Choosing the right trading platform for a forex and CFD trading journey is one of the easiest ways to improve traders’ odds of meeting their goals. However, the platform choice isn’t always simple; there isn’t just one best platform that’s the clear winner in all regards. Spreads also play a key role, as tighter spreads can significantly reduce trading costs and improve profitability over time.
As such, traders need to make a bit of compromise. They should choose a widely used platform to make it easier to find a good brokerage that offers it. On top of that, they need to match the platform up with their estrategia de trading.
For scalpers, or any trader that enjoys a quick pace, fast execution and low spreads are key. When placing a lot of trades, flat fees are unacceptable, and loose spreads eat away a good part of potential profits.
Latency, on the other hand, is crucial in actually executing the strategy well. Traders need low latency to enter and exit at the correct pip and avoid slippage, which occurs when prices change after they initiate a trade.
This article will present some of the best options as far as execution and spreads go.
Spreads – A matter of brokerages, not forex platforms
Before going further into the article, it’s important to outline that trading platforms have very little to do with spreads. Spreads are the difference between the bid and ask prices of an asset. As such, the market and the broker that traders choose affect them.
There are two types of brokerages in the forex and CFD space. Market makers match traders’ positions and take the counter-position, broadening the market spread as a cost of their services. These kinds of brokers are what most scalpers go for since they only have spreads and not flat fees.
The other type, STP/ECN brokers, match traders with interbank markets or liquidity providers. They actually have tighter spreads, but they also add a flat fee for their service. For forex traders taking many positions, this makes achieving long-term viability much harder.
Another important consideration for spreads is how the markets themselves are behaving. During volatile periods, such as around reports or major market openings and closings, brokers often widen spreads. As such, traders who want to avoid spreads likely want to stick to calmer, mid-day periods.
Forex platforms execution and latency
Before going into the platform options available to modern forex and CFD traders, it’s important to go over execution speed. Most notably, execution is something that depends on traders themselves.
Some are just quicker at navigating their screen, or have better reflexes than others. These skills can improve, but mastering the platform boosts execution the most.
As such, if a trader is using platform A today and switches to platform B, which has lower latency, tomorrow, they would not see an increase in performance. Instead, they’d likely need time to adapt to their new trading circumstances and the new interface before they’d notice a difference.
This skill difference is way more noticeable in manual trading than the difference between platform execution speeds. The differences in speed are measured in milliseconds, barely even noticeable to humans. Of course, this may mean more in algo trading, or when there’s general network instability.
And a final note along the same line as the previous sentiment, the trader’s network, and the broker’s network play a role in determining execution speeds. As such, if a trader is experiencing connectivity issues even with a good platform, they may want to consider switching forex brokers or looking at their own ISP.
VPS
As we finally get into the platform options, there are few quicker ways to trade than via a VPS. VPS, standing for Virtual Private Server, isn’t a platform itself, but rather a virtual machine to which traders connect remotely. If placed close to a broker’s matching engine, it will allow for extremely low latency numbers.
It also has other advantages, such as operating 24/7, which means that algo traders can leave their processes running indefinitely. However, the VPS itself is either a paid external service or something that a broker provides, usually at an added cost. As such, traders who are interested in benefitting from this low latency structure should first measure whether it’s worth the cost.
cTrader
When it comes to commonly used trading software, cTrader is the quickest in the forex market. Its server latency generally hovers in the 3-10 ms range, and it has a bunch of other useful features, such as an excellent API.
On top of that, it’s a fantastic trading tool. Out of the box, it actually outperforms the more popular MetaTrader 4 and 5, which we’ll touch on soon. It has more indicators, timeframes, a more modern UI, and similar options when it comes to algo trading and backtesting.
The thing that holds cTrader back somewhat is its limited availability. While it is fairly popular, it’s nowhere near as prominent as MetaTrader 4 or 5. As such, traders may have difficulty finding the right broker to use the platform with.
However, traders who do succeed can also match the platform with a VPS, nearly eliminating latency. In essence, this is the fastest execution commercial forex traders can attain.
MetaTrader 5
The newer of the MetaTraders is also the one that’s more technologically advanced, which isn’t a surprise. However, it’s still quite a bit slower than cTrader, coming in at 10-30 ms on average.
Again, this difference is fairly slight, and even traders who prioritise latency are unlikely to notice it if CFD trading manually. However, what MT5 lacks in speed, it makes up for in other features.
For starters, it’s much more widely available, with many more brokers adopting it. In fact, some brokerages have specific MT5 accounts that tailor the experience even further, which may lead to improved results overall.
On top of that, it has a massive community, leading to tonnes of free custom tools being available. These include EAs, which are very important for algo traders, who, again, prefer low latency. As such, for traders who aren’t yet completely set in their ways, MT5 may be a better profile match than cTrader, although the latter is more technically potent.
MetaTrader 4 forex platforms
Lastly, we have MetaTrader 4, which is the slowest of these three, coming in at 30-50 ms. The thing MT4 has going for it is availability, as traders are likely to find the platform in most forex or CFD brokers they visit. It comes in with even more custom tools than MT5, but for those targeting execution, the prior two options may be better.
Custom solutions
Some brokers also offer custom platforms. If these brokers are specifically tailored towards quick CFD trading, their platforms may be on the faster side latency-wise. Additionally, since brokers normally run these on their own servers, they may be more stable connectivity-wise.
Trading style dictates everything
For manual traders, these minuscule execution differences are barely noticeable. They are more likely to get the results they aim for by picking something that they are confident in using. And since most retail traders do trade manually, they should look into feature-rich and broadly available platforms rather than tunnelling on execution speeds.
However, for algo traders, the technology may make a difference. A VPS may be a worthy investment, and a tech-forward platform like cTrader and MT5 may be their best bet.
Don’t be afraid to experiment, and always log results. That way, the trading platform and trading strategy will eventually sync up, where fast execution will shine to its fullest.
Descargo de responsabilidad: Este material tiene fines informativos y educativos generales únicamente y no debe considerarse como asesoramiento ni recomendación de inversión. T4Trade no se hace responsable de los datos proporcionados por terceros a los que se hace referencia o que aparecen en hipervínculos en esta comunicación.
