The custom software development market is growing due to rising demand. In 2022, its market size was valued at $29.29 billion globally. From 2023 to 2030, it is expected to grow at a CAGR of 22.4%. Many businesses prefer custom solutions over the thousands of commercially available software. Technology has transformed traditional business methods.
One sector affected by modern software is trading. It is no longer limited to large organizations. Investors and ordinary individuals are now key players in the market. In the digital age, a market player’s success depends on having a robust and full-featured trading platform.
Here is a closer look at what is needed to develop a trading platform and how to create one that excels.
Understanding the Use of Software in Trading
Before we dive into developing trading software, let’s first look at how trading platforms are used, how they make money, and the different types available.
What is Trading Software?
Trading software is a computer program that traders use to execute trades in financial markets. It helps monitor virtual trading and supports various trading operations:
- Real-time quotes
- Charts
- Diagrams
- Market data analysis: calculating bid-ask spread, managing deals with brokers, showing the “buy or sell” ratio
- Automation of trading strategies
- A space to trade and analyze financial items like currencies, stocks, derivatives, and bonds. This can be done with a financial intermediary like a broker, market maker, or stock exchange
Most trading solutions are available on mobile apps, desktop apps, and web-based platforms.
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Types of Trading Platforms
Before choosing a trading software development company, decide if you prefer proprietary (prop) trading platforms or commercial trading platforms.
- Prop Trading Platforms: Prop trading platforms are developed by major brokerage companies. They are tailored to specific trading styles and designed to match the needs of electronic brokerage models.
- Commercial Trading Platforms: Commercial trading platforms target day traders and retail investors. They are easy to navigate and offer features like news feeds, charts, and exchange portals. Examples include Binance and Robinhood.
How the Software Generates Revenue
You might wonder how trading platform software makes money. There are several ways to generate revenue.
Payment for Order Flow (PFOF)
PFOF is compensation a brokerage firm gets for directing orders to a specific market maker or exchange. This usually amounts to fractions of a penny per share. For every transaction in and out of the market, you receive a small amount. It may seem minor, but Robinhood made $467 million in the third quarter of 2023 using this method.
Fees and Interests
There are various ways to implement fees and interests on your platform:
- Users might borrow funds or securities at certain interest rates, increasing profitability.
- The platform might charge fees for specific transactions.
- Examples include withdrawal fees, management fees, and inactivity fees.
Subscriptions
Platforms can use the Freemium model to make money. This model offers a free version with basic features and a paid version with advanced features for premium subscribers.
In-app Advertisement
Many free applications rely on ads to generate revenue. Be mindful that ads can negatively impact user experience. Use native ads, banner ads, or rewarded video ads strategically.
Trading Platform Benefits and Potential Challenges
Before building your team of trading software developers or planning to create one yourself, it’s important to understand the benefits and challenges of the development process.
Benefits
- Access to real-time data and in-depth technical analysis.
- Ability to make confident and informed decisions.
- Automated trading, leading to better outcomes and increased ROI.
- Custom trading software allows for efficient risk management tools.
- Includes testing and simulation capabilities.
Challenges
- The development process is long and complex. Working with reputable trading software development services is recommended. EZtek Software has a proven track record of delivering top-notch services and products, regardless of the project’s complexity.
- Cyber threats are significant and can have devastating consequences. Implement robust security measures to protect sensitive financial data.
- The trading market is governed by strict legal and regulatory frameworks. Developers need to follow these rules closely to avoid manipulation and safeguard traders’ interests.
Essential Features of Trading Software
Whether you are developing stock trading software, a currency trading app, an option trading system, or a futures trading platform, certain key features are essential for success in a competitive financial market.
Dashboard with Statistical Information
A strong trading system has a customizable dashboard. It includes various charts, up-to-date market prices, the user’s balance and activity, and advanced data analytics. This information helps users make smart, data-driven investment decisions.
Newsfeed
Trading software should have a newsfeed. It provides access to valuable market news, forecasts, trends, and other insights at a glance. This allows users to make quick and confident decisions. Stock exchanges do not wait for any investor, so timely information is crucial.
Authentication
Mobile trading apps require users to provide personal information for KYC (know your customer) regulations. Once verified, users can access their accounts. For optimal security, two-factor authentication is used. Users set a password, and a unique code is sent to their registered mobile number or email address.
Filtering Tools
To avoid missing valuable investment opportunities, users need custom filter tools. These tools help quickly navigate through stocks or cryptocurrencies, showing the newest growth rates, orders, indexes, and more.
Convenient Admin Tools
Custom trading software should include convenient admin tools. These tools should allow quick access to customer requests, status updates, and pending or submitted orders.
Real-Time Alerts
Real-time updates are crucial. Users should be able to monitor market events, price fluctuations, and technical indications. The app should always be available for the newest updates or for special security reasons.
High-Level Security
Security is a major concern in software development, especially in the trading industry. Financial data is sensitive, so implement strong security measures like encryption and two-factor authentication.
Portfolio
Users should have a comprehensive view of their portfolio. This includes everything from their stocks or currencies to their current value.
Programmatic Trading
Modern trading platforms offer programmatic trading features. This allows users to execute trades automatically, eliminating the need for manual order placement. Users can also test the system’s response to specific commands.
Guides and Tips
Providing detailed trading tips is beneficial for investors, especially beginners. The more successful trades users make, the more profit you earn.
Trading Software Development: A Step-By-Step Guide
Creating a trading platform involves five key stages: legalities, market research, choosing a platform, development, testing and quality assurance, and releasing the app.
Legalities
The financial sector has strict rules and regulations. First, understand and comply with the relevant standards and laws. For example, in the US, follow the Securities and Exchange Commission (SEC) guidelines. In Europe, research the General Data Protection Regulation (GDPR).
Market Research
Conduct thorough market research to understand your target audience, budget, time, and demand. This step is crucial for a sustainable business in the vast, competitive fintech market.
Choose Your Platform
Decide on the platform for your software. Will your platform have a mobile version? If so, will it be for Android, iOS, or both? Consider cross-platform development with programming languages like Native or Flutter.
Development Process
Begin the actual development process, involving both front-end and back-end development. The front-end team will work on UI/UX, the website interface, and prototyping. The back-end team will focus on securing the platform and APIs, including third-party APIs for non-essential features. A professional and dedicated team ensures smooth development.
Testing
Testing and quality assurance are crucial in fintech. Conduct performance testing to determine the system’s speed, scalability, and stability.
Deployment and Maintenance
After testing and fixing bugs, release the app to stores. Regular updates are necessary to fix bugs caused by third-party API updates and to add new features.
Outsourcing Is the Way to Go in 2024
Developing trading software can be a challenging journey, but it’s worth the effort. Why not make the process easier with the best resources available? You can access seasoned developers, cost-effective strategies, simplified management, and full focus on your core business operations by partnering with EZtek Software. Our expert technical team is dedicated to bringing your vision to life. Contact us today to learn more about how we can help with your trading software development needs.
