Best Trading Platforms Compared & Reviewed

Trading is one of the riskiest types of investing because it involves taking large risks for large rewards. As such, and as you will see on risk warnings that are required by the FCA to be published on all trading platforms and trading advertising, up to 80% of those that try trading lose money.

So, it’s important to learn how trading works before risking any money, then start small and not trade with anymore than you can afford to lose. We have a dedicated guide to where you can learn to trade from respected and regulated providers.

Spot markets can be traded on margin and traders pay or receive funding based on interest rate differentials, borrow rates and the positions they hold. Typically long positions pay funding whilst short positions receive funding or rollover fees.

3. Different Financial Markets Come With Different Risks

➡️ Shares (Stocks)

➡️ Indices

➡️ Commodities

➡️ Forex

➡️ Bonds

➡️ ETFs

➡️ Cryptocurrency

Learn How To Trade Stocks

4. High-Risk Trading Means Potentially High Rewards

Trading in the financial markets can be a way to make money, but it is important to be aware of the risks involved. Here are some of the pros and cons of trading in the financial markets:

Pros:

• Potential for high returns: The financial markets can be volatile, meaning that prices can rise and fall quickly. That creates opportunities for high returns if you are able to make accurate predictions about the direction of the markets.
• Access to a wide range of assets: There are a wide variety of assets that can be traded in the financial markets. Many brokers offer access to more than 10,000 trading instruments so you should always be able to find trading opportunities.
• Liquidity: The financial markets can be very liquid, meaning that there are usually always buyers and sellers. That liquidity makes it easier to quickly trade in and out of your positions, so you can move quickly and take advantage of trading opportunities as you spot them.

Cons:

• High risk: The financial markets are risky, and there is always the potential to lose money. This is especially true if you are not experienced in trading, or if you make bad decisions and are led by your emotions.
• Volatility: The financial markets can be volatile, prices in them can fluctuate very quickly and sometimes randomly. This can make it difficult to make accurate predictions about the direction of the market and that can mean trading losses.
• Fees: There are fees associated with trading in the financial markets, such as commissions and spreads. These fees can eat into your profits and your capital, so it is important to understand what these fees are and to factor them into your trading decisions.
• Experience: Trading the financial markets is essentially a competition between you and other traders. These include experienced retail, professional and institutional traders all of whom are very happy to profit from your trading mistakes.

5. Risk Management And Protecting Your Downside

Understanding Leverage

Many of the instruments that traders use are geared or leveraged products. Leverage is a very powerful tool because it allows traders to control a much larger portion of an asset than the capital would otherwise allow.

If you are trading with a leverage of 10:1 then every £1000 you have in your trading account could control £10,000 worth of an underlying asset, say a stock index, a commodity like gold or an FX pair such as dollar yen.

Using leverage can magnify trading profits but is just as effective at magnifying trading losses and eating through hard-won capital.

Many novice or newbie traders lose money because they don’t understand the effect of leverage on their trading PnL and account balances.

Overtrading

Overtrading occurs when a trader takes on more risk than they and or their account can handle. This can happen when a trader is trying to make money too quickly, or when they fail to calculate and adequately manage their risk.

Overtrading can lead to losses, and excess costs and can even put a trader’s whole account at risk. Traders need to understand the risk in every trade they make, both individually and cumulatively.

This means knowing the size of each position, and the maximum downside on each trade. The margin requirements for each trade and the effect that pledging margin, both initial and variation will have on their account balances.

A trader should always be aware of these numbers, before they trade, as part of their risk management strategy. Which itself should form part of their overall trading plan.

That should include rules about the size of each trade, the amount of capital at risk per trade and the maximum number of trades they will have open at any one time.

6. Why Do Traders Lose Money? (And How To Avoid It Happening)

Losing money is part of trading even the best traders do not get it right all the time, you can have the right idea and the wrong timing and make a loss

However inexperienced traders often lose money because they don’t follow a defined trading plan or strategy. In many cases breaking or ignoring their own rules when they trade.

For example, by having too many trades open, or trading in a position size that’s too large for their account and ignoring stop loss levels.

When you combine inexperience with leverage, then you have a recipe for disaster.

It is possible to avoid these pitfalls. However, you need to be disciplined, follow your risk management rules, and use the trading tools and order types at your disposal. These include stop losses, trailing stop losses and limits.

7. Beware Of Trading Educators & Social Media Influencers

Trading the financial markets involves money and where there is money there are unfortunately people looking to take it from you. Often by selling those new to trading a dream that doesn’t exist.

Their methods range from posting glitzy lifestyle pictures on Instagram with claims that trading has funded their life of luxury- which you can have too- if you send them your money. Or promises that they have unlocked the secrets of the markets which they will be happy to sell to you, for a fee.

Don’t fall for these scams there are no get-rich-quick schemes in the market instead traders learn to become profitable through a process of education and trial and error.

Recognising and learning from their mistakes and correcting that behaviour the next time out.

Learning to trade with the help of a trading educator can help new traders understand the markets, why prices move the way they do and strategies that they can use to benefit from that.

There are good trading educators out there but you shouldn’t be paying thousands of pounds to take their courses,  particularly when there are so many educational resources available online.

As to social media, new traders can learn a lot about the markets from far more experienced traders on platforms such as Twitter. But be wary of those that boast about how much money they are making, and instead look for those who offer rational comments and opinions backed up by facts.

8. Trading Signals Can Give You Ideas, But You Have To Make The Final Decision

Trading systems and signals are often pushed by social media influencers, and others, as a way to make profits without putting in the effort. Few if any of these services will work.

Think about it if you a had system that continuously made you money from trading, why would want to share that with anyone else?

And if you wanted to sell it what value would place on that golden goose?

Not all trading services are a scam but at best trading signals are tools that can highlight better risk-reward opportunities.

If you have the inclination or ability you can build your own trading signals using any number of resources on the internet.

For example, one popular trading signal is the Moving Average crossover. A moving average is simply the rolling average price of a stock, or other asset over, a set period for example 20 days. Moving averages are typically displayed as an indicator on a price chart.

If we use two moving averages of different periodicities then we can compare how these two lines are moving relative to each other and the price of the underlying security.

If we use a short-term MA and longer-term MA line then we can get an insight into changes in price momentum by for example noting when the short-term faster-moving MA line crosses over the slower moving, longer-term MA line.

A cross above the slower-moving line is typically seen as indicating upside price momentum while a cross to the downside is associated with downside price momentum.

In the chart below of Western Digital Corp (WDC), the price line is shown in blue with the 20 and 50-day MA or moving average lines drawn in orange and green respectively.

The red ellipses highlight MA cross-overs in both directions.

Other indicators that traders regularly use to create trading signals include RSI 14, Bollinger Bands and Stochastics.

9. Your Personality Will Determine What Sort Of Trader You Are Going To Be

As you move through your trading journey It’s important to try and identify what type of trader you are going be. Here are some examples and brief descriptions of trader types and styles.

• Scalper: A trader who buys and sells securities for small profits within seconds or minutes, taking advantage of price fluctuations and market inefficiencies.
• Day trader: A trader who opens and closes positions within the same trading day, the day traders leverages short-term market movements, while avoiding overnight risk.
• Swing trader: A trader who holds positions for a few days to a few weeks, aiming to identify  and capture intermediate-term trends and price momentum in either direction.
• Technical trader: A trader who uses technical analysis -the study of historical and current  price patterns and indicators on a chart, to analyse market movements and identify trading opportunities.
• Fundamental trader: A trader who bases trading decisions on the intrinsic value of securities, using economic data, financial statements, and news events to evaluate discrepancies between current prices in  and the intrinsic value of securities.
• Trend trader: A trader who follows the direction of the dominant market trend, whether it is up, down, and tries to profit from that trend until it reverses course.
• Social/sentiment trader: A trader who uses social media platforms, online forums, and crowd-sourced opinions to gauge the mood and sentiment of the market and anticipate its behaviour. Social traders often  also use copy trading services.
• Macro trader: A trader who takes positions based on the global economic and political landscape and data, focusing on factors such as interest rates, inflation, trade policies, and geopolitical events.
• Algo & API trader: A trader who uses computer programs and algorithms to execute trades automatically based on predefined rules and criteria, and who connects to trading platforms via application programming interfaces, or APIs to access market data and execute their trading algos.

10. Practice With A Demo Account (But Don’t Be Fooled By Initial Wins!)

The good news for would-be traders is that it’s possible to try before you buy, thanks to the availability of demo trading accounts.

Most brokers and trading platforms offer potential clients the chance to test the platform and their trading aptitude in a simulated trading environment, which behaves in a very similar way to the live markets.

This provides the perfect opportunity for you to get familiar with the way that markets move  and how the trading platform operates.

However the demo environment can lull traders into a false sense of security because you are not trading with real money and that makes a big difference to your trading psychology.

There is a great line in the book Reminiscences of a Stock Operator, about why demo accounts are good for testing functionality, but they cannot prepare you for real live trading when your money is actually at risk. The story is about a man who was going to fight a duel the next day.

His second asked him, “Are you a good shot?” “Well,” said the duelist, “I can snap the stem of a wineglass at twenty paces,” and he looked modest. “That’s all very well,” said the unimpressed second. “But can you snap the stem of the wineglass while the wineglass is pointing a loaded pistol straight at your heart?”

Overall it’s a good idea to spend time in the demo environment but you will need to migrate to the live markets to begin trading, and to do that, you will need to open a live brokerage account.

The best way to do that is to think about what you will want from your broker listing items such as the markets and instruments you want to trade, the size of trades and account opening balances, educational resources and support etc.

Once you have created your list of requirements you can use our trading account comparison tables to find a broker that will meet your needs.