When it comes to forex trading, both beginner and seasoned investors have a few great options to choose from. Forex trading is all about opening and closing trading positions just at the right moment and for that to work flawlessly, you need reliability, stability, and speed. Not all platforms can check on all the boxes, but few are considered to be the best by the industry gurus and opinion leaders. Let’s take a brief look at each of them.
MetaTrader 4 (MT4)
Specially designed for forex trading, MetaTrader 4 is one of the most popular trading platforms with over 14 million active traders. Since retail forex trading is a comparatively new investment market, there was no premium third-party forex trading software available before MT4. It is one of the most stable platforms out there which is also available on both iOS, Android, Windows stores. There are a variety of useful features which include:
- Enables one-click trading for quick action and convenience
- Traders can get recommendations from expert advisors
- There are more than 50 trading indicators to analyze
- Pending orders feature is also available
- You can limit orders for risk management purposes
- Multi-charting allows you to view the overall data patterns
- Nine separate time-frames available
MetaTrader 5 (MT5)
It is the next-generation version of MetaTrader 4 but has failed to gain the popularity of its predecessor. That being said, it is not a reflection on the quality of the software but rather the slow migration of traders who are set in their ways. MT5 is marginally faster in terms of executing orders, compatible with more order types, and features a large number of indicators along with some proprietary features. However, there is not much to differentiate it from MT4 which is one of the reasons behind slow migration. It has between 1.5 and 2 million users globally so far.
- Offers 21 timeframes for the traders which include 11 ‘minute’ charts like M1, M2, and M3, along with hourly, weekly, and monthly charts
- Access to 6 different types of pending order including sell stop, buy stop, sell limit, buy limit, sell stop limit, and buy stop limit orders
- You have the option to switch between netting and hedging mode where the latter enables you to take trade-in opposite positions
- Includes Depth of Market (DOM) feature which enables traders to see the offers and bids at various prices of an instrument
Developed by a company named Spotware, cTrader is the biggest competition to MetaTrader platforms. According to the website, it has ‘millions’ of users and is being used by 60 forex brokers along with 40 partnerships with liquidity providers. The platform is available through a web browser but recently mobile apps for both Android and iOS have also been made available. Some of the key features include the following:
- Wide variety of market orders combined with quick order execution and protection
- A diverse range of price charts, time frames, and zoom levels
- More than 70 built-in indicators along with custom indicators
- Up to 50 sharing tools and templates which includes embedding
- Traders can build bots and indicators
- Comes with an all-inclusive algorithm for the purpose of automated trading
- Option for trade copying available with separate accounts
How Are Brokers Integrated in the Working Process?
Developers of the trading platforms have turned their product into Software as a Service (SaaS) tool by creating APIs for them which can be integrated into any forex trading platform. The development team of the forex broker can use those APIs to integrate their desired trading platform into the website and then their users can sign into those platforms using the broker’s website’s credentials.
This provides an easy way for forex brokers to leverage the convenience and popularity of already established trading platforms instead of investing in their proprietary one. It also gives small brokers the opportunity to run their businesses who don’t have enough capital to develop, test, and maintain expensive trading platforms.
How Do Platform Developers Make Money?
For trading platform developers, there are multiple ways to make money. For instance, they can charge their users a subscription fee or transaction commissions. However, due to the nature of competitiveness in the forex market, generally, the trading platforms give their services to retail users for a fee and make their money through licensing fees and monthly service fees paid by the forex brokers.
For instance, if a forex brokerage wants to use the MetaTrader 4 trading platform on their website, they will have to pay an upfront licensing fee of $100,000. Then for hosting and other services they will charge $15,000 per month or more depending on the scale of operations. Striking such licensing deals with multiple brokerage firms becomes the primary source of income for trading platform developers.
When it comes to the top trading platforms, there are many but only three stand out – i.e. MT4, MT5, and cTrader. They deliver the combination of speed, stability, affordability, and reliability that traders are looking for while ensuring the best customer experience every day of the week.