Nowadays, trading and investing in financial markets, such as stocks, currencies, and cryptocurrencies, have become even more popular. Thanks to the advancement of technology, more and more trading platforms are now available online. However, some trading platforms are favoured by most brokers because of their benefits.
Online trading platforms like Metatrader 4 (MT4) are significant because trading and investing in different financial assets would not be possible without them. If you have just started delving into the financial markets and would want to learn more, here are some of the frequently asked questions regarding online trading platforms.
What Is a Trading Platform?
Trading platforms are software that is used by retail traders (or investors) and brokerage firms all over the world. Through a financial mediator, trading platforms can open, close, or manage market positions.
Trading platforms are typically utilised for trading in the futures market, foreign exchange (forex), and contracts for differences (CFDs). They are sometimes provided by online brokerage firms for free or at discounted prices when maintaining a well-funded trading account.
What Are the Execution Modes Provided by Trading Platforms?
Reputable trading platforms like Metatrader 4 offer three main execution modes, which include the following:
Instant Execution: This mode executes a market order at a price offered to a particular broker. However, orders may not be executed until the broker accepts the price offered. This is why a “requote” sometimes happens for this execution mode.
Execution by Request: This mode is the opposite of instant execution, wherein a broker provides a price beforehand, which are then delivered to the platform. Once the prices are available, an individual can either confirm or reject the order.
Execution by Market: This mode provides your broker with the power to execute orders at the market’s given price. This is done through advanced permission and giving up authority.
What Is a Pending Order?
A pending order allows you to buy or sell a security at a predetermined price. Four types of pending orders revolve around buying and selling securities, including Buy Limit, Buy Stop, Sell Limit, and Sell Stop. These orders are essential because it allows you to execute your buy and sell orders without manually monitoring your positions.
What Is the Difference Between a Take Profit Order and a Stop Loss Order?
A Stop Loss is an order that helps in minimising your losses if particular security moves away from a profitable direction. Once you set a Stop Loss order, the market position will automatically be executed once your set price level is reached.
On the other hand, a Take Profit is an order that is intended for securing your profits. It is the order that you set when the direction of a stock moves towards profitability. It has in common with a Stop Loss order that the position automatically closes also when your set price levels are reached.
Trading platforms will provide you with an extensive range of customisable indicators and professional features that can make you better at making trading and investing decisions.
However, make sure that you only choose a trading platform that is easy to use and experiences generally few glitches. In this way, you will perform better when executing your market orders and being more profitable.