The most well-known type of trading software is of course the trading platform, but traders can also benefit from other types of trading software, such as analytic software, software for automation, strategy-testing software, etcetera.
Today, comprehensive trading platforms are available where a lot of features are built-in, but there are also plenty of third-party developers out there who create software for traders. Some software are stand-alone, while others are meant to be integrated with a trading platform. Since the trading platforms MetaTrader4 and MetaTrader5 have become so prevalent among online traders, there are many developers who create add-ons specifically for them.
Online trading platforms allow you to trade and gain exposure to assets and other underlyings. Examples of popular and well-known trading platforms are MetaTrader4, MetaTrader5, eToro, Algotrader, and NinjaTrader.
Some trading platforms are exclusive to a specific online broker and you have to sign up that broker to get access to them. This is for instance the case with the eToro trading platform, which is only used by eToro clients. Other platforms are third-party platforms and utilized by multiple online brokers and their clients. Two well-known examples of such platforms are MetaTrader4 and MetaTrader5.
An advantage with getting familiar with a big third-party platform such as MetaTrader4 is that you can sign-up with additional brokers and see what they have to offer without having to learn how to use a new trading platform. This means you get less “locked in” by the first broker you start using. (If you find it really easy to get accustomed to new trading platforms, this is not really a point to consider.)
Many of the trading platforms tied to one specific broker are niche platforms that offer something special. The eToro platform is for instance specialized in social trading and makes it really easy to get started with social trading, copy trading, etcetera.
Important: Quite a few brokers will give you access to several trading platform once you have signed up with them. You might for instance be able to use both their in-house platform and a big third-party platform such as MT5.
If a trading software is to be downloaded and installed on your device (e.g. computer) it is important that it is compatible with your computer. Therefore, check in advance what or which operative system that is recommended for the software.
Some trading software does not require a download and installation. There are for instance trading platforms that you access directly in the web browser.
If you want to use trading software on your mobile device (smartphone or tablet), you can either open it in the browser window or download a mobile app – depending on what is on offer from the software developer. Apps are typically made for either iOS (Apple mobile devices) or Android.
Always make sure you understand the costs associated with a specific piece of trading software before you download or use it.
Generally speaking, trading platforms are free to download and explore, since the broker will make money from you when you actually start doing real-money trades. (You will pay commission or similar, or the broker makes money from the spread, or a combination of both.)
With other trading software, (e.g. add-ons to a platform) the sky is the limit for what they can cost and how you will be charged, to stay on your toes and read the fine print. You have to decide if they are worth it or not.
Be wary of offers that seem too good to be true. There are plenty of fraudsters out there, and they run the gambit from identity theft to simply over-promise and under-deliver.
Ask yourself: If someone has really invented a fool-proof 100% risk free method of making a fortune through online trading, why are they so eager to sell this amazing piece of software (or system, or secret information) to you for $99?
Signal service software will send you “signals”, i.e. trade recommendations. There are hundreds of different signal service providers to chose from, with varying quality. Make sure you pick one that is not just generally highly regarded but traders, but also known to be high-quality for the specific type of trading you do (asset types, time-frames, trading technique, etc).
Most trading platforms have built-in technical analysis (TA) software, including historical market data and various tools for charting. Therefore, it is a good idea to start with that, and see if the what you can use for free is sufficient for your needs or not. Don´t spend money on technical analysis software until you know that it is actually worth the investment.
With the right technical analysis software, it will be easier to handle huge amounts of market data and spot useful patterns. Some third-party TA software solutions are exceptionally good at providing greater breadth and depth to the market monitoring compared to your average solution, and they will also help by very rapidly identifying and flagging patterns.
Some TA software packages will track and analyse not just trading data, but also include fundamental data (when applicable) and even monitor news and social media for trading opportunities.
Instead of manually opening and closing positions, you let the automated trading software do it for you – in accordance with your rules.
One advantage with automated trading software is its ability to react extremely quickly to market changes and strike at the opportune moment. Also, you don´t need to live glued to your phone, constantly checking market news and data.
Some traders use automated trading software to take heat-of-the-moment emotions out of the equation. They decide on a trading strategy when they are calmed and composed, and the let the automated trading software (“the robot”) execute the strategy.
Copy trading platforms & Social trading software makes it easy to copy the trades of other traders into your own portfolio. You can also copy trade suggestions generated by software rather than follow and copy a real human trader.
Back-testing software makes it easy to back-test your trading strategy and systems against historical data.
Some trading software is highly specialized, and one example of this are the e-mini trading software solutions. E-minis are futures contracts that represent a fraction of the value of standard futures. Therefore, they are popular among small-scale retail traders. E-mini contracts have been around since 1997, when they were launched for the S&P 500 index. A trailblazer in the field of e-minis is the Chicago Mercantile Exchange´s Globex electronic trading platform.
E-mini trading software is typically created for scalping.
Journalling software makes it easy to keep log books (detailed accounts) for your trading. A good journalling software will record many different details, including instrument, date and time, entry, exit, and profit/loss. It is a great source of information if you want to analyse your trading to spot strengths and weaknesses. Many journalling software applications come with analytical tools.
An arbitrage trader aims to profit from situations where the same asset has different prices on different markets. There are many types of software available for arbitrage trading, and it is important to pick one that suits the specific needs of your niche.
Arbitrage opportunities tend to exist for only a very short period (partly due to the actions of other arbitrage traders, who quickly spot the gap and close it) so using very quick software solutions is more or less mandatory on most markets in order to be profitable.
In recent years, cryptocurrency arbitrage trading has become quite popular due to the lack centralization, and arbitrage software is now available that specifically targets one or more cryptocurrencies.