In finance, an electronic trading platform also known as an online trading platform, is a computer software program that can be used to place orders for financial products over a network with a

financial intermediary A financial intermediary is an institution or individual that serves as a middleman among diverse parties in order to facilitate financial transactions. Common types include commercial banks, investment banks, stockbrokers, pooled investment funds ...

. Various financial products can be traded by the trading platform, over a communication network with a

or directly between the participants or members of the trading platform. This includes products such as stocks, bonds,

currencies A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general def ...

, commodities, derivatives and others, with a financial intermediary, such as

brokers A broker is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither role should be con ...

market maker A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the ''bid–ask spread'', or ''turn.'' The benefit to the firm is that i ...

Investment bank Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort. In finance, the purpose of investing i ...

s or stock exchanges. Such platforms allow electronic trading to be carried out by users from any location and are in contrast to traditional

floor trading Open outcry is a method of communication between professionals on a stock exchange or futures exchange, typically on a trading floor. It involves shouting and the use of hand signals to transfer information primarily about buy and sell orde ...

using open outcry and telephone based trading. Sometimes the term trading platform is also used in reference to the trading software alone. Electronic trading platforms typically stream live market prices on which users can trade and may provide additional trading tools, such as charting packages, news feeds and account management functions. Some platforms have been specifically designed to allow individuals to gain access to financial markets that could formerly only be accessed by specialist trading firms. They may also be designed to automatically trade specific strategies based on

technical analysis In finance, technical analysis is an analysis methodology for analysing and forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis use many of the sam ...

or to do high-frequency trading. Electronic trading platforms are usually mobile-friendly and available for Windows, Mac, Linux, iOS and Android.

Etymology

The term 'trading platform' is generally used to avoid confusion with ' trading system' which is more often associated with the trading method or strategy rather than the computer system used to execute orders within financial circles. In this case platform is used to mean a type of computing system or operating environment such as a database or other specific software.

Historic development

Transactions have traditionally been handled manually, between brokers or counterparties. However, starting in the 1970s, a greater portion of transactions have migrated to electronic trading platforms. These may include

electronic communication network An electronic communication network (ECN) is a type of computerized forum or network that facilitates the trading of financial products outside traditional stock exchanges. An ECN is generally an electronic system that widely disseminates orders e ...

alternative trading system Alternative trading system (ATS) is a US and Canadian regulatory term for a non-exchange trading venue that matches buyers and sellers to find counterparties for transactions. Alternative trading systems are typically regulated as broker-dealers r ...

s, "

dark pool In finance, a dark pool (also black pool) is a private forum (alternative trading system or ATS) for trading securities, derivatives, and other financial instruments.Lemke and Lins, ''Soft Dollars and Other Trading Activities'', §§2:25 - 2:29 (Thomson West, 2013-2014 ed.). The first electronic trading platforms were typically associated with stock exchanges and allowed brokers to place orders remotely using private dedicated networks and

dumb terminals A computer terminal is an electronic or electromechanical hardware device that can be used for entering data into, and transcribing data from, a computer or a computing system. The teletype was an example of an early-day hard-copy terminal and ...

. Early systems would not always provide live streaming prices and instead allowed brokers or clients to place an order which would be confirmed some time later; these were known as ' request for quote' based systems. Trading systems evolved to allow for live streaming prices and near instant execution of orders as well as using the internet as the underlying network meaning that location became much less relevant. Some electronic trading platforms have built in scripting tools and even APIs allowing traders to develop automatic or algorithmic trading systems and robots. The client

graphical user interface The GUI ( "UI" by itself is still usually pronounced . or ), graphical user interface, is a form of user interface that allows users to interact with electronic devices through graphical icons and audio indicator such as primary notation, inst ...

of the electronic trading platforms can be used to place various orders and are also sometimes called

trading turret A trading turret or dealer board is a specialized telephony key system that is generally used by financial traders on their trading desks. Trading has progressed from floor trading through phone trading to electronic trading during the later ...

s (though this may be a misuse of the term, as some refer to the specialized PBX phones used by traders). During the period from 2001 to 2005, the development and proliferation of trading platforms saw the setting up of dedicated online trading portals, which were electronic online venues with a choice of many electronic trading platforms rather than being restricted to one institution's offering.

References

{{Online brokerages Share trading *

Etymology

Historic development

See also

References