or making so many trades in a month. 

Depending on the broker and cost, they often bundle features like:

  • Premium investment research
  • Real-time price quotes
  • Financial charts and comparisons
  • Active news feeds

Many trading platforms offer easy access to stock markets. But some may target specific markets or assets including equities, currencies, options, and futures. 

Trading platforms versus brokerages

In simple terms, a brokerage firm acts as the intermediary between investors and exchanges, employing brokers to buy and sell securities. 

By contrast, trading platforms act as the intermediary themselves. Brokerages may offer trading platforms to investors or rely on them as part of their own trading strategy. 

Types of trading platforms

There are two basic types of trading platforms: commercial and proprietary (prop) platforms.  

Designed to be easy to use, commercial platforms usually target the less-experienced retail investors and day traders. 

On the other hand, prop platforms are designed and built by large brokerages to suit their specific trading strategy. They may be built to fulfill certain requirements or include more advanced features. 

What this means for you

If you prefer a more active investment strategy or prefer to build your own portfolios, trading platforms can help you access the markets. But with so many options on the market, it’s essential to select one that suits your needs. 

Fees

One of your first considerations should be fees. Platforms that charge higher fees may provide more features for your buck. However, bigger fees eat into your profits.

Features

Day traders may need platforms that offer complex features like market maker depth and momentum charts or multiple trading windows. And if you’re trading in more advanced investments, such as forex or options, your platform should permit access to said markets. 

But traders who prefer a long-term approach or simpler investments like stocks, bonds or mutual funds may make do with less advanced platforms. 

User requirements

Lastly, consider if you have to meet specific conditions to use a platform. 

For example, platforms like Robinhood act as standalone intermediaries that any investor can use. But others require you to work with a particular brokerage firm. 

Also look at any account or approach requirements. For instance, options traders may have to be approved by a platform before accessing the options markets. And day traders generally have to meet minimum account balance requirements or be approved for margin trading first. 

In short: The exact platform you require will vary based on your portfolio holdings, goals, and needs. But unless you’re an advanced investor or using “fun money” to dabble in day trading, we generally advise that you stick with a platform that makes achieving your long-term portfolio strategy possible.

(Not that we’re advocating for Q.ai’s AI-backed Investment Kits, zero fees, and low $100 investment minimums. Oh wait… We totally are.)

Disclosures

Q.ai is the trade name of Quantalytics Holdings, LLC. Q.ai, LLC is a wholly-owned subsidiary of Quantalytics Holdings, LLC ("Quantalytics"). Quantalytics offers automated financial advice tools through Quantalytics Investment Advisors, LLC ("QAI"), an SEC-registered investment advisor. QIA’s investment advisory services are ONLY available only to residents of the United States. Disclosures concerning QIA’s investment advisory services are available on its Form ADV filed with the SEC. The content in this newsletter is for informational purposes only and does not constitute a comprehensive description of Q.ai's investment advisory services.

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