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What are the Different Types of Day Trading Platforms?

By Dana DeCecco
Updated Feb 13, 2024
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Specialized day trading platforms are available for nearly every tradable financial asset. Many brokers provide day trading platforms at no cost to the trader. Third-party applications provide advanced day trading techniques. Traders specializing in equities, futures or forex have a broad selection of platforms from which to choose.

Day trading platforms are closely tied to the trading system selected. Rule-based trading systems generally are a better choice than discretionary trading. Advisory software platforms implement a wide array of trading tools such as scanners and indicators. Automated platforms use rule-based trading signals to execute buy and sell orders. Technical analysis is the basis for most day trading platforms.

Direct access platforms allow the stock trader to deal directly with the market maker, specialist or electronic communication network (ECN). Level-two quotes give the trader a deeper insight into market activity and discovery of the best bid/ask prices. Trades are executed in a fraction of a second. Some brokers offer deep discounts on brokerage fees and commissions, depending on the volume of trading. Reduced transaction costs are imperative for the day trader.

Futures trading platforms are available for exchange traded derivatives. Online futures brokers offer 24-hour trading and an assortment of trading platforms. Most futures brokers offer a choice of their proprietary day trading platform or a number of third-party vendor platforms. Many include live streaming quotes on electronic futures and options. The depth of market and advanced charting are also available on many platforms.

Advanced charting platforms are available from nearly all forex brokers. Volatility in the currency markets makes forex a popular day trading choice. Forex brokers offer free charting platforms loaded with advanced indicators and day trading tools. Many brokers offer the option of trading directly from the chart. Split-second order entry is a common feature of forex platforms.

Before selecting a day trading platform, the investor must decide which financial instrument will be traded. Stocks, futures and forex are a few of the choices available. Many brokers offer educational resources for day traders. The investor should have a thorough knowledge of the software, systems and strategies available before entering the arena of day trading. The day trader will be competing with professional traders and powerful computers.

Day trading platforms might have several different features, some of which are absolutely necessary. The platform must have a top-of-the-line data feed. A good system is useless with bad data. The trade execution system must be easy to use, and split-second execution is essential. Reduced transaction costs are necessary for volume traders.

On top of these requirements, the day trader must be intimately familiar with the platform. There is no time for second-guessing. If the platform is not fully automated, the trader's response must be immediate and accurate. Education and practice using paper trading accounts might prove to be extremely valuable.

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