How to Build Stock Trading Software And Algorithms

Brokers, traders and other active participants in stock markets for more efficient trading use terminals - software solutions for analyzing markets, using trading advisors and organizing dealing services. Good examples are MetaTrader, Ally Invest and MetaStock. But they are far from one of a kind.

Moreover, there is no ideal trading terminal for stock markets. Therefore, if you create such software, you can become a monopolist in this segment. To make this happen, take into account the recommendations of our article, which describes all the important details of the development of platforms for stock trading. We also recommend reading - BEST JAVASCRIPT FRAMEWORKS AND LIBRARIES OF 2022.

What are trading terminals

Web technologies are designed to make life easier for modern man in all aspects of his work. And smart people do not try to go against this trend (if only you are not the leader of the authoritarian regime), but use it to improve business performance. For example, brokerage companies, which in the 2000s began to wonder how to create an automated trading system. And most of them succeeded.

The applications created at that time made it possible to carry out only the basic operations of buying / selling stocks, but this could be done from anywhere in the world without an intermediary in the form of a broker on the phone. Over time, the set of functions grew, as did the tasks of the trading terminal. And now it is not just a trading platform, but an analytical center with statistics on the market, news and expert advice.

What are the features of trading applications

Registration. The process of creating an account and verifying the identity should be simple and, most importantly, as secure as possible (when it comes to money and billing information, the issue of security is particularly relevant). Ideally, you need to offer the user several options for registration and authorization, for example, via email, phone number or social networks. In addition, modern terminals must also support Face ID and / or Touch ID.

User page. The section with the user's personal information must be accessible for editing, including after registration. At the same time, almost everything should be allowed to be updated - on behalf of the bank account. Only statistics should be constant.

Marketplace. Place to place orders for the purchase / sale of shares. It should be possible to access and edit important information (statistics, indicators, expert advice, historical references, etc.) and the ability to use trading algorithms. This section is key to trading platforms, so pay maximum attention to it.

News feed. This may surprise, but the news feed is one of the most important software components for stock trading. The fact is that stock price charts on stock markets are sensitive to certain informational events (global and local).

For example, a local accident at an oil pipeline could lead to a fall in the shares of the owner of the pipeline and an increase in the shares of oil companies in other regions. Another example: the decisions of the authorities of one country to impose sanctions on another country or individual companies almost always have a serious impact on financial markets.

Payments and transactions. The function is needed to replenish deposits, conduct trading operations, withdraw money and manage cash flows. It is important to remember about security here - information flows must be encrypted.

Quotes monitoring. This screen should be informative, understandable and accessible 24/7. It should also include tools for setting up and the ability to take notes.

Guides, interactive tips. No matter how hard the UX / UI developers try, a good platform for the stock market cannot be made clear at first glance. Therefore, it is important to take care of the training and hints in advance, which will simplify familiarity with the platform.

Briefcase. Investors and traders should be able to track the status of assets and positions in real time. We also need a system of settings and filters for analyzing information. Such a system will allow making more correct conclusions: buy, sell or leave everything as it is..

Deposits. Balance check should be available at the touch of a button. Access to it should be on almost all screens of the platform. This is an important usability element, without which you will not create a popular stock trading platform.

Analytics. Active participants in the stock market cannot conceive their activities without observing market statistics, analyzing the effectiveness of transactions (trading strategies and algorithms) and trading in general. Charts will be the best solution for analyzingng market conditions, diagrams - for evaluating the effectiveness of trading strategies.

Demo account. Simplify the process of involving the user, as he will be able to experience the platform without risking real money.

Push notifications. The best way to get user feedback.

Search. Convenient search engine will make life easier for users.

How to create a successful trading platform

Developing software and algorithms for trading in the stock market is a complex and expensive process. Even if you do everything qualitatively, it’s not a fact that the platform created becomes popular. To ensure that development does not follow an unsuccessful scenario, pay attention to the following six points.

1: Mobile application VS Mobile site

If your plans are limited to creating only the desktop application, the mobile version is not needed. Nevertheless, most successful brokerage companies have the opportunity to trade using smartphones and tablets, as this increases the coverage and insures against problems associated with malfunctions of the desktop application.

To develop a mobile terminal, you need to decide how it will interact with user devices:

1. Responsive site. Mobile version of a web resource that automatically adapts to all screens of mobile devices. The advantage of this approach is that you do not need to separately create or configure anything for different devices and operating systems.
2. Full mobile app. The application can integrate features and elements that can not be fully implemented on the sites. In addition, the application more effectively engages users.

The mobile application allows you to access the stock market in one click, while a responsive website requires at least two clicks (launch the browser and open the site tab). Therefore it is better to stay on this option..

2: Selection of supported operating systems

The choice of supported operating systems depends on the coverage of potential users. And here is a simple rule: the more, the better. However, we must remember that the integration of support for each operating system costs money, and that different operating systems have different audiences.

Based on the popularity of operating systems, you need to bet on Windows, Android and Apple devices. At the same time, it should be remembered that operating systems are updated from time to time to new versions, and you need to respond promptly to this.

3: Development process

Now that we have dealt with the preliminary questions, we can start creating software for trading stocks. This process is usually divided into three stages:

1. Mobile development. Here you will need the skills of application developers for Android and iOS devices (Windows Mobile devices can be neglected). Android specialists should be familiar with the C # or Kotlin programming languages, and iOS specialists should be Java or Swift. Of course, there are other programming languages, but these are most commonly used.
2. Back-end development. To create a trading platform, we also need backend specialists who will be involved in server technologies: software logic, architecture, databases, and so on. Typically, programming languages such as Java, PHP, Net, Python, and Ruby are used for this, as well as SQL Server, Oracle, MySQL tools. At this stage, login, transaction, alert and other functions will be created.
3. Front-end development. This concept implies the creation of a platform design and a web interface, that is, the “client” part — everything that the user interacts with. The frontend developer must know the programming languages JavaScript, CSS and HTML, be able to work with various frameworks (AngularJS, Bootstrap) and libraries like jQuery. And he also needs to master Ajax –– technology that allows access to the server without reloading the page.

To create a trading platform of your dreams, in addition to these specialists, you will need a few more people who will take the following positions:

1. Project Manager (PM) - responsible for communication between the customer (boss) and direct software developers.
2. QA engineer - will test your application.
3. Designer - responsible for UI / UX.

Design for the trading platform is a separate topic, so we will consider this issue in more detail.

4: Trade system design

Trading is an activity where one wrong move can lead to failure. Therefore, the design of the trading platform should be as convenient as possible and warn users against erroneous clicks. Therefore, when developing interfaces, you need to pay closer attention to such things:

1. The development of UI / UX needs to begin at the stage of formulating the idea and requirements for the product. Otherwise, you will adjust the UI / UX to the already developed product - not the best idea.
2. Usability testing should be carried out for each version / design variation, each screen and each interface element.
3. Understanding user requests and behavioral patterns will facilitate the design development process and the application as a whole. Feel free to ask people / community about their preferences.

5: Trading algorithms

This concept includes computer scripts (algorithms) that independently “decide” when and how to conduct purchase / sale operations. A “solution” is embedded in an algorithm when it is created, and it is usually subject to formal rules that are based on technical and / or fundamental analysis.

There are two types of trading algorithms:

1. To reduce the cost and the likelihood of failure to execute large transactions. The bottom line is that large orders can create increased demand or supply for an asset, which will lead to an increase or decrease in its price. Therefore, large applications, as a rule, divide and implement with certain periods of time. An example of such algorithms is Target Close, VWAP, TWAP or Percentage of Volume. They are well known and need to be integrated into the trading platform.
2. To increase capital. These are scripts that use trading strategies and repeated patterns on charts for automated trading. The essence is simple: make money without understanding the market, a kind of "magic wand". Such algorithms need not be added.

It should be noted that the efficiency of the second type of algorithms is doubtful, since financial markets (and the economy as a whole) are chaotic systems of the second order. That is, these are systems with a high dependence on the initial conditions (“Butterfly Effect”), which react to predictions about them. First-order systems are simply chaotic, for example, the weather, the “three-body problem” and other.

Humanity has not yet learned how to predict the behavior of chaotic second-order systems. Moreover, many mathematicians and economists, on the basis of the Gödel Incompleteness Theorem, believe that this is basically impossible. Keep this in mind if you offer users algorithms with a "guarantee" of profit.

6: Safety

Alas, the security of financial data is a huge problem for the Internet community. And solve it, as a rule, in two ways:

1. Refusing to own money and user billing data, transferring this “privilege” to third-party resources, such as banks. This approach can be implemented, but it adds complexity to the platform and increases the cost of cash transactions.
2. By introducing enhanced security measures for authenticating and authorizing users. Usability suffers from this.

When developing a trading platform for the stock market, it is better to choose the second option. However, a balance must be struck between safety and convenience, although safety must remain a priority. In addition, you need to take into account the trend towards increasing deanonymization of monetary transactions in the network - many states introduce rules requiring the use of KYC & AML.

How much does the development of a trading platform costs

Price depends on the number of working hours and hourly rates of performers. The table shows the average for the North American market. In other countries, the rate is usually lower, and therefore the cost of development is lower.

Now you know all the points to consider when developing a platform for trading stocks. It remains to find developers who have an idea of how to create such products, and offer their services for a reasonable price.

How to Build Stock Trading Software And Algorithms key takeaways:

#1. What are trading terminals
#2. What are the features of trading applications
#3. How to create a successful trading platform
#4. How much does the development of a trading platform costs