How to Build a Trading Platform: Market Insights, Tech Stack, Cost

The online trading platform market is booming. According to the Fortune Business Insights report, this market was valued at $7,958 million in 2018 and is expected to reach $12,064 million by 2023 with a CAGR of 7.8% during the forecast period between 2019 and 2023.

The online trading platform market has reached new heights in the last few years. In fact, it is booming and one of the most flourishing markets in this age of technology.

There are many reasons for this trend:

• The ease of use and accessibility that comes with digital platforms have made them more popular than ever before. This has led to an increase in their accessibility as well as their number.

• Increased competition among different companies to provide better services has led to a rise in standards across all industries, including finance and banking. This means that people who want their financial transactions handled by professionals will find more options available than ever before. 

It’s clear that online trading platforms are here to stay, and will continue to grow in popularity. There are many reasons why people should consider using and developing these tools—they offer a convenient way to trade currencies, stocks, commodities, and more. And since they can be accessed from any computer or mobile device with an Internet connection, they open up new opportunities for people who don’t have ready access to traditional financial institutions.

Overall, the market for online trading solutions is expected to continue to grow in the coming years, driven by the increasing popularity of online investing and the availability of new technologies and services. This growth presents opportunities for platforms to expand their offerings and reach new users, as well as for investors to access a wider range of investment opportunities. And now is the perfect time to start developing your own online trading platform. 

Most popular trading platforms 

These platforms are accessed via the Internet, and they provide users with a range of tools and features to help them make informed trading decisions. Some of the most popular online trading platforms include:

• eToro

eToro is a social trading tool that allows users to trade a wide range of financial assets, including stocks, currencies, commodities, and cryptocurrencies. The platform is known for its user-friendly interface and its social features, which allow users to follow and copy the trades of other users.

Source: eToro

• Robinhood

Robinhood is a commission-free trading solution that allows users to trade stocks, options, and cryptocurrencies. The platform is popular among novice investors for its simplicity and ease of use, and it has been praised for its clean, modern design.

Source: Robinhood

• TD Ameritrade

TD Ameritrade is a full-service trading tool that offers a range of trading tools and resources, including market research, educational materials, and trading platforms. The platform is popular among active traders for its advanced features and its support for a wide range of asset classes.

Source: TD Ameritrade

• Fidelity

Fidelity is a leading investment and trading solution that offers a range of products and services for investors, including brokerage services, retirement planning, and managed portfolios. The platform is known for its high-quality research and analysis, and its support for a wide range of investment options.

Source: Fidelity

• Charles Schwab

Charles Schwab is a brokerage and investment platform that offers a range of services for investors, including trading, research, and financial planning. The platform is popular among active traders and long-term investors for its low fees and its support for a wide range of asset classes.

Source: Charles Schwab

Overall, these online trading platforms are among the most popular and well-regarded in the market, offering a range of features and services to meet the needs of different investors.

Types of trading platforms

There are 2 types of trading solutions: prop (proprietary) and commercial trading solutions. Let’s talk about them and find out their pros and cons. 

Prop trading platforms

Also known as proprietary trading platforms, these tools are used by proprietary trading firms to execute trades on behalf of the firm. Proprietary trading firms are typically made up of teams of professional traders who use the firm's capital to trade financial instruments like stocks, bonds, and derivatives. These traders are often highly skilled and experienced, and they use sophisticated trading strategies to generate profits for the firm.

• Advantages of prop trading platforms

One of the main advantages of prop trading platforms is that they allow proprietary trading firms to trade large volumes of securities quickly and efficiently. This is because prop trading platforms are typically designed to be highly efficient and user-friendly, allowing traders to enter and execute trades quickly and easily. In addition, prop trading platforms often provide advanced features like real-time market data and analysis tools, which can help traders make more informed trading decisions.

Another advantage of prop trading platforms is that they can provide proprietary trading firms with access to a wide range of financial markets. Many prop trading platforms are connected to multiple exchanges and other trading venues, which can give proprietary trading firms access to a wide range of securities and other financial instruments. This can be especially beneficial for firms that trade in a variety of different markets and want to take advantage of market opportunities as they arise.

The Cost of Trading Platform Development in 2024

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• Disadvantages of prop trading platforms 

Prop trading platforms also have some weaknesses. First of all, they are often expensive to use. Proprietary trading firms typically have to pay fees to access prop trading platforms, and these fees can add up quickly, especially for firms that trade large volumes of securities. In addition, props are often complex and require a high level of expertise to use effectively. This can make it difficult for new or inexperienced traders to use prop trading platforms, which can limit their ability to generate profits for the firm.

Commercial trading platforms 

Commercial trading tools are used by retail investors to trade securities on their own behalf. Unlike prop trading platforms, commercial ones are typically designed to be user-friendly and easy to use, even for investors who are new to the markets. Many of them also provide educational resources and tools like market analysis and research to help investors make more informed trading decisions.

• Advantages of commercial trading platforms

One of the main advantages of these solutions is that they are generally less expensive to use than prop trading platforms. Most of them charge lower fees than prop ones, making them more accessible to retail investors who may not have a lot of money to invest. In addition, commercial trading platforms often offer a wide range of investment products like stocks, bonds, mutual funds, and exchange-traded funds (ETFs), which can provide investors with access to a diverse range of investment opportunities.

Another advantage of commercial trading platforms is that they are often highly customizable, allowing investors to tailor their trading experience to their individual needs and preferences. Many of them allow investors to set up custom watch lists, create alerts, and execute trades using a variety of different order types. This can help investors to manage their portfolios more effectively and make more informed trading decisions.

• Disadvantages of commercial trading platforms

One of the main disadvantages is that they may not provide investors with the same level of access to markets and securities as prop trading platforms. Commercial trading platforms are typically not connected to as many exchanges and trading venues as prop trading platforms, which can limit the range of securities that investors can trade. In addition, commercial trading platforms may not provide the same level of market data and analysis tools as prop trading platforms, which can make it more difficult for investors to make informed trading decisions.

Online trading platform features 

Some of the most common features include the following:

• Real-time market data: Online trading platforms provide investors with access to real-time market data like prices, bid/ask spreads, and trading volumes. This can help investors to track the performance of their investments and make more informed trading decisions.

• Charting and technical analysis tools: Many online trading solutions provide investors with a range of charting and technical analysis tools like trend lines, moving averages, and oscillators. These tools can help investors to identify trends and patterns in the market, and to make more informed trading decisions.

• Research and news: Online trading platforms often provide investors with access to research reports and other forms of market analysis. They may also provide access to financial news and other sources of information that can help investors stay up-to-date with market developments.

• Trading algorithms and automation: Some online trading tools provide investors with access to trading algorithms and other tools that can help automate the trading process. This can include features like the automatic execution of trades, or the ability to set up custom trading rules and strategies.

• Portfolio management: Online trading platforms often provide tools for managing and tracking users' investment portfolios. These tools can help users monitor the performance of their investments, assess the risks and potential rewards of different investments, and make adjustments to their portfolios as needed.

• Order execution: They can help users execute trades quickly and efficiently. This can include features like one-click trading, which allows users to place trades with just a few clicks of their mouse.

• Mobile access: Many online trading solutions offer mobile apps, allowing users to access their accounts and execute trades on the go. This can be particularly useful for traders who need to be able to react to market events quickly, even when they are away from their desks.

• Secured payments: The payment gateways should be secure and allow traders to easily add funds to their accounts and withdraw money quickly and without any hassle.

• Notifications: The trader should be able to set alerts for news, price changes, or other events. These alerts should appear as notifications that overlay other apps and make a sound to grab the user's attention.

User roles in online trading platforms 

To develop a trading platform or stock trading software and to ensure smooth operation, it is important to have a clear understanding of the different roles that users can play.

One of the key roles in an online trading platform is the trader. This is the user who actually buys and sells assets on the platform, using their own funds or borrowed money. Traders must have a thorough understanding of the markets and financial instruments in order to make informed decisions and maximize their returns.

Another important role in an online trading platform is the investor. Investors provide capital to traders in exchange for a share of the profits. This can be a less risky way to participate in the markets, as investors do not have to directly manage their own trades. However, it is important for investors to carefully research and choose the traders they invest with to minimize risk and maximize returns.

In addition to traders and investors, online trading platforms may also have moderators who are responsible for enforcing the platform's rules and regulations. These moderators may also provide support and assistance to users, and help resolve any disputes that may arise.

Finally, online trading platforms may also have administrators who are responsible for managing the platform itself. This may include tasks like setting up accounts, processing payments, and ensuring that the platform is operating smoothly and efficiently.

User roles for stock trading platforms include mentioned above + brokers who are licensed professionals who buy and sell securities on behalf of clients.

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The importance of security and regulation compliance

We’ve already mentioned security in the feature list of an online trading platform, but this aspect is so important that we think it is worth talking about it in detail. Security is important when it comes to an online trading tool or stock trading app development because it protects your data, your customers' data, and your brand.

1. It's one of the first lines of defense against hackers and cyber criminals who want to steal your personal or financial information.

2. Security protects you from being sued: Financial markets are heavily regulated to protect investors and maintain the integrity of the markets. Online trading platforms must comply with these regulations to ensure that they are operating legally and fairly. This may include obtaining licenses and permits, following industry standards and best practices, and regularly reporting to regulatory bodies.

3. It also helps protect your reputation as a company that takes its customers' security seriously. With the rise of cyberattacks and data breaches, it's more important than ever for trading tools to implement strong security measures to keep users' information safe. This may include using encrypted connections, secure servers, and two-factor authentication to prevent unauthorized access to accounts.

Regulation compliance is important for all online trading platforms because it ensures fair, equal, and safe access to the market. Regulation compliance also ensures that there is no fraud by verifying users' identities and protecting them from loss due to theft or hacking attempts on their accounts. It also makes users feel safe as they can be confident that their investments are protected and that the platform is operating in a fair, transparent manner.

Compliance is crucial for the success of any trading platform because it ensures that your customers' information, including any personal details, is kept safe by ensuring that all necessary rules and regulations are followed.

Compliance makes it easy for investors to buy into the business model of your platform because they can see how well-regulated it is. It also helps avoid fines and penalties from regulatory agencies like FINRA or CFTC, which could result in significant losses for your company.

How to develop an online trading platform: 

There is a set of steps to follow if you want to build a successful trading solution. This part of the article covers them all, from beginning to end.

Step 1: Research your target audience 

User research is an essential part of the software development process. By understanding the needs, behaviors, and preferences of the users, developers can create a software product that is tailored to their audience and meets their expectations.

User research can reveal gaps in the market, unmet user needs, or potential usability issues. This information can be used to inform the design and development of the product, ensuring that it is as effective and user-friendly as possible.

User research can also help you validate assumptions and hypotheses about the product and its potential users. By testing these assumptions with real users, developers can gain valuable insights and feedback that can be used to refine the product and improve its performance.

Step 2: Choose a trading platform development company

To create an online trading platform, it's important to choose a trading platform development company that has experience in this field. When looking for the right partner, look for a company with a good track record and one that is reliable and trustworthy. 

An experienced team usually has a broad market view, masters the development process, and works with the latest development tools and best approaches.  

Step 3: Discuss your ideas with the development team

Once you've put together a list of the features you'd like to see in your trading platform, it's time for a chat with your development team. You'll want to make sure that your ideas are feasible and can be implemented. The best way to do this is by thoroughly talking it through with someone who has experience building trading platforms. If you're not clear on what they mean by "customizable" or "user-friendly," ask them to explain it in more detail; likewise, if you're unclear about how much something might cost or how long it will take, ask!

Step 4: Clarify all technical aspects of your future project

The next step is to clarify all technical aspects of your future project. This is an important stage because it will help you understand what kind of requirements your trading solution should have and what capabilities the development team must have so they will build a good platform for you. The main tasks during this phase are:

• Understanding your business needs;

• Defining the requirements for our system and defining its technical specifications;

• Evaluating different development approaches (for example, using open source or custom solutions).

Step 5: Define a feature set for your trading platform

As with everything else in software development, this is where you'll have to make some tough calls about what your app will do and what it won't. Your role here is to decide which features are absolutely necessary for your target users, and which ones can be left out.

The key question when making these decisions is: "How can I build this feature so that it meets the needs of those who will benefit from it most?" It's easy enough to imagine adding every single possible feature into any app we create—but then we'd find ourselves building something that would cost too much money or take too much time (or both). Instead, try to focus on identifying those things that are most important for people using your product—and then develop them first before adding anything else into the mix. 

In other words, we recommend starting with an MVP (Minimum Valuable Product) that would have basic functionality and then scaling the product according to users’ feedback.  

Step 6: Provide a list of required data sources

If your trading platform is being built for another exchange and/or third-party software provider like Tradingview or FXCM's eSignal, then it's important that they provide their requirements as early as possible in order to ensure that everything is working properly before launch day.

Step 7: Define a matching algorithm you want to implement

The next step is to define a matching algorithm you want to implement. A matching algorithm is a logic that will be used by your trading platform to match orders with one another, ensuring that they are executed at the best price possible.

In this step, you should go through each of the different components of your trading system and decide what type of algorithm would work best for each component. In other words, how will you match orders if one side has more liquidity than another? How do you prioritize which order gets filled first when they are all matched at the same price? Do you just want randomization in our matching or some sort of deterministic approach (like always filling from lowest to highest)? We'll use these answers as guidelines for implementing these components later on in our project plan. 

Step 8: Develop your future solution 

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.

• Software engineers (frontend, backend) who are responsible for creating and implementing the various components of the platform. This could include creating algorithms for executing trades and developing data infrastructure to support the platform. The developers would use a variety of programming languages and tools to build the platform and ensure it is efficient, scalable, and user-friendly. 

• Data analyst who would be responsible for collecting and analyzing data related to the trading platform. This could include data on user behavior, platform performance, and market trends. The data analyst would use this information to identify areas for improvement in the platform and make recommendations for changes and enhancements. This could include creating data visualizations and reports to help stakeholders understand the data and make informed decisions about the direction of the project.

• UX/UI designers who create wireframes, mock-ups, and other visual aids to help guide the development process and ensure that the platform is user-friendly and intuitive to use.

• QA engineer who is responsible for ensuring the quality of the platform. This could involve creating and implementing a testing strategy to identify and fix any bugs or issues with the platform before it is released to users. The QA engineer would work closely with the development team to coordinate testing and provide feedback on the platform's performance. They may also be responsible for managing a team of QA engineers and overseeing the overall quality assurance process for the project.

• Project manager who is responsible for coordinating the work of the various team members and ensuring that the project stays on track. A project manager may also be responsible for communicating with the client and other stakeholders to keep them informed of the project's progress and address any concerns or issues that may arise.

The specific tech stack used in the development of your future solution will vary depending on the requirements of the project and the preferences of the development team. However, some common technologies are typically included in the tech stack for an online trading platform.

Let’s talk about security once again. Ensuring the security of an online trading platform is a critical concern, as the platform handles sensitive financial information and transactions. To ensure the security of an online trading platform, developers may use a variety of technologies, including:

• Encryption: Encrypting data transmitted between the platform and its users can help prevent unauthorized access to sensitive information. This can be done using technologies like HTTPS, SSL, and TLS.

• Authentication: Authenticating users can help prevent unauthorized access to the platform. This can be done using techniques like password authentication, two-factor authentication, and biometric authentication.

• Access control: Controlling access to the platform and its resources can help prevent unauthorized access and protect against attacks. This can be done using technologies like role-based access control and access control lists.

• Firewalls: Firewalls can help prevent unauthorized access to the platform by blocking incoming traffic from untrusted sources. This can be done using hardware or software-based firewalls.

• Monitoring: Monitoring the platform and its users can help detect and prevent security threats. This can be done using technologies like intrusion detection systems, network monitoring tools, and security information and event management systems.

Step 9: Testing 

Testing helps you ensure the quality and usability of the product and can reduce the risks associated with its development. By conducting thorough and comprehensive testing, developers can create a high-quality online trading platform product that meets the needs of its users. 

Our expertise in online trading platform development

Last year, we developed a broker Forex trading platform with fast financial services and lower trading costs. We carried out the UX/UI design as well as the frontend and backend development.

One of the main difficulties was the old Heroku hosting system, which was difficult to access and threatened the overall platform’s security. That’s why we decided to migrate to Amazon Web Services which are more secure, fast, and reliable. 

Trading platform monetization strategies 

How do trading platforms make money? There are 3 main monetization models. The monetization model you choose will be the foundation of your business. It's important to choose the right one for your platform because it will affect everything from how you make money to how much money you're making.

Interest 

Apps like Robinhood make money by taking an interest rate from the uninvested funds that users keep in their accounts, similar to how a bank collects interest on cash deposits. This strategy has been criticized, but if the service is valuable and users are willing to pay for it, it can be a successful approach.

Premium subscription 

When you charge users a recurring fee that lets them access certain features or content on your platform. This can be good for large platforms with high volume who want to offer more value to their customers by charging more than just once-off transaction fees.

Transaction fee

This is when you charge users a small fee for every transaction they make on your platform.

Estimated cost of an online trading solution development 

The cost of development will vary depending on a range of factors, including the complexity of the platform, the technologies used, and the resources required. However, it is possible to provide an estimated range of costs based on industry averages and typical project requirements.

Generally speaking, the cost of developing an online trading platform can be broken down into three main categories: design and development, infrastructure, and maintenance and support.

The design and development phase is typically the most expensive part of the project, as it involves creating the user interface and implementing the core features and functionality of the platform. This phase may require a team of designers, developers, and quality assurance specialists, and it may take several months to complete. Depending on the complexity of the platform and the size of the team, the design and development phase of an online trading platform project may cost between $50,000 and $150,000.

The infrastructure phase involves setting up and configuring the servers, databases, and other systems that will be used to host and support the platform. This may include the purchase of hardware and software, the provisioning of cloud services, and the configuration of network and security systems. The cost of the infrastructure phase of an online trading platform project may range from $20,000 to $50,000, depending on the requirements of the project.

The maintenance and support phase involves ongoing activities like software updates, security patches, and user support. This phase may require the services of a team of support and maintenance specialists, and it will typically continue for the lifetime of the platform. The cost of the maintenance and support phase of an online trading platform project may range from $10,000 to $30,000 per year.

Overall, the total cost of developing an online trading platform may range from $100,000 to $230,000, depending on the specific requirements of the project. This estimate includes the costs of design and development, infrastructure, and maintenance and support, but it does not include the cost of any third-party integrations or additional services that may be required.

Wrapping up

We hope that this guide has been helpful in understanding the process of creating a trading platform and choosing the right software development company. Overall, developing such tools is a complex process that involves a range of technical, design, and compliance considerations. It is important to carefully plan and design the platform to ensure that it meets the needs of the target audience and provides a reliable and user-friendly experience. Though there are already big players in the online trading market it’s definitely worth building your own solution.

If you are interested in developing your own trading platform, contact us today so we can discuss your ideas and help you achieve your goals.