A great question to answer is 'What are stock trading platforms?'
The answer to this depends upon who you are and what you do. At the 'big end' of the scale, in the modern interconnected and electronic world, a stock trading platform is actually 'the exchange' or 'the market' itself.
Once upon a time, the market was a collection of people
who met in the same place to buy and sell stock holdings. We have all
read stories about coffee houses, Masonic lodges or certain streets
where the market was 'made'... Those scenes of men in funny coloured jackets yelling at each other was part of the system known as open outcry.
These days, many stock markets have a physical address that is visited or operated in, by very few people. The modern stock exchange is a network of computers and those computers are linked together using a stock trading platform. This means that all the major players, investment banks, stockbrokers, hedge funds, mutual funds and on and on are all linked together. They all see the same information through the platform and through their Bloomberg or Reuters news systems.
But unless you are - to use the correct terminology - a market participant, this probably won't have an impact on you.
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Instead, the private investor may have access to a rather smaller scale trading platform. This platform may relate to one specific market - the NASDAQ for example - or to a collection of markets. These may or may not include commodities and bonds - this would depend on the requirements of the individual and the offerings in the marketplace.
Most stock trading platforms available to the individual are designed to do certain and specific things. Firstly, they are there to provide up to the minute prices from the markets. This is to make buying and selling easier in real-time.
Needless to say, this is a huge leap forwards when compared to how we all used to learn about the latest stock market action the following morning in the Wall Street Journal.
For most private investors, this type of service puts them on an almost equal footing - in terms of information - to most professional fund managers. Going back as far as perhaps 1995, this was virtually unthinkable. Access to profitable and timely information has changed so much in such a short period of time that it is hardly any surprise that the stockbroking industry is struggling.
A more level playing field
The best stock trading platforms will usually have indepth pricing too. This will show the user the price of the last trade struck in the market for an asset and the volume (quantity) that was traded. This will help an investor to understand the actual state of the market.
Going even further, some systems allow the user to see trades waiting in the wings to be matched. This offers a real insight into the likely short-term direction of the market and how the supply and demand looks. This is and can be very valuable information. This can put the individual day trader into the same areas of market knowledge as a fund manager. How useful would that be to you?
Without going any further and trying to explain the workings and benefits of a platform, it is hopefully obvious why they are so popular. In fact, I would go as far as to suggest that any serious investor - professional, public or private - would be mad to enter the markets without access to such a system.
It would be like entering a duel with a pistol. Only to find that your opponent had a high-powered sniper rifle and could shoot you before you could see him!
If you were to make regular trades in the market, either long-term or short-term, would it be helpful to have access to something that did this?
> Tracked your portfolio
> Offered specific buy and sell recommendations relating to technical factors
> Made those recommendations based upon your own desired type of trading
> Enabled you to see the levels of trades in the market so that you could assess liquidity and not get 'caught out'
> Showed you what the professional investors - the smart money - was doing
> Provided access to top level training materials so that you could enhance your own skills
All things to all people?
Most systems will also offer some sort of portfolio management section. This is designed to enable the investor or trader to keep an active watch over their entire portfolio. As you may imagine, this is another useful and time saving gadget. It ought to be noted that this will likely be far beyond the level of monitoring that an individual could expect from more traditional a financial planner.
But, of course, most stock trading platforms could not sell their product in the market unless they could prove that they helped to make you profits. This means that many offerings also do some sort of stock or trade picking by expert technical analysis traders.
In other words, a good setup will pick the investments or trades, help you buy and sell easily and knowledgably AND help you monitor the portfolio!! For some, that is everything covered...
The best trading platforms will cover a multitude of asset classes. They do this for several reasons - to be in a position to always have a trade available, to save the client from wanting or needing multiple services and so that they can justify a higher price point. Therefore, it is quite normal for a service to offer tips about bond trades, commodities, stock picks and many of the additional services mentioned above.
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Platforms tend to provide the service providers with a decent income (in addition to their trading activities) and many use this income in ingenious ways. Many are looking for tiny advantages in their trades wherever possible, so reinvest some of their profits into research. As a client, this can lead to cutting edge day trading strategies that an individual would likely never be able to develop alone.
It will come as no surprise to learn that many of these services are targeted primarily at Americans. This means that there is often a bias towards trades on the main American markets (the NYSE and NASDAQ) and commodities (since most are traded in US$ and the main market is the Chicago Board of Trade). This leaning towards the US isn't really a problem for traders that are not based in America - these days most markets and stockbroker accounts enable international trades. However, there are sometimes time zone issues to take into consideration.
By clicking here you can watch the latest promotional video content from a stock trading platform provider. We have never used their services, so cannot offer any sort of judgement about their platform of trading advice, but we do feel that their free video content offers some useful information to the user, and provides a good idea of what you might expect from a platform provider.
To read more about stock trading and the tools, strategies and techniques that will help you, please visit these pages: