How to Create a Trading Platform: Core Steps and Pitfalls to Consider

What are the key steps to building a trading platform?

Trading platform app development encompasses several vital stages. The following list describes the essence and common approaches within each stage.

Set up your project

Working on the preparation stage of the project helps you increase production speed, minimize business risks, and reduce overall costs.

Discovery research. Before starting app development, it’s crucial to conduct discovery research. Define your target audience (e.g., by demographic, geographic, psychographic, and behavioral segmentation) and explore their current pain points and expectations from a product in the niche. The more granular the segmentation, the greater your chances of winning users.

To accomplish this, thriving startups do the following:

• Competitors analysis. Make a list of the market's top competitors in your category. Shortlist it with the most relevant players (e.g., by type of trading assets). Examine their set of features and value proposition. Don't rush to compare to industry giants as they have enormous budgets and authority unattainable for startups.
• Interview users. Survey different channels employing both online and offline surveys to get valuable and actionable information from potential users. It’s also possible to delegate this task to a survey company. Consider running a focus group interview.
• Interview stakeholders. Stakeholders usually possess deep expertise, insights, and data in their business domain, allowing them to understand the market better. As a startup owner, collect their vision and ideas on what solutions can make a difference to user experience in your niche.

Value proposition. When offering a new trading platform to the market, startups need to provide their audience with reasons why they should use the new trading platform. It has to be a clear and persuasive brand message revealing practical value to prospects. Tell users how they can benefit from your product and how it serves as a unique experience for them.

Idea validation. New businesses are all about bringing better or innovative solutions to users. Before investing significant resources in a minimal viable product (MVP) or a new feature development, determine if it will deliver the desired outcome to your business. At this point, generate testable hypotheses and business assertations.

• Product team gets a specification that effectively and unambiguously describes the product they need to build
• Reduced overall costs
• Increased production speed
• Minimized risk and issues
• A precise roadmap for your project
• Definition of your MVP
• Timeline and budget
• Documentation and attachment to the agreement
• Plan for your potential investor

If you need help creating a robust roadmap for your project, drop a line here. Our project managers are happy to share their expertise.

Define features to include

Most trading platforms have similar functionalities. However, a distinct set of features allows each app to attain its marketing advantage.

We prepared a check list of elements to consider when creating your trading platform application:

Signup and login (Authentication). When it comes to signing up for financial applications, users want to be sure their data is secure. Therefore, it’s reasonable to support a one-time PIN (OTP) authentication, multi-factor authentication (MFA), and biometrics authentication methods. For the latter, you can benefit from face ID technologies (Apple’s Face ID, for instance).
Entering a personal account should allow users to edit and update settings and profile data, track transactions, and monitor all quotes in real time. When your project grows, think of designing several interface themes, so users can customize their profiles.

Filters and search bar. Trading is oversaturated with data. Help your users intuitively navigate your application and quickly find urgent data. Create a list of filters allowing traders to see market data by assets and their long-term/short-term durability, volatility (say hello bitcoin volatility), companies, and other criteria. Design sub-filters to each category, where possible, to improve user experience (e.g., you can add “strike prices” per “call option” and “put options”). Also, add a search bar, so traders can find necessary information using keywords.

Watchlist. A watchlist helps users see current trading opportunities, estimates trend direction, spots hot stocks or other assets, tracks portfolio performance, and collects a ton of other insightful data. It’s a convenient way to exercise primary market research. You can offer your curated watchlist but let the users customize it independently. Add a watchlist editor feature to your application.

Company profiles. Let users analyze portfolios of market leaders and adopt their trading approaches accordingly.

Newsfeed. Trading is based on collecting and analyzing data and the ability to act on it promptly. Offer a newsfeed in real time where users can find insightful news and updates (e.g., exchange rates, initial public offerings).

Analytics. Your trading platform must provide users with trading charts, indicators, and historical benchmarks. Think of pinning a data chart at the top of the newsfeed.

Push notifications. To ensure users receive critical data, breaking news, and updates instantly, add push notifications to your app. Real-time alerts are essential to track movements in the market. Set reminders and stay updated on the news that affects time-sensitive assets with high volatility.

Deposit. The deposit feature allows traders to replenish their accounts with wire transfers and see the status of their deposits.

Withdrawals & transaction history. Users need access to the entire history of their deals and transactions. It allows them to track the movement of funds within their accounts.

User tips and guides. To facilitate their onboarding to your trading platform, provide users with educational materials, lifehacks, pro tips, FAQs, and other information. Ideally, arrange your training and tutorial programs and a 24/7 customer support team, but that tends to be pricey. Start off with tips and guides.

Plan the project’s budget

Launching your trading platform requires well-thought-out budget planning. Any mistakes made here could cost you the complete project success. Did you know that running short of cash is one of the top reasons startups fail?

Defining mandatory and optional expenditures for your projects and planning your revenue streams are crucial. Don’t be obsessed only with a financial strategy for your product development. Think of tactics to attract your first pool of prospects, too. You can create the best trading platform ever, but no one will use it if nobody ever hears of it. So, it’s a constant juggling of product quality and marketing activity.

From the very beginning of the project, try to adjust your budget spending to cover the following categories:

• Team. In the early stage, you must structure your core team. Hire only talents proficient in the trading platforms niche, so they can hit the ground running. As a startup, your product delivery must be fast. Refrain from team expansion unless it’s vital. The fewer people in your team, the quicker the communication and the better performance and velocity achieved.

• Sales and marketing. Be prudent here. Run some budget-friendly marketing activities to help you better understand your target audience. Purchase insightful reports from authoritative sources in your business domain. Or invest in a consultation with an expert to get relevant insights. Do not overspend on promo activity at this stage.

• Product development. The shorter the time-to-market you have, the more time you have to adjust your product to meet the needs of your target audience. As they say, “You can't edit a blank page,” so release your MVP as quickly as possible. Collect feedback and behavioral data, use heatmaps, and analyze user journey maps (both mobile and desktop if that’s the case). Use the data to edit your product accordingly.

Consider security aspects

Bad actors go where the money flows. Hence, you absolutely must include extensive data security measures when developing a competitive trading platform. This is a matter of gaining a credit of users’ trust that eventually translates into a market advantage.

To tackle security challenges, leading software development companies adhere to these time-tested approaches to:

• Pentests on a regular basis

• Scripted compliance (in continuous integration/continuous delivery [CI/CD]) accompanied by a regular review

• Static/dynamic application security testing (SAST/DAST) as part of CI/CD

• Regular security review by a human

• Encryption at rest (DBs, code, backups) and in transit (HTTPS)

• Strict network firewall rules (deny all, allow only required ports to explicit targets)

• State-of-the-art web application firewall

• Workload security monitoring (for this purpose, implement security operations center [SOC])

• Segmentation of networks

• Required MFA

• Single sign-on (SSO) implementation, if possible

• Anomaly detection based on app metrics

• Pro-active alerting based on logs monitoring

This comprehensive list of security solutions is available when you partner with IT Craft.

Select a tech stack

When choosing a tech stack for your project, requirements speak. For example, if you’re going to work with banking APIs, protocols, and standards — Java would fit nicely. Remember that startups typically succeed when adjusting light programming languages like PHP (Symfony LTS) or Node JS (NestJS/Express).

When considering development methodology, it's reasonable to think of microservices architecture. It can support multiple technologies, helping developers to solve different tech tasks efficiently.

Partnering with IT Craft software development company allows startups to harness the advantages of microservices architecture and much more:

• Frontend

  • Angular
  • React.Js
  • Vue.Js
  • TypeScript

• Backend

  • Rest API
  • PHP 8 (Symfony LTS)
  • NodeJS (Express, NestJs)
  • TypeScript
  • Python

  Serverless:

  • AWS Amplify (AWS Lambda, AppSync, Cognito, S3, CloudWatch, Pinpoint)

• Infrastructure

  Microservice Architecture

  • Docker, Amazon Web Services (EC2, AWS Fargate, CloudFormation, CloudWatch, S3, RDS, Elasticache)
  • Jenkins
  • Groovy
  • Ansible
  • Terraform
  • Redis
  • RabbitMQ
  • Kafka
  • Elasticsearch

• Databases

  • MySQL
  • PostgreSQL
  • DynamoDB
  • MongoDB

  Automation Testing:

  • Unit
  • Integration
  • Functional testing

• Development methodologies

  • Scrum
  • Kanban
  • Waterfall

Regarding iOS and Android platforms, you can work with the following options:

• iOS

  • Swift
  • UIKit
  • Alamofire
  • SnapKit
  • Stripe payments
  • Cocoa Pods
  • MVP, MVVM

• Android

  • Java 8
  • Kotlin
  • AndroidX appcompat
  • Stripe payments
  • MVVM, MVC
  • Coroutines, LiveData, DataBinding

Now it’s time to plan how your product will be profitable.

Choose your monetization strategy

Trading platforms can be monetized in several ways. Your choice depends on the specific details of both your application and your target audience.

Subscription fee. It’s as simple as it sounds. Trade platforms derive their earnings from daily/weekly/monthly/annual or lifetime subscription fees. Users get full access to all features of an application with no ads.

In-app advertising (IAA). One of the most popular application monetization models is the one in which app owners gain revenue from advertisers — banners or even interstitial videos between menus (playing video ads amid trading sessions is a bad idea). There are many different ad formats and types to choose from. Thus, app publishers can create different ad placement strategies. Conversely, users consume all platform features for free.

In-app purchase (IAP). Trading platforms can shape a large pool of MAU, luring them with subscription- and ad-free applications. Such applications offer users free access to all features necessary to execute trading operations. However, users can purchase extra features to improve their experience. It’s not mandatory for daily trading, but it can, at times, make a difference for a trader.
To promote their set of features, app owners can provide their users with a free trial period of the features, called the freemium model.

Fees and interests’ model (a.k.a. Payment for order flow [PFOF]). This model allows app owners to make money by charging a per-transaction fee. It can either be a fixed rate per transaction or a percentage of a sum. However, there can be different tariffs for different sums.

Mixed model (a.k.a. hybrid monetization model). Another high-ranking monetization approach. It allows trading platforms to diversify their revenue streams. Traders can combine any of the above-mentioned models and switch to another anytime they need.

Hire your development team

In most cases, to develop a trading platform application, you need a team with the following expertise:

• Project manager (PM)
• Business analyst (BA)
• UX/UI designers
• Back end developer
• Front end developer
• QA specialist
• DevOps
• Application developers
  • iOS
  • Android
  • Cross-platform

Today, startups can choose between developing their application with an in-house team or partnering with outsourcing companies. Besides saving time and significant project costs, hiring an outsourcing software development team allows startups to completely delegate technical management to a team of professionals. Thus, startups can focus on their core business goals.

As the business owner, ensure your potential software provider can provide the following services and principles:

• Their team members have both advanced hard and soft skills.
• Fluency in English — both written and oral. Must reply quickly to your messages, emails, meeting invitations, etc.
• Adjust working hours to your needs and organize night shifts, if necessary.
• Consider partnering with a multicultural organization
• Solid expertise and experience in your business domain
• Successful, verifiable case studies and testimonials

Outsourcing has been a popular option for trading platform developers for many years. CEE region countries are top players in the outsourcing market: Ukraine is one of the leaders in this geographical area. IT Craft is a Ukrainian IT company that provides software and business development talents with expertise in the trading niche. Also, the company’s employees are proficient in technical and business English.