Online trading activity continues to increase globally, as, according to Statista, the global online trading market will reach $13.3 billion by 2026, growing at a CAGR of 6.4%. Fintech companies and startups can take advantage of this trend and launch their own web trading platform.
Web trading platforms allow users to buy and sell various assets, including stocks, currencies, or bonds, research stock market trends, and measure portfolio performance. Popular trading platforms can have millions of active users and generate hundreds of millions of dollars in annual revenues, with TradingView, eToro, and Zerodha among the most notable examples.
This article highlights six essential functionalities to consider when building your custom trading software.
1. Order Management and Execution
Placing new stock orders and managing the existing ones is the key functionality of trading platforms, as this is the way users can buy or sell securities to make a profit. There are multiple types of orders, each serving its unique purpose:
- Market orders
Market orders enable traders to sell or purchase financial assets at the current optimal market price, so they are mainly used when transaction speed is the top priority.
- Limit orders
This order type allows the user to specify price limits for buying or selling assets, allowing traders to have more control over their transactions.
- Stop orders
With a stop order, a financial asset is bought or sold as soon as its price reaches a stop price specified by the user, so this order type can serve as a risk management tool for traders.
If reaching a wide user audience is your priority, you need to ensure your platform supports as many order types as possible. You can also consider additional, rarer order types, such as fill or kill and trailing stop orders, to attract traders with more complex and sophisticated trading strategies.
2. Algorithmic Trading
Algorithmic trading, or the use of computational calculations to trade securities, is becoming increasingly popular among traders across the globe. Compared to $2.03 billion in 2022, the global algorithmic trading market is expected to reach $3.56 billion by 2030, as stated by Fortune Business Insights.
Implemented into a stock trading platform, algorithmic trading allows users to speed up trading operations significantly, executing even thousands of orders simultaneously with minimal human intervention. The user only needs to define what the program should trade, how, and when it should stop trading, and the algorithms will automatically place trade orders based on these instructions.
However, algorithmic trading is inaccessible to most traders, especially non-tech-savvy ones, as they have to code trading robots with languages such as Java, Python, or C++. In turn, a robust web trading platform can provide no-code tools to help traders run and customize trading algorithms.
3. Paper Trading
Paper trading allows platform users to buy and sell virtual currency instead of real securities and practice trading without risking losses. Such functionality can serve both inexperienced traders only starting their careers and industry professionals, so platform owners should consider implementing it.
Newcomers can use paper trading to understand how trading works in general and hone their trading skills. In turn, trading veterans can use paper trading to experiment with different hypotheses and strategies in a controlled and safe environment.
4. Analytics
Built-in analytics functionality is also critical for trading platforms, as it allows users to make smarter data-based trading and investment decisions.
For example, the platform can enable a trader to analyze their portfolio using metrics such as information ratio, Sharpe ratio, or Sortino ratio to determine portfolio consolidated value, volatility, or associated risks and identify areas for improvement. In addition, a platform can provide benchmarking tools to help evaluate a portfolio against different standards, such as the S&P 500 or NASDAQ Composite indexes.
Moreover, trading platforms can provide tools for collecting and analyzing level 2 data. Level 2 market data gives traders a more precise and deeper understanding of the state of the market – traders selling or buying securities, the dynamics of supply and demand, and the average order size. Since this information helps users to predict possible stock movements, it’s essential for making smarter trading decisions.
More advanced trading platforms also allow users to create personalized market scanners and customize them by adding different filters, parameters, and gradients. For example, a user can create a scanner to track assets with the highest dividend yield or identify the most active competing traders in a particular stock market.
5. News Feed
Traders and investors must keep their fingers on the market’s pulse by monitoring critical economic events and news affecting securities markets to make adequate financial decisions. A built-in news feed can simplify this task by providing platform users with real-time access to market news and expert analytics from various trusted resources.
For convenience, the trading platform can categorize news based on tags (such as “earnings,” “bankruptcies,” or “currencies”) to make the news section more convenient for users navigation-wise. In addition, the platform can allow traders to personalize news feeds using price, stock float, and keyword filters to see only information relevant to them.
6. Communities and Forums
An additional but value-adding functionality for trading platforms are social features, such as communities or forums. For example, the platform can have a community enabling users to get advice from other people and discuss market trends.
Such functionality can help beginners learn from more experienced market players. At the same time, industry professionals can use such social features to share trading ideas with colleagues and thus improve their trading strategies.
Final Thoughts
The online trading market is growing at an accelerated pace. Startups and fintech companies can tap into this trend by providing traders and investors with specialized web trading platforms. These feature-rich solutions allow users to buy and sell assets, track their portfolio performance, follow industry news, and communicate with other traders.
Developing such a solution is a complex task, which, however, can be simplified by enlisting the help of professional stock trading software developers. Third-party experts can handle all development aspects, helping business owners build reliable, bug-free, and secure trading platforms.
