What is a stock trading investing app?
Remember the times when stock investors belonged to a small group of people visiting their brokers to deposit money and keep track of their portfolio? Well, these times are long gone. Imagine that you want to acquire a few shares in Tesla. Nothing easier nowadays. Download a stock trading app of your choice, deposit money and buy the shares. The next steps? Watching how your assets perform with full transparency, getting pulled by the beautiful UI, becoming familiar with the market insights, analyzing the graphs, maybe seeing how your friends are doing. Now you can talk about your trading adventures at parties. Pretty cool, isn’t it?
Sure, but with the fun comes responsibility. Stock trading is risky. Without experience and enough time to monitor the market, you might end up struggling with getting any return whatsoever. That’s why stock trading applications like Robinhood get complaints from users about unsuccessful performance. This, in turn, makes companies releasing them come up with new ways of educating the users to give them the possibility to invest and a bigger chance of winning. How do they do it? One way is by offering robo-advisors that analyze the indicators and make decisions based on objective criteria.
The current state of the stock trading apps market
Trading apps democratize market trading. They offer financial instruments like stocks, fractional shares, ETF’s, precious metals, bonds, and more. The online trading platform market had a value of $13.1 Billion in 2019 and is projected to be $18.3 Billion by 2027. It goes without saying that the demand is growing, and the well-designed apps that have the right market strategy are really successful. Let’s take Robinhood as an example; since 2017, they’ve been growing by 4 million users annually. They generated $682M in payment-for-order-flow revenue in 2020, a 514% increase compared to the previous year. Other popular stock trading apps are TD Ameritrade, Webull, Ally, E*TRADE, Acorns, Stash, eToro, and Revolut.
Can I build a stock trading app like Robinhood myself?
Since the finance and banking industry is more open for non-banking institutions nowadays, the startupers are free to build apps that let the users trade assets with no limits. As I’ve mentioned above, there are plenty of them on the market, and new ones keep appearing. It shouldn’t come as a surprise, really; since more and more users are up for this kind of trading, the demand for new apps enabling it grows. Each app has its niche and way of working, and many may still be undiscovered. So who knows, maybe your trading app will become a new unicorn on this market?
There are certain steps you need to take to find out about it:
- deciding on your target market,
- defining the features of the application that will serve your users the best,
- getting the trading license,
- developing a user-friendly, robust, and secure application,
- marketing the application.
What are the features of a successful trading app like Robinhood?
Let’s now see what features the successful apps have, what you need to build one, and what APIs you can leverage to develop your product faster.
Registration and KYC
Usually, the registration is divided into short and long registration. The former should be easy and contain as few steps as possible. Revolut, for example, lets you register with your basic personal info, email address, and verifies only your phone number. Easy log-in lets your users utilize the features that do not require more in-depth user information; for the financial and trading features, they need to complete a long registration/KYC/AML.
The KYC process consists of steps that verify the users’ identity, occupation, and income to reduce the risk of fraud. It can be supported by proven API providers on the backend, such as Veriff. Still, this process should be as easy and fast as possible, which is why including animations, icons, and a progress bar is a good idea. To give you an idea, you might want to incorporate a chatbot to make the form-filling experience even more user-friendly. After completing this step, the user should be able to start investing.
Registration steps design by Merixstudio
The long registration is also useful for potential customization of the dashboard or investment suggestions. When the registered user logs in, two-factor authentication should be required to protect sensitive financial data inside of the application.
The dashboard should consist of the primary information that the user needs to see right away when opening the stock trading app, such as:
- balance of the user’s funds,
- basic growth/fall charts,
- user’s watchlist and holdings,
- portfolio value,
- most promising opportunities.
The charts should be filterable, e.g., by period, assets, or wallets. The user may want to have a possibility to charge their account directly. They should be able to go from the dashboard directly to the performance of their particular assets, see the most profitable ones, categorize them, etc.
Dashboard designs by Merixstudio
When building a successful stock trading app like Robinhood, it is good to let the dashboard adjust to the user’s preferences and level of advancement. After well-designed onboarding, we should know how knowledgeable about investing the user is, what level of support they expect, and how much risk they’re willing to accept. That’s one of the reasons why dashboard management is a nice-to-have.
User portfolio is where users can analyze their assets in detail and make further investment decisions. Although it’s usually shown in the form of graphs or lists, it’s a good idea to allow filtering and modifying the visualizations on the go.
The portfolio should consist of groups of assets set automatically and customizable by the user. The data in the charts ought to be real-time to reflect changes in the market best. An effective stock trading app like Robinhood should also be highly responsive, even when processing large volumes of data. What we recommend for building complex, multi-layer charts is using Highcharts or Nivo Charts library.
Portfolio feature in Robinhood app and in Genuine Impact app developed by Merixstudio
Deposit money (payments)
The most common way to change money to assets is by depositing funds to the virtual wallet in the app and then buying assets using those funds from the wallet. The money can be deposited via a bank transfer, credit/debit card, PayPal, Google, or Apple payments. It is a nice-to-have when the users can set automatic deposits. Moreover, the money deposit should happen in real-time to make the user experience flawless.
Deposit money feature in Binance app
If you want to save development time, we recommend using APIs that deliver out-of-the-box payments and wallet features. Among the often used ones, you’ll find Plaid (it has already become a standard for connecting bank accounts with apps) Finicity, and Apexx. The most common payment API is Stripe.
The core of each stock trading app like Robinhood is – probably not surprisingly – the trading feature. Trading starts with the stock screening. Usually, it is simply the listing of stocks filtered and sorted according to the user’s preferences. Each position should contain detailed data about the stock, e.g., the share price, the number of shares, a line or candlestick showing the stock’s performance, EPS, profit margin, balance sheet, description of the company, company details and news, earnings, analyst ratings. It is good to have share prices in real-time; not every app offers this and it's particularly useful for the users who make their investment decisions quickly. Having all the information in one place allows the user to make an informed investment decision with full transparency and in an unbiased way. Propositions on stocks can be personalized based on the information gathered during the onboarding and the user's habits. For the stock market insights, we can use some APIs like Yahoo Finance, Zirra, Bloomberg Market and Financial News, Xignite.
Once the user of a stock trading app like Robinhood decides what to invest in, the number of steps to finalize the transaction should be relatively low. Choose a stock, click to invest, choose the amount, buy – and that’s it. The executing order and flow of funds should go smoothly and update quickly– for that to happen, you need an integration with some trading engine.
Exemplary stocks purchasing flow in Revolut app
Some users like making decisions independently, while others prefer having support in the form of a robo-advisor that facilitates automated trading. In the latter scenario, the user chooses how much monthly they want to invest, for how long, what kind of risk they’re able to take... and they’re done. A robo-advisor is a module that provides users with investment suggestions based on algorithms’ calculations or artificial intelligence models. If you’re looking for the use cases of this feature, check out RobotFX Fluid, Betterment, Vanguard, or Wealthfront. There are also applications that offer human advisors (Betterment) and the ones that allow users to copy the behavior of the most successful traders (eToro).
Building a trading/broker engine from scratch might be time-consuming, which is why we recommend using APIs like Alpaca, DriveWealth, Ally, InteractiveBrokers. If you want to assist your users in decision-making, consider going for Zirra or Accern.
It’s not only the experienced investors who use stock trading apps like Robinhood. The trading newbies are their users as well. That’s why some applications offer a learning feature, which teaches how to invest and how to use the app to the fullest.
The educational component can utilize gamification, which always results in increased user engagement. Some applications also do the trading simulator, which works just like the trading feature – the only difference is that the user doesn’t spend real funds but fictional ones. The trading simulator is an excellent way to help users realize the risk coming from trading.
The stock market is susceptible to any changes happening to the stock listed companies, so traders usually appreciate having the most relevant market insights right in the app. This information can be available in the form of media titles about stocks that appear in the section buy/sell. An example of an API that delivers us such insights is Marketstack.
Market insights design in Genuine Impact app by Merixstudio
Notifications and alerts
Stock trading requires quick reactions and having relevant data right at your fingertips. Alerts and notifications allow users to receive information about essential growths and falls, events, earnings. Usually, the user can set up their custom alerts, e.g., when the value of the stock reaches a certain threshold.
Alert setting screen in Revolut app and Webull app
What about the marketing and business model of a stock trading app like Robinhood?
All of the successful applications on the market have clearly defined unique selling points and niches. Acorns boasts roundups, Stockpile gives $5 to every new user, Round offers human advisors instead of algorithms, E*TRADE focuses on long-term investments.
If you want to follow in their footsteps, you need to build an app that stands out from the crowd and is well-adjusted to its users’ needs. To achieve this goal, define the user persona and make the marketing narrative speak to them. It’s great if you can wrap the USPs into one catchy statement so that your users remember it and pass it to their friends. And speaking of preparation, you might want to prototype your stock trading app and gather user feedback before coding – there is no better way to find out whether you’re delivering a quality product or not.
Regarding the business model, many successful apps offer free plans for starters. For example, Robinhood is recognized on the market for being totally free as they earn money from other sources. It’s good to find out what kind of business model will be acceptable for your target group.
Regulatory Compliance in Financial Services
We’re heading towards the end of this guide, but there’s one more important thing to bear in mind if you’re up for building a stock trading app like Robinhood: to launch a trading or an investment application, you need to apply for the broker-dealer license. This comes with a couple of restrictions regarding Anti-Money Laundering (AML), Know Your Customer (KYC), and customer data protection. Also, each country has its own regulatory organization, e.g,. the U.S. Securities and Exchange Commission (SEC) in the US. Speaking of data and software security, certain practices help in data protection, e.g., biometric authentication, automatic log out from the app, and data encryption.
Ready to build your own stock trading app? Get in touch and let us assist you on this journey!