Educational insight: How does stock trading work in the 21st Century?
Trading on any type of exchange works very different today from how it is portrayed in famous Hollywood blockbusters like The Wolf of Wall Street. This is because it all happens on a computer screen and so there is no need to crowd a room full of shouting traders.
So to trade on the financial market, you need a computer (or a smartphone) onto which you download a so-called trading platform. This is a program that shows you actual charts of the market instruments you are trading. Through the trading platform, you place your trading orders, which are then sent to the market, where they are then matched with the counterparty. However, to get your orders into the market, you need to open an account with a brokerage firm. The broker serves as a kind of intermediary that is directly connected to the market to which it sends your orders.
So your orders first go to the broker's servers, who then send them to the market where they are paired with the counterparty. Any profits then go directly to you, while losses stay in the market or go to the broker (depending on the broker model, which is something we describe below in this article).
Trading platforms - software necessary for trading on the stock exchange
It doesn't matter if you decide to trade gold using CFDs or enter the exchange with futures contracts, you will need a trading platform in all cases. This software serves as your gateway to the world of the markets and shows you, through different types of charts, how the price of the instrument you are trading is doing. The platforms run on your computer and some of them also work on smartphones or in your web browser interface.
There are plenty of trading platforms and some brokers even offer their own platforms, but one of the biggest stalwarts of online trading is the MetaTrader 4
platform. In addition to charting, trading platforms also offer the ability to use various trading tools designed to help you spot potentially profitable opportunities in the market. The most common types of tools include indicators
At Purple Trading, we offer clients the modern cTrader trading platform in addition to the legendary MetaTrader 4. The cTrader
is developed by the traders themselves and designed to make trading on it as intuitive as possible, giving the trader the ability to manage risks more precisely.