In the financial context, a platform that is used for electronic trading can also be called as an online trading platform. This is a computer software program which is used in order to place orders for financial products. This is done over a network which has a financial intermediary. There are a number of financial products that are traded using this platform of trading. The process happens over a communication network. Sometimes there are financial intermediaries in between or the process can even be direct between the members of the trading platform or the participants. Some of the examples of such trades products are stocks, derivatives, commodities, currencies and so on. The financial intermediaries in the system are market maker, brokers, stock exchanges and investment banks. People from any location can use these trading platforms. This feature makes it different from the traditional method that is floor trading. This type of trading uses an open outcry and telephones to trade. Trading platform can sometimes be used just to indicate the trading software solely.
When participating in electronic trading, one can see the market prices on a live stream. They also provide additional trading tools like charting packages, account management functions and other news feeds that are related to the industry. In the olden days, transactions were handled manually between counterparties or brokers. But, with the advancement in almost every field trading has become easier than ever before. It was during the early stages of 1970’s that a number of transactions started migrating towards the electronic platform. This can also be considered as the alternative trading system in a sense. The initial electronic trading system that was introduced to mankind was associated with stock exchanges. They allowed the brokers to place the orders remotely. This was done with the use of dumb terminals and some dedicated networks.
During the early stages, not all systems supported live streaming of prices of commodities. Instead, they allowed the brokers or the clients to place orders. They will then be confirmed after a while. This system is known as request for quote. This was considered as a time taking process by many traders. The world of trading evolved over the years and has made live streaming of prices possible. They also gave way to instant execution of orders. Internet was always used as the underlying network. This made the location a less relevant factor for trading. There are a number of electronic trading platforms in the industry today. Each one of them differs from the other with the services they offer. There are some platforms that offer built-in scripting tools while some other have APIs which allow traders to develop algorithmic or automatic trading systems and robots as well. The graphical user interface that is used by the client in an electronic trading system can even be used in order to trade currencies, futures, equities. They can even be referred by the term trading turrets. This is sometimes considered as a misuse of the term by some people.
Advancement of electronic trading – MetaTrader 4
MT4 is the short form that is given to the term MetaTrader 4. This is one of the most famous electronic trading platforms. This is most commonly used by traders that specialize in online retail foreign exchange speculative. This kind of platform was developed by MetaQuotes software. The software was released in the year of 2005. This particular software has the license to be used by foreign exchange brokers. These brokers are the people that provide this software to the clients that approach them. There are two components in the software which are namely, client and server. Both the components are run by different people. The server component is the one that is run by the broker who has purchased it through his/her license and the client software will be provided to the customers of the broker. They can use that particular component anytime to see the live streaming of prices and charts online. They can also be used in order to place new orders and manage their accounts. The client component is composed of a Microsoft Windows-based application. This software mainly became popular because of its ability that allowed the end users to write their own trading scripts. They also included robots which made automatic trading a possibility. There is even a successor to this software that is known as MetaTrader 5. It was released in the year 2010 by MetaQuotes. The uptake of this software was slow. The traders preferred using MT4 up until April 2013.
History and the functionality of the software
The developer of the software MetaTrader4 began releasing a number of versions of this software into the market since the year 2002. MT4 is still considered to be a significantly enhanced version of all the other software that was released earlier. MT4 was officially released in the year of 2005. During the time between the years of 2007 and 2010, many brokers started adding metatrader 4 as a platform for an optional alternative. This was used optionally along with the trading software that already existed. This happened when the platform became popular among the traders. A large number of third-party scripts and advisors were also responsible for this growth of the platform. The terminal that is used by the client included a built-in editor. It also has a computer with access to a free library of software that is contributed by the user. Articles and help are also included. A proprietary scripting language is used by the software. This enables the traders to develop expert advisors, scripts, and custom indicators. The platform’s ability to support algorithmic trading is considered to be the main reason for its popularity among the traders everywhere. MT4 is designed in such a way that it can be used as a stand-alone system by the broker. It requires the broker to manually manage the position. This is the common configuration that is seen in the MT4 platform that is used by brokers.