Ways to Build Trading Platform Similar to Robinhood

Published on February 5th, 2024

The trading industry has been dramatically transformed by recent technological advancements, particularly in the realm of online trading platforms. These platforms, exemplified by the revolutionary Robinhood, have completely revolutionized the way people invest and trade stocks. By making stock market participation easier and more accessible, Robinhood has paved the way for a new generation of investors. The ability to build trading platform has become a pivotal aspect of this transformation, allowing entrepreneurs and developers to create innovative solutions that cater to the evolving needs of modern traders.

Given Robinhood’s resounding success, it comes as no surprise that many aspiring entrepreneurs are now looking to develop their own trading platforms. If you find yourself among these ambitious individuals, here are some key considerations and strategies to help you build a trading platform that emulates the success and appeal of Robinhood. By incorporating user-friendly interfaces, seamless execution of trades, innovative features, and robust security measures, you can create a platform that stands out in this competitive market and attracts a loyal user base. Remember, building a successful trading platform requires a combination of technological expertise, market understanding, and a commitment to providing an exceptional user experience.

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Investment Software Market Overview

Before diving into the specifics of building a trading platform, it is essential to understand the current landscape of the investment software market. According to a report by Grand View Research, the global investment management software market size was valued at USD 3.32 billion in 2019 and is expected to grow at a CAGR of 7.0% from 2020 to 2027. This growth can be attributed to the increasing demand for investment management software from various industries, including banking, financial services, and insurance (BFSI), healthcare, retail, and others.

Moreover, with the rise of fintech startups and technological innovations in the investment industry, there is a growing need for efficient and user-friendly investment software solutions. This presents a significant opportunity for entrepreneurs looking to enter the market with their own trading platform.

How Does an Online Investment Platform Work?

An online investment platform, also referred to as a trading platform, is a digital interface that enables users to seamlessly engage in the buying and selling of a wide range of financial products, including stocks, bonds, options, and cryptocurrencies. These platforms serve as intermediaries, facilitating smooth transactions between users and the market, while providing essential features such as real-time market data, trade execution, and a host of other investment-related services.

When using an online investment platform, users typically begin by creating an account, which grants them access to a personalized dashboard. From there, they have the ability to deposit funds into their account, either through various payment methods or by transferring existing assets. These deposited funds then serve as the basis for executing trades across different financial products, allowing users to diversify their portfolios and explore various investment opportunities.

To ensure transparency and safety, online investment platforms employ strict security measures, including encryption protocols and multi-factor authentication, to safeguard user information and funds. Additionally, these platforms often provide educational resources and analytical tools to empower users with the knowledge necessary to make informed investment decisions.

In terms of revenue generation, online investment platforms typically employ a fee-based structure. This can include commissions charged on each transaction, subscription fees for premium features, or even a percentage-based fee on the total value of assets under management. The specific fee structure may vary depending on the platform and the services offered.

Overall, online investment platforms have revolutionized the way individuals participate in financial markets, democratizing access to investment opportunities and empowering users to take control of their financial futures.

Types of Investment Platforms

There are various types of investment platforms available, each catering to different levels of investors and their specific needs. Some of the common types include:

Robo-advisors: These platforms use algorithms and automation to provide personalized investment advice and manage portfolios on behalf of users. They often have lower fees compared to traditional financial advisors, making them a popular choice for beginner investors.
Stock trading platforms: As the name suggests, these platforms focus primarily on buying and selling stocks. They may also offer additional features such as research tools and educational resources to help users make informed decisions.
Cryptocurrency exchanges: With the rise of cryptocurrencies like Bitcoin and Ethereum, specialized platforms have emerged to facilitate their buying, selling, and trading. These platforms often have advanced security measures in place to protect against cyber attacks.
Peer-to-peer lending platforms: This type of platform connects borrowers directly with lenders, cutting out traditional financial institutions. Users can earn interest by lending their money to borrowers in need, while borrowers can access funding at potentially lower interest rates.
Real estate crowdfunding platforms: Similar to peer-to-peer lending platforms, real estate crowdfunding allows users to invest in specific properties or projects and receive a share of the profits. This type of platform has opened up the real estate market to a wider range of investors.
Social trading platforms: These platforms allow users to follow and copy the trades of more experienced investors, making it easier for beginner traders to learn from experts. They often offer educational resources and tools to help users improve their own trading skills.
Commodities and futures trading platforms: For those interested in investing in commodities like oil, gold, or agricultural products, there are specialized platforms that allow users to buy and sell these assets. Futures trading platforms also enable users to speculate on the future price of commodities or financial instruments.

Also Read: How to Build Stock Trading App? A Brief Guide

4 Tips on How to Build an Investment App That Succeeds

Building an investment app can be a lucrative venture, especially with the growing popularity of online investing. However, with the increasing number of apps in the market, it’s crucial to stand out and offer unique features to attract users. Here are some tips on how to build an investment app that succeeds:

Perform a thorough competitor analysis

Before diving into the development process, it’s essential to research and analyze other investment apps in the market. This will give you insights on what features are already available and which areas you can improve on or offer something new. It will also help you identify your target audience and their preferences.

Consider the fintech-required compliances

Investment apps deal with sensitive financial data, and thus, it’s important to comply with fintech regulations. These compliances ensure the security of user information and build trust in your app. Some common requirements include data encryption, secure login methods, and identity verification procedures.

Hire a team for custom software development

Investment apps require a high level of security and functionality, making it crucial to hire an experienced team for custom software development. This will ensure that your app is built with the latest technologies and has a seamless user experience.

Create a list of features your application should have

Based on your competitor analysis and target audience, create a list of features that will set your app apart. Some essential features to consider include real-time market data, portfolio tracking, investment tools, and push notifications for stock alerts.

8 Key Features of a Stock Trading App like Robinhood

Robinhood, a widely-used investment app, has gained popularity for its commission-free trading options in stocks, ETFs, and cryptocurrencies. With its user-friendly interface and distinctive features, Robinhood has successfully attracted a large user base. The platform’s intuitive design and innovative functionalities make it an excellent choice for both beginner and experienced investors alike. By providing easy access to various investment options, Robinhood empowers individuals to take control of their financial future. Here are some features to consider when building a stock trading app like Robinhood:

1. Registration of a Personal Profile

To begin using a stock trading app, the first step is to create a personal profile. This profile should include essential details like your full name, email address, and date of birth. Providing accurate information is crucial for ensuring smooth account setup and verification.

Furthermore, it is highly recommended to implement a secure login method, such as two-factor authentication, to enhance the safety and security of user information. By adding this extra layer of protection, users can have peace of mind knowing that their personal and financial data is safeguarded against potential threats.

Taking these initial steps not only facilitates a seamless user experience but also ensures that your investment journey starts off on the right foot. So, make sure to take the time to create a comprehensive and secure profile when using a stock trading app.

2. Adding Bank Card and Bank Account Linked to the App

Once the personal profile is set up, the next step is to connect a bank card and link a bank account to the app. This allows users to easily deposit funds into their trading account and withdraw profits as needed.

When building a stock trading app like Robinhood, it is essential to integrate secure payment gateways and follow stringent security protocols to protect users’ financial information. Additionally, providing multiple payment options and ensuring fast and efficient transactions can greatly enhance the user experience.

3. Third-party Payments and Investments

Apart from traditional bank cards and accounts, some stock trading apps go a step further by offering the option to link third-party payment platforms like PayPal or Venmo. This innovative feature allows users to conveniently fund their trading account using these popular payment methods, giving them more flexibility and ease in managing their investments.

What’s more, these apps don’t just stop at stocks. Many of them also provide options for investing in other financial instruments such as cryptocurrencies, mutual funds, and exchange-traded funds (ETFs). By expanding the scope of investment opportunities, these apps empower users to diversify their portfolios and potentially maximize their returns.

With these added features, users have access to a wider range of investment options, making it easier for them to tailor their portfolio to their specific financial goals and risk tolerance. Whether they are looking to invest in traditional stocks or explore emerging markets like cryptocurrencies, these apps cater to the diverse needs and preferences of investors, providing them with the tools they need to build a well-rounded and successful investment strategy.

4. Analytics and Market Insights

Another key aspect of a successful stock trading app is the provision of analytics and market insights. By leveraging advanced algorithms and data analysis, these apps can provide users with valuable information to make informed investment decisions.

Some apps offer features such as real-time market updates, customizable watchlists, and in-depth company profiles. This allows users to stay on top of market trends and track the performance of their investments, facilitating a more proactive approach to managing their portfolio.

Moreover, many apps also offer access to expert insights and research reports from industry professionals. This can be especially beneficial for novice investors who may not have a deep understanding of the stock market. By providing users with reliable information and analysis, these apps help level the playing field and give users the confidence to make informed decisions.

5. News Feed and Social Network

In addition to analytics and market insights, many stock trading apps also offer a news feed or social network feature. This allows users to stay updated on the latest happenings in the financial world and share their thoughts and strategies with other investors.

The news feed feature curates relevant articles from trusted sources, providing users with a one-stop-shop for all their financial news needs. This not only saves users time but also ensures that they are accessing reliable and accurate information.

The social network aspect of these apps allows users to connect with like-minded individuals and share their investment strategies, tips, and experiences. This can be especially beneficial for novice investors who may benefit from the insights and knowledge of more experienced traders.

6. Scanning Tools and Alerts

Another incredibly useful feature offered by stock trading apps is the availability of advanced scanning tools and real-time alerts. These cutting-edge tools utilize sophisticated algorithms to meticulously scan the market, identifying potential investment opportunities based on specific criteria set by the user.

For instance, users have the ability to set up personalized alerts that promptly notify them when a particular stock reaches a predetermined price point or when there is a sudden surge in trading volume. This allows investors to effortlessly stay updated on market movements and swiftly seize potential opportunities, all without the need for constant monitoring of the market themselves.

By harnessing the power of these scanning tools and alerts, users can gain a competitive edge in the fast-paced world of stock trading, making informed decisions and maximizing their investment potential.

7. Fundamental Research Tools

In addition to scanning tools and social networking features, many stock trading apps also provide users with access to fundamental research tools. These tools allow investors to delve deeper into a company’s financials, performance history, and industry trends, providing valuable insights for making informed investment decisions.

Some of the common fundamental research tools provided by these apps include financial statements, analyst reports, earnings calendars, and market news. These resources can help investors gain a better understanding of a company’s financial health, growth potential, and competitive landscape.

Furthermore, these tools are often accompanied by interactive charting features that make it easier for users to visualize trends and patterns in the market data. This not only assists with decision-making but also helps users develop their analytical skills and understand market dynamics.

By incorporating fundamental research tools into their stock trading app, companies are empowering users to make more informed and strategic investment decisions, leading to better portfolio management and potentially higher returns.

8. Support and Education

Aside from providing users with the necessary tools to trade stocks, many stock trading apps also offer support and educational resources. This is especially beneficial for novice investors who may need guidance or clarification on certain aspects of trading.

Support features can include live chat options, customer service hotlines, and even personalized coaching sessions with experienced traders. These resources can help users navigate through the app and address any technical difficulties or questions they may have.

Additionally, educational resources such as tutorials, webinars, and articles are often available to help users learn more about stock trading strategies, market analysis techniques, and risk management. This can be incredibly valuable for investors looking to improve their skills and make more informed decisions.

Data Protection in Trading Apps

With the rise of digital trading, data protection has become a top concern for both users and companies. Stock trading apps collect and store sensitive personal and financial information, making them attractive targets for hackers.

Biometric authentication: Many stock trading apps now offer biometric authentication options, such as fingerprint or facial recognition. This adds an extra layer of security and helps prevent unauthorized access to user accounts.
Multi-factor authentication (MFA): Multifactor authentication (MFA) is a security measure that adds an extra layer of protection to user accounts. It requires users to provide multiple forms of identification, such as a password and a unique code sent to their phone or email, before gaining access. By incorporating this additional step, MFA significantly reduces the risk of unauthorized access, even if a user’s login credentials are compromised. This robust security feature adds peace of mind and ensures that user accounts remain secure and protected from potential threats.
Defending your users from cybersecurity threats: Stock trading apps must also take measures to defend their users’ data from cybersecurity threats. This includes implementing security protocols like firewalls and encryption, regularly updating software, and conducting vulnerability testing. It’s essential for companies to have a strong defense against cyber attacks to protect their users’ sensitive information.

Data encryption: Encryption plays a pivotal role in safeguarding sensitive user data, particularly in stock trading apps. By transforming readable information into complex code, encryption renders it virtually unreadable to unauthorized individuals lacking the decryption key. This additional layer of security acts as a robust shield, ensuring that even if a hacker manages to breach the system, the encrypted data remains indecipherable and unusable. Thus, encryption serves as a crucial pillar in upholding data protection and preserving the confidentiality of valuable user information.

The United States:

The United States takes data protection and cybersecurity very seriously. In 1998, the US government passed the Data Protection Act to ensure that personal information is protected from being misused by organizations or individuals. This act was later replaced by the Privacy Act of 2020, which aims to strengthen privacy protections for individuals’ sensitive information.

In addition to laws and regulations, the US government also has agencies dedicated to cybersecurity, such as the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) and the Federal Trade Commission (FTC). These agencies work together to protect individuals and businesses from cyber threats by providing resources, information, and guidance on how to stay safe online.

The United Kingdom:

The United Kingdom also has strict laws and regulations in place to protect user data. The Data Protection Act of 2018, along with the General Data Protection Regulation (GDPR) adopted by the European Union, sets guidelines for how organizations should handle individuals’ personal information. Failure to comply with these regulations can result in hefty fines and penalties.

Furthermore, the UK’s National Cyber Security Centre (NCSC) works to protect the country’s critical infrastructure and provides guidance and support to businesses and individuals on how to stay secure online. The NCSC also runs initiatives such as Cyber Essentials, a certification scheme that helps organizations demonstrate their commitment to cybersecurity.

How Robinhood App Makes Money and Other Ways of Monetization?

In addition to laws and regulations, companies also have their own methods of making money and monetizing user data. One example is the popular stock trading app Robinhood.

Robinhood offers commission-free trading, which has attracted millions of users since its launch in 2013. But how does the company make money if it’s not charging any fees for trades?

One way Robinhood generates revenue is through margin trading. This feature allows users to borrow funds from the company to make larger trades, and Robinhood makes money from the interest charged on these loans.

Interest – In addition to providing commission-free trading, Robinhood also earns interest on the cash balances held in users’ accounts. This is because when a user deposits money into their Robinhood account, it is swept into a network of program banks that pay interest to Robinhood based on the amount of cash held and the interest rates set by the participating banks. This allows Robinhood to pass on some of the interest earned to its users, helping their cash balances grow over time.
Freemium – While the basic Robinhood app is free to use, there are also premium features that users can pay for. These include Robinhood Gold, which offers extended trading hours and larger instant deposits, and access to research reports from Morningstar. This freemium model allows Robinhood to generate revenue from a small percentage of its user base while still providing a free platform for the majority.
Fee per trade – While Robinhood’s main appeal lies in its commission-free trades, it is important to note that the company does charge fees for certain types of transactions. These fees include foreign exchange fees, which are incurred when converting currencies, and regulatory transaction fees, which are imposed by regulatory bodies. It’s worth mentioning that the foreign exchange fees vary depending on the currency being converted, and the regulatory transaction fees are determined based on the specific type of transaction and the governing regulations. It’s always a good idea to review and understand these fees to make informed decisions when using Robinhood for your investment needs.

Top 3 Alternative Applications Compared to Robinhood

In addition to discussing the features and business model of Robinhood, it’s also helpful to compare it to other popular investment apps in the market. This can provide a better understanding of Robinhood’s unique offerings and help users make an informed decision when choosing an investment platform.

One notable comparison is between Robinhood and traditional brokerage firms like Charles Schwab or E*TRADE. While these traditional firms have been around for decades and offer a wide range of investment options, they also come with higher fees for trading and account maintenance. Robinhood, on the other hand, offers commission-free trades and no minimum balance requirement, making it more accessible to new investors.

M1 Finance

M1 Finance is an increasingly popular investment app known for its user-friendly interface and diverse investment options. With M1 Finance, users can invest in a wide range of stocks, ETFs, and bonds without any fees. Similar to Robinhood, M1 Finance also offers commission-free trades and has no minimum balance requirement, making it accessible to investors of all levels.

One standout feature of M1 Finance is its unique “pie” investing feature. This innovative tool allows users to create customized portfolios with different allocations of stocks and ETFs, giving them greater flexibility and control over their investments. By diversifying their portfolio with a mix of assets, investors can potentially reduce risk and optimize their returns.

Whether you’re a beginner looking to start investing or an experienced investor seeking a platform with advanced features, M1 Finance offers a comprehensive solution that combines simplicity and flexibility. With its intuitive interface and robust investment options, M1 Finance empowers users to take charge of their financial future with confidence.

M1 Finance Pros:

Commission-free trades and no account minimums
Diverse investment options including stocks, ETFs, and bonds
Innovative “pie” investing feature for customization and diversification
User-friendly interface suitable for all levels of investors

M1 Finance Cons:

Limited research tools compared to traditional brokerage firms
No option for individual stock trading, only allows for fractional shares
Limited customer support options

WeBull

WeBull is a fast-growing online brokerage platform with a focus on providing advanced trading tools and educational resources for investors. Similar to Robinhood, WeBull offers commission-free trades on stocks, ETFs, and options. However, what sets WeBull apart from other platforms is its extensive research and analysis tools.

With real-time market data and customizable charting tools, WeBull provides traders with in-depth insights and analysis to make informed investment decisions. The platform also offers a robust paper trading feature for users to practice their strategies without risking real money.

WeBull Pros:

Advanced research and analysis tools
Commission-free trades on stocks, ETFs, and options
Customizable charting tools with real-time market data
Paper trading feature for practice

WeBull Cons:

Limited investment options, only allows for stocks, ETFs, and options
No fractional shares offered
No mutual funds or bonds available for trading
Limited customer support options compared to traditional brokerage firms.

Vanguard

Vanguard is a well-established and trusted brokerage firm known for its low fees and diverse investment options. Unlike the previous two platforms, Vanguard offers not only stocks, ETFs, and options but also mutual funds, bonds, and CDs.

With over 40 years of experience in the industry, Vanguard has built a strong reputation for its index funds which have lower expense ratios compared to actively managed funds. The platform also offers a variety of educational resources for investors, including webinars and guidance on retirement planning.

Vanguard Pros:

Diverse investment options including stocks, ETFs, options, mutual funds, bonds, and CDs
Low fees and expense ratios for index funds
Strong reputation in the industry
Educational resources for investors

Vanguard Cons:

No fractional shares offered
Limited customization options for trading interface
High minimum investment requirements for some funds
Limited customer support options compared to traditional brokerage firms.

What Does It Cost to Build a Trading Platform Like Robinhood?

The cost of building a trading platform like Robinhood can vary significantly based on several factors. These include the desired features and functionalities, the level of scalability required, compliance requirements, and the technology stack chosen for development. This estimation includes expenses for:

When it comes to development expenses, they can range from around $100,000 to upwards of $500,000 or even more for the initial launch version. The final cost will depend on the complexity of the platform, the customization needed, and any additional integrations or third-party services required.

It’s important to note that ongoing maintenance, updates, and future enhancements may incur additional costs. It’s always advisable to work with experienced developers and consult with professionals to get a more accurate estimate tailored to your specific requirements.

Market Research and Planning: $10,000 – $15,000 – This phase involves conducting extensive research to gather insights into the target market, identifying competitors, and formulating a comprehensive business plan for success.
UI/UX Design: $20,000 – $40,000 – In this stage, skilled designers will create visually appealing and user-friendly interfaces that enhance the overall user experience, ensuring seamless navigation and engagement.
Front-end and Back-end Development: $50,000 – $300,000 – Skilled developers will bring the design to life by coding the front-end and back-end of the application, building its functionality, and integrating necessary features and databases.
Quality Assurance and Testing: $10,000 – $30,000 – Thorough testing will be conducted to identify and fix any bugs or issues, ensuring that the application functions smoothly and meets the highest quality standards.
Data Security and Encryption: $10,000 – $50,000 – Implementing robust security measures and encryption protocols will safeguard sensitive user data, providing peace of mind and building trust with users.
Legal and Compliance: $10,000 – $70,000 – Legal experts will handle all necessary legal requirements, ensuring compliance with regulations, protecting intellectual property, and mitigating potential risks.

How iTechnolabs Can Help in Trading Application Development?

iTechnolabs is a leading software development company that specializes in designing and building high-quality trading applications. Our team of experienced professionals can provide end-to-end solutions for all your trading application development needs, ensuring that your project is completed within budget and on time.

Our experts have extensive knowledge and experience in various technologies, including market research, UI/UX design, front-end and back-end development, data security, legal compliance, and quality assurance. By leveraging the latest tools and techniques, we can create custom trading applications that are tailored to your specific business requirements.

Tailored Solutions: Our services are customized to meet the unique needs of your trading application, ensuring functionality aligns perfectly with your business goals.
Technological Expertise: With expertise in the latest technologies and frameworks, iTechnolabs delivers robust, scalable applications that stand the test of time.
Comprehensive Market Research: To ensure that your application is competitive, we conduct in-depth market research, integrating features that are in demand.
Striking UI/UX Design: Our designs are not only visually appealing but also user-friendly, providing an engaging experience that retains users.
Advanced Security Protocols: With top-notch security measures, we protect your application against threats, keeping your data safe and secure.
Stringent Quality Assurance: Through meticulous testing, we ensure your trading app works flawlessly, providing an optimal user experience.
Legal and Regulatory Compliance: We navigate the complex legal landscape, ensuring your trading app complies with all necessary laws and regulations.
Ongoing Support and Maintenance: After launch, we remain dedicated to your success with ongoing maintenance and support services.

Are you planning to build a trading platform like Robinhood?

At iTechnolabs, our approach to building trading platforms is designed to give our clients a competitive edge in a fast-paced financial market. Our team’s deep understanding of the trading industry allows us to develop solutions that are not only state-of-the-art but also in tune with the evolving needs of traders. The benefits of choosing iTechnolabs for your trading platform development include:

Customization at Its Core: We recognize that each trading entity has unique operations and goals. This is why custom tailoring is at the forefront of our development process, ensuring that the features, performance, and user interface of your trading application perfectly suit your business model.
Technological Prowess: Harnessing the power of the latest technologies, our experts can build high-performance applications that are reliable and scalable. This way, as your business grows, your trading platform can seamlessly expand to meet increasing demands.
In-Depth Understanding of Market Trends: Our comprehensive market research guarantees that your trading application stays ahead of the curve, incorporating the most sought-after features and functionalities that traders demand.
Unmatched UI/UX Design: We craft engaging and intuitive user experiences, creating interfaces that resonate with users and foster loyalty, positioning your platform as a preferred trading destination.
Rigorous Security Measures: In a world where data breaches are costly, we implement stringent security protocols to safeguard your platform against potential threats, providing peace of mind for you and your users.
Quality You Can Trust: Our commitment to quality is evident in our exhaustive quality assurance processes, ensuring that every aspect of your trading application operates flawlessly.
Compliance Without Compromise: Navigating regulations can be daunting, but with iTechnolabs, you’re assured a trading platform that adheres to legal and regulatory standards, avoiding potential pitfalls and penalties.
Dedicated Support System: Post-launch, we stay with you every step of the way, offering support and maintenance services to handle any issues swiftly and efficiently, guaranteeing the longevity and success of your trading platform.

Important: 15 Best Online Trading Platforms

Conclusion:

At iTechnolabs, we understand the critical importance of building high-performance trading applications that can adapt and grow with your business. Our team’s expertise in market research ensures that your platform stays ahead of industry trends and incorporates the most sought-after features and functionalities to meet traders’ demands.

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