February 24, 2023
This article discusses the process of developing a trading app like Robinhood, possible pitfalls, as well as tips & tricks. Check it out!
This article provides a step-by-step guide on how to build a stock trading app. It’ll be useful for entrepreneurs looking to create a trading app similar to the popular app Robinhood.
Trading apps have become a growing trend in recent years due to their convenience and accessibility. With the proliferation of smartphones, it has become easier for people to manage their investments on the go. Additionally, trading apps often have a user-friendly interface, making it easy for novice traders to enter the market. The increasing popularity of passive investment strategies, such as index fund investing, has also contributed to the growth of trading apps as they allow individuals to actively manage a portion of their portfolio.
Robinhood, founded in 2013 and is headquartered in Menlo Park, California, is a popular stock trading app that allows users to buy and sell stocks and other financial instruments. By August 2022, the number of Robinhood users was 13.3 million. There are several unique selling points that made the Robinhood app popular:
Easy to use: The Robinhood app has a user-friendly app design that makes it easy for people to buy and sell stocks, even if they have little or no experience in the stock market.
No commission fees: One of Robinhood’s top features is that it doesn't charge any commission fees on trades, making it an attractive option for people who want to invest in the stock market without incurring high fees.
Educational resources: Robinhood also provides educational resources and tools, such as articles and videos, to help people learn about investing and the stock market.
Mobile accessibility: The Robinhood app is available on both Android and iOS platforms, which makes it convenient for people to access and manage their transactions on the go.
Social aspect: The app also has a social aspect, where users can follow other investors and see what stocks they are buying and selling. This feature helps people learn from others and make informed investment decisions.
Conducting a competition analysis can also help identify industry trends and best practices, and allow the team to learn from the successes and mistakes of other apps. This can help ensure that the app is well-received by users and has a strong market position.
The Robinhood app has become so popular that there are many similar apps available now. Some examples include:
Webull: Webull is a stock trading app that offers commission-free trades and a variety of tools and features for investors. It also has a user-friendly interface and a wide range of educational resources for new investors.
Acorns: Acorns is a robo-advisor app that helps users invest their spare change in a diversified portfolio of stocks and bonds. It offers a range of investment options, including a retirement account, and has a low minimum deposit requirement.
Stash: Stash is another robo-advisor app that aims to make investing easy and accessible for beginners. It offers a range of investment options, including a variety of exchange-traded funds (ETFs), and has a user-friendly interface and a range of educational resources.
E*TRADE: E*TRADE is a long-established online brokerage that offers a wide range of investment options, including stocks, ETFs, and options. It has a more advanced platform than some of the other apps on this list, making it a good option for experienced investors.
Fidelity: Fidelity is a well-known financial services company that offers a range of investment products, including stocks, ETFs, and mutual funds. Their app is user-friendly and offers a range of tools and resources for investors.
Put simply, the Robinhood app makes it easy for people to buy and sell stocks and other investments directly from their phones, without the need to go through a traditional brokerage firm. Let’s see who can use it and what problem it solves.
Robinhood is available to anyone who is at least 18 years old and has a valid U.S. mailing address (unfortunately, it’s not yet available outside the U.S.)
To start using Robinhood, you will need to download it from the App Store or Google Play Store and follow the instructions to create an account and complete the necessary paperwork. Once your account is set up and funded, you will be able to start trading and investing through the app.
By offering commission-free trading, Robinhood eliminates the trading cost and makes it more affordable for people to buy and sell stocks and other securities, which can make it easier for them to build a diversified portfolio and participate in the stock market.
Robinhood also aims to make investing more accessible and user-friendly. Its mobile applicaiton and website are designed to be easy to use, with a clean, intuitive app design that allows users to quickly and easily place trades, view their portfolio, and track their investments.
The app is known to be user-friendly, with a simple interface and educational resources to help people learn about investing and the stock market. Let’s examine the feature list in detail.
The app will need to provide a way for users to create a new account. This can be done through a sign-up form that asks the user to provide basic information such as their name, email address, and a password. The password should be encrypted and stored in a secure manner to protect the user's privacy.
It provides users with a personalized view of their portfolio and other relevant information.
This feature allows users to track their investments and see how their portfolio is performing. The user portfolio feature also allows one to connect to a financial data API, calculates portfolio performance, and allows users to buy and sell investments.
These allow users to visualize and track the performance of specific stocks or other financial instruments. The crucial part of the development is to connect to a financial data API to retrieve real-time data for the charts, the app will need to connect to a financial data API.
It’s an important security feature for a Robinhood-like app, as it helps protect users' accounts from unauthorized access.
Push notifications are a useful feature for a Robinhood-like app, as they allow the app to send real-time updates and alerts to users.
Verification of Investor
This helps ensure that only qualified investors are able to use the app's trading and investing features.
This feature allows users to fund their accounts and make trades.
This allows users to fund their accounts and make trades.
Selling and Buying Functions
These are key features of apps like Robinhood, as they allow users to trade stocks and other financial instruments. To develop them, you’ll need to connect to a brokerage API and implement selling and buying functions by writing code to send the user's trade details to the brokerage API and handle the API's response. If the trade is successful, the app should update the user's portfolio to reflect the new holdings or proceeds from the sale.
Market Data Collect
This provides the real-time financial data that powers the app's various features.
The watchlist feature should allow users to add and remove stocks from their watchlist. This can be implemented through the use of a form or search bar that allows the user to enter the ticker symbol of the stock they want to add or remove.
Search and Sorting Capabilities
It allows users to easily find and compare different investment options. It’s also developed through connecting to financial data API, implementing the search function, and sorting and filtering options.
It allows users to quickly and easily view the current price and other relevant information for a particular stock.
It’s a useful component for an app like Robinhood, as it allows users to learn about investing and improve their financial literacy. It’s important to allow users to track their progress through the content and see what they have completed and consider integration with other features.
There are a few ways that apps like Robinhood make money (please note that they often offer free trial):
Trading commissions: One way they make money is by charging a commission for each trade that users make on the platform. These commissions are typically lower than those charged by traditional brokerages, making Robinhood an attractive option for frequent traders.
Interest on cash balances: Robinhood also makes money by earning interest on the cash balances of its users. When users deposit money into their Robinhood accounts, the company invests this money in short-term, low-risk assets and earns a return on the investment.
Premium features: Robinhood offers a number of premium features that users can purchase for an additional fee. These features might include advanced research tools, higher levels of customer support, or other perks.
Market data revenue: In addition to these revenue generation strategies, Robinhood also makes money by selling market data to third parties. The company has a large user base and generates a large amount of data on trading activity, which it can sell to financial institutions and other interested parties.
Knowing different monetization strategies, their pros and cons, also helps to identify best growth strategies to apply.
Developing an app like Robinhood is a long process that involves several essential steps we will mention below.
The research stage is an important part of the development process for an app like Robinhood. During this stage, the development team will gather information and insights that will inform the design and development of the app, as well as marketing and advertising strategies and ensure that those processes are smooth and evidence-based.
At the end of the research process, you should have these questions answered:
What type of services do you want to provide?
What features do you want to integrate?
Which specific problems will your stock trading app solve?
When choosing an operating system (OS) for developing an app like Robinhood, there are generally two main options to consider:
iOS is the operating system used on Apple devices, including the iPhone and iPad. If you want to develop an app that targets users of these devices, then you will want to develop for the iOS platform.
Android is the operating system used on a wide range of devices, including phones and tablets from manufacturers such as Samsung, Google, and Huawei. If you want to develop an app that targets users of these devices, then you will want to develop for the Android platform.
A Hybrid approach allows developers to leverage the advantages of both technologies and create an app that is fast, responsive, and has access to native device features, while also being easy to maintain and update.
It is also possible to develop a web-based app that can be accessed from any device with a web browser, regardless of the OS. However, this approach may have certain limitations compared to native apps.
Choosing the right software development vendor is an important part of the success of your future product. There are many benefits that experienced software development team brings to the table:
Experience and expertise: It's important to choose a software development company that has experience and expertise in developing similar apps and technical implementation, as this can help ensure that the app is built to a high standard and meets the needs of the target market.
Cost-effectiveness: The company should also offer competitive pricing and a good value for the investment. This will help ensure that the development process stays within budget and maximizes the return on investment.
Communication and collaboration: Good communication and collaboration are key to the success of any software development project. The company should be able to effectively communicate with the development team and work with them to deliver the app on time and to the desired quality.
Proven track record: Finally, the company should have a proven track record of delivering successful software development projects. This can help ensure that the company has the necessary skills and capabilities to deliver a high-quality app.
The team composition for online trading platform development will vary depending on the specific needs and requirements of the project. However, there are some key roles that are typically involved in the development.
Meeting regulatory compliance is an important aspect of developing a Robinhood-like app, as it helps ensure that the app operates in a legal and ethical manner.
Depending on the region of operation, your app must follow the guidelines of international or governmental financial institutes and adhere to the anti-money laundering mobile app rules.
In the USA, fintech apps follow the laws of CFPB – Consumer Financial Protection Bureau. Other services are:
CFTC – Commodity Futures Trading Commission
FinCEN – Financial Crimes Enforcement Network
BSA – Bank Secrecy Act
NFA – National Futures Association
During this stage, the development team will conduct various tests to ensure that the app is working as intended and meets the required quality standards.
User data protection is essential when developing a trading app for several reasons. Firstly, financial information is often sensitive and personal, and it is the responsibility of the app developer to ensure that this information is kept secure. If user data were to be accessed or compromised, it could have serious consequences for the individual, such as financial loss or identity theft. Additionally, ensuring secure transactions is also important from a legal perspective. There are several security measures that are commonly used in the development of an app like Robinhood to ensure its security.
Biometric authentication is a common security method used in the finance industry, including in stock trading apps.
Multi-factor authentication requires users to provide more than one form of identification when logging into a stock trading app. In addition to a password, users must also enter a verification code, which is often an "OTP" (one-time password) generated by an app like Google Authenticator.
Data encryption is a critical security measure for stock trading platforms, as they often store sensitive user information like cardholder details. Without encryption, this information could be accessed by hackers who may attempt to steal users' funds.
Cybersecurity threats protection includes implementing an automatic log out feature when a user session ends, providing regular security patches that are installed automatically, and making the app available only on trusted marketplaces like Google Play and the App Store.
The cost of developing an app like Robinhood can vary significantly depending on a number of factors, such as the complexity of the app, the development team's hourly rate, the length of the development process, and the number of platforms.
|Location of engineers||iOS||Android|
Here is the approximate tech stack needed for the app like Robinhood development.
|Frontend||React, Vue (Vuex, Nuxt), Next, Angular, TypeScript|
|Backend||Java, Python, Node.js (Nest, Express); MySQL or MongoDB (data management systems)|
|Third-party integrations||Stripe or PayPal (payment processing), Bloomberg, Ultumus, or Thomson Reuters (market data feeds), Auth0 or Okta (identity and authentication)|
Given that it takes approximately 2200 hours to design, develop and test the app for one platform, it may cost anywhere from $50,000 to $150,000 depending on the location of your development team.
In conclusion, building an app like Robinhood requires careful planning and consideration of various factors such as the target audience, business model, and desired features. It is important to conduct market research and a competitor analysis to understand the needs and preferences of the target audience, as well as the current landscape of similar apps. Additionally, it is essential to have a solid understanding of the technical aspects of app development. By following these steps and working with a team of experienced professionals, it is possible to successfully build and launch an app like Robinhood.
If you have an idea for your future trading app or are unsure where to begin, please don't hesitate to contact our team for a consultation. We hope this guide has helped you better understand the important aspects and details of the development process.
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🏹 What is Robinhood?
🏹 What are Robinhood app features?
🏹 How long does it take to develop an app like Robinhood?
🏹 What is the cost of an app like Robinhood?
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