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Multi Asset Online Trading Platform

Trading Platform Comparison

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Multi-asset Platform Overview

The purpose of an Online Trading Platform is to offer the user, an active investor often referred to as a trader, an integrated solution to easily access all global markets taking into consideration the context of the individual investor's Investment Policy Statement (IPS). Such an IPS will above all else specify the (investment) objectives and constraints, such as the time horizons, restrictions (a.o. product restrictions) and liquidity aspects. The online trading platform typically covers a large palette of instruments related to a multitude of financial markets at the level of cash and derivatives. These can be directly traded at (much) lower costs than with the traditional banking services.

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Fundamentals of a Brokerage Platform

The Online Trading Platform is an Information Technology application that is developed and managed by a Broker (the term can differ depending on the location) respectively a bank. The active investor will sign a contract for the use of the platform and transfer assets (typically cash).  Once the assets are transferred, the investor is granted access to start investing / trading activity on the offered markets – with a palette of instruments that will vary from one platform provider to the other. Usually, the access is granted through desktop/laptop, tablet and mobile phone via a dedicated App.

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Trade Solidity and Security

It is essential for the user to understand the risks associated with the wealth brought on the platform. Cash may be independently protected up to a certain level. The level of capital of the Trading Platform provider is another key indicator, it is also the operational risk it is running in the context of extreme situations (such as a systemic type of crash) and the way it is mitigated that are relevant for the user. Beyond operational risk, there could also be other material risks to consider. Relying on a bank that has a particularly high level of its own capital is certainly an advantage but it is not the only criterion to consider for a proper evaluation. Operational risk of a company is indeed difficult to evaluate as an external party.

As the platform is remotely accessed and relies on an Information Technology (IT) solution, the platform provider should explain the key characteristics of the communication and IT security. While there is never a zero-risk situation, the user should be interested in an above-average level of safety.

Moreover, other terms and conditions do likely apply and need to be studied in detail beforehand: especially when it comes to forced position closing.

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Trading Signal

Trading signal services are related to specific systems which deliver automatically market position information based on a model. In terms of implementation, they are either an informational service or an asset management mandate/agreement. In case of an informational service, it is the investor who implements the signals; the investor may also use them only as a basis to make a decision, but undoubtedly, the service is (essentially) integrated in the platform.

Trading signals are part of extended (not basic) functionalities select providers can offer – the platform needs to be adapted specially for that purpose.

Often questioned by users are what type of models are typically used in the context of a trading signal service? The most common ones are likely market trend following. This topic includes identifying the trend (if there is one) and indicating the corresponding market position.

The provider, at the very least, describes the type of model that produces the signals.  One example is related to technical analysis as it is the case for the trend following approach mentioned above.  A second example is when the signals apply a fundamental approach, using fundamental data at the level of individual companies and/or macro-economic information. More detailed information is likely available from certain Trading Platforms upon request.

Ultimately trading signals are a question of the desired level of trust which in many cases the investor will build progressively.

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Quality Service

There are at least two types of support to consider: Technical and Client Relationship.  The first, technical, is linked directly to the platform offerings.  The second, client relationship, covers the user experience for example in the context of disagreements.  One aspect objectively evaluated is the availability of the support Broker Platforms provide.  Online Broker Services should transparently disclose their terms and conditions, at the very least on the company website.

In addition, the platform provider may also present economic forecasts, which could potentially be vital for the user's investment strategy. Another type of advanced service is the access to company analysis based on fundamental data – with an associated investment rating; this type of service is rare for an Online Trading Platform user – especially if it is available at low or no costs.

Another example of associated services are educational sessions, seminars or workshops they are related to the use of the platform or covering investment topics in particular.

It must be noted that the level of services can also include dedicated and personal investment advisory.  This is typically a function of the amount of assets transferred to the platform and the level of trading activity (transactions). It is similar to the difference of service between Retail and Private Banking.  To have access to a personal investment advisory service provided from real people (not bots) who are located in Switzerland and easily accessible can be a competitive advantage, especially when the service is offered in one’s native language.

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Platform Conviviality in Switzerland

An Online Trading Platform allows the user to easily and effectively personalise their trading experience, especially when it comes to the mobile/app level. The ability to set-up quickly a table of instruments / products is a minimum requirement for the available platforms in the Swiss market.  Ideal platforms offer “smart” suggestions within specific categories.  This includes the graphical user interface, both intuitive and flexible, when it comes to graphical technical analysis (also called qualitative technical analysis). 

Investors should not forget that if a larger set of classic technical analysis tools is provided (basic functionality), their use is also partly a function of live quotes.  The advanced applications allowing for the development of a true (investment-)system certainly isn’t common (extended or even very extended functionality). The absence of the latter makes the use of technical analysis therefore less useful.  Certain trading platform providers in Switzerland may as well offer research (extended functionality) that can be technical analysis related or of fundamental nature such as company reports with a buy/sell/hold rating (or a mix of both).

Examining the Swiss market: the amount of online trading platforms available as increased in Switzerland in recent years. The differentiation factors go well beyond simply prices, even though prices (with not only the transaction costs) remain a key driver. It is very likely that the Swiss service, especially when it comes to the safety of the wealth that is transferred to the platform, is a prominent decision factor. The long-term success of the platforms is probably a function of the level of understanding of the individual investor needs (these will also vary with time), innovation (own innovation or from other parties) and service quality. It should not be forgotten that this requires strong investments from the providers themselves. 

In conclusion, it is highly recommended for the user to test the platform – typically with a free demo account – in order to get a better idea of the level of conviviality & functionality offered. Of course, the investor may also make suggestions regarding the platform: the reaction of the provider in that regard may also be a selection criterion.
Beyond the individual investor's evaluation criterions, most often the user will look for a “cultural match” with themselves and the platform provider of their choice.

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Platform Technology and Features

What instruments or products provided by the Online Trading Service is a key question to consider, since not all platforms will have the same offering.  Despite the fact that the large markets are typically covered by most platforms in Switzerland, they are not necessarily offered with the same extensive solutions.  Therefore, unless the user aims to trade only the most common indices, currencies etc., it is best practice to investigate beforehand if the coverage fits their individual needs, such as testing the service via free trial

The more frequent short-term activity the user chooses to have, the more necessary it becomes to access live data. Common technical analysis approaches using classic parameters on a single large market may well be less efficient: the possibilities to go beyond that shall be explored by the user.

Another basic functionality are the delivery of economic data and the related calendar as well as company news and earnings calendar.  This feature is categorised as basic since they are easily available elsewhere on financial websites free of charge. 

A larger palette of types of orders are often provided by Swiss Online Trading Platforms, including combined orders .  The user may not need that level of coverage but on the other hand it is a great source to discover new ways to trade.  A detailed overview of the transactions made as well as a (quantitative) performance and risk analysis are key tools for the trader.

Investors should take into account that the technological capabilities and the extent of coverage of trading platforms will likely vary with time and modern advancements.

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Costs, Fees and Interest

Both the platform and external costs of online trading are applied in several places - in most cases, where one would not expect it. It is therefore essential to compare costs at the appropriate level depending on the instruments traded. In addition, the conditions are a function of the assets contributed and the trading activities. These conditions can change quickly, and so can the costs.

Below are the cost categories in an overview:

  • (Recurring) costs linked to the (cash-)account(s) and the custody account(s)
  • Costs related to special orders.  An example of this is a limit order with guaranteed execution (for which the provider takes a risk that will need to be compensated)
  • Costs (total costs, to be precise) per transactions including those related to dealing in a foreign currency that leads to an exchanged (of currencies). The costs can be different in normal and more volatile conditions
  • Cost /interest related to over-night open positions for CFDs for example. And that not only for long but also for short positions
  • Costs associated with the information and live quotes (and their level of detail, that’s versus delayed quotes) services
  • Costs and possible restrictions related to the cash- and securities-transfers
  • Costs for official documents for tax purposes for example and (possible) paper-communication costs
  • Interests on the accounts in particular may lower the costs, even though they are not usual
  • Possible costs for closing the account(s)

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Financial Leverage

Derivatives allow the possibility to leverage the exposure: for a typical platform this will encompass CFDs, futures/forwards and options, the user is therefore able to apply leverage which can potentially become quite high.

A key aspect to consider is that the maximum leverage which can be applied for a particular instrument is in fact the choice of the platform: that choice can be changed quickly, especially when the developed equity markets become more volatile. In other words, the user needs to have developed a strategy allowing the use of leverage at a reasonable level. Limit order can assist with leverage but only to a certain degree if the limit order is not guaranteed – and if it is guaranteed by the Trading Platform, it often comes at a cost that needs to be calculated in. Moreover, it is recommended the user take into account that losing positions may lead to a forced closing by the trading provider and further protective actions – this is detailed in the terms and conditions (of use of the platform).

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Resources

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Swiss Online Trading Platform Comparison trading-boerse.ch

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14-page white paper with the most important and relevant evaluation criteria you can use to compare online trading platforms.

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Checklist Online Broker Comparison

Qualification Checklist for Trading Platforms

Use this comparison checklist to conduct a thorough review of the online trading platforms available on the market and find the best platform for your personal trading requirements. The checklist assessment tool contains formulas and over 40 aspects to evaluate and compare online trading platforms in Switzerland.

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