What is an online trading platform?
The goal of an online trading platform is to connect online buyers with online sellers, known as market makers, through a website that offers a secure and regulated environment.
However, you might be wondering, what is it that buyers and selling are trading? In general terms it could be anything which can be viably traded online. However, here associate the online trading trading term to market investment trading. That is, the best online platforms where you can buy and sell investment assets or similar. Market trading mainly consists of:
- Stocks – Also known as company shares
- ETFs – Exchange Traded Funds
- Cryptocurrencies such as Bitcoin
- Index Funds – Typically consists of a collection of different company shares
- Forex – Trading foreign currencies against each other, and
- Commodities such as gold, silver and oil
If you’re not familiar with most of these terms then don’t worry too much as we’ll go through each category a bit later on.
Choosing the best trading platform for you
If you’re just starting out to invest you really want to find the best possible platform that allows you to buy and sell the most popular markets but also doesn’t eat away profits through fees. If on the other hand, you’re already familiar with trading and investing, the main reason why you’re here is most likely to be because you’re searching for a platform that offers advanced trading tools.
In both cases, we truly believe that the best trading platform should allow its investors to participate in thousands of different markets, including some of the popular stocks, cryptos and forex, yet still offer advanced trading tools to facilitate growth, all for a respectable fee.
Broker regulation & licensing in the UAE
Smart investment choices have always in part of the UAE community and one can’t expect a solid foundation without a regulatory framework. In order for a financial broker to operator in the UAE, they must abide to all regulations submitted by the UAE Securities and Commodities Authority (SCA). Recently a new licensing restructuring has been submitted by the SCA and financial brokers must now obtain a license depending on the category they operate in.
Category 1: This licensing category caters for activities dealing in securities carried out by trading brokers, international market brokers, unregulated derivatives contracted (CFDs) and currency (Forex) trading brokers in the spot market and dealers.
Category 2: The second category caters for activities dealing in investments and consists of activities related to the management of securities portfolios, the management of investment fund investments, the establishment and management of investment funds (management companies), and the administrative services of investment funds.
Category 3: Third category caters for activities related to safekeeping, clearing, and registration. This includes activities related to general clearing, safekeeping, registrars of private joint stock companies, issuers of covered warrants, and depository banks and their agents.
Category 4: The fourth category is aimed towards credit rating and includes credit rating activity.
Category 5: Last but not least there’s also the fifth category which caters for arrangement and counseling. This includes financial consultations and the activities carried out by financial advisors and listing advisors, in addition to introduction and promotion activities
Depending on the online broker in question, it might need to abide by one or more of these categories in order to obtain the relevant license.
What makes a good trading platform?
Finding a trading platform online is quite easy, but finding one that is great is challenging. This is mostly because everyone has different needs and expects different features. Nonetheless, there are several factors which are always attractive, whether you’re a beginner or a seasoned trader.
Trading tools & markets
This one goes without saying, a good trading platforms offer 500 markets to trade in, a great one offers a thousand, but the very best platforms let you trade in over 2000 markets and offer leverage options, social trading and much more. Markets can range from Bonds, Commodities, Forex and Crypto, to Stocks, ETFs and Indices, but only the very best cover all market categories.
Design
An online trading portal is primarily concerned with its structure and visual appearance. From the point of view of the test experts, it is important that even inexperienced users find their way around the platform with ease. For this reason, experts always look very closely at such factors in their comparison in order to uncover any possible shortcomings.
Structure
The structural design should be as efficient and easy to understand as possible. This makes it easier for the user to understand the individual features and thus be able to use them efficiently.
The simpler and the more clear an online trading portal is, the easier it will be for the user to exploit its full potential.
Functionality
What’s the point of having a great looking trading platform, with limited functionality? Expectations of traders with regard to functionality increase the more they become familiar with trading and investing. You should always choose a platform that will not only meet your current trading needs, but will also provide the necessary features to benefit from your improved skills. If you find a platform that offers plenty of functional features, yet meets your current criteria, then you have found yourself a winner.
Fees
This one is also very straight forward. The cheaper it is to execute a deal, the more likely you’ll end up with a profit. Typically, you should go with brokers who have 0% commission and no overnight fees. Spread fees are quite standard but typically you want to search for brokers that offer tight spread fees as that implies a better deal.
Licenses & reputation
Experienced experts always favor heavily regulated providers. Some of the toughest regulators that license online trading platforms are:
- Cyprus Securities & Exchange Commission (CySEC)
- UK’s Financial Conduct Authority (FCA)
- Australian Securities & Investments Commission (ASIC)
- UAE Securities and Commodities Authority (SCA)
Different licenses cover different markets but what you need to make sure is that the platform is regulated and has at least one valid license from the above.
FAQs
Yes, online trading platforms are permitted in UAE as long and the broker financing the online platform has the proper licensing and adhere’s to regulatory standards.
Unfortunately, we’ve all heard scams and proper due diligence is required in order to avoid such scams, however, if the platform as an active license and is used by hundreds of thousands of people than it;s considered safe. Here at Brokers&Banks we do our best to list licensed platforms that operate in the highest of standards.
