Nowadays, new and innovative ways to trade are always coming up. Many people have switched to algorithmic trading because of how quickly they can execute trades at an extremely low cost. This has caused an increase in demand for Algo Trading Apps. Industry reports estimate that global Algo Trading App revenue will hit $18.8 trillion by 2024.
If you are also thinking of developing a robust algorithmic trading application, you have made the right decision.
Automated AI-driven trading programs allow both advanced traders and beginners to create customized platforms and hone their skills. Algo trading provides numerous advantages over traditional forms of investing, such as discretionary and high-frequency trading.
It allows traders to reduce risk and transaction fees while increasing accuracy and speed using pre-programmed instructions.
Algo trading is widely used in the finance industry by banks, investment funds, hedge funds, and retail traders. It provides a great benefit for traders who want to set their position on the market.
Today in this guide, we will discuss the benefits and the must-have features of Algo trading apps and cost estimation to help you develop a top-notch Algorithmic trading application.
So let’s begin!
What is Algorithmic Trading?
Algorithmic trading or Algo trading is an automated trading technique where trades are made according to pre-programmed algorithms. Algorithmic programs are capable of placing bets faster and with more accuracy than people because they are programmed to follow an algorithm.
Algo trading eliminates the need for human intervention and enables the user to find opportunities in the market quickly before human traders even identify them.
Humans are emotional beings and cannot react fast enough or make decisions based purely on rationality because there are too many transactions occurring at once for them to keep track of all the data.
Over the past few years, trading has spread to a wider audience. Those who wish to trade for themselves need access to robust educational resources in order to train their skills and broaden their knowledge base.
Benefits of Algorithmic Trading
There are multiple benefits to developing the Algo trading app for experienced traders and newcomers. Let’s have a look at them.
1. Minimize Sentiments
When it comes to automated trading systems, they eliminate emotional responses from humans throughout the whole trading process. By keeping emotions in check, traders usually don’t let them cloud their judgment and stick to the plan.
Once trade rules are met, trades are automatically executed, so there is no waiting around. This ensures that trades happen at appropriate times and lessons both under or over-trading while giving you an opportunity for profit at every stage.
2. Capacity to Backtest
Back trading is a trading method that uses historical market data to evaluate the viability of an idea. When designing a system for automated trade, all rules need to be clear cut and absolute so that there is no room for ambiguity-as computers cannot make assumptions or guesswork.
This type of backtesting lets traders fine-tune their systems and figure out how profitable they would be overall.
3. Attain Consistency
Consistency is one of the most difficult aspects of managing trading plans. If a trading plan has the potential to become profitable, traders who ignore these rules and alter this system will disrupt the market.
Trading is an industry where you can either win or lose; you cannot expect success every time since it doesn’t work that way. You must be prepared for failures just as much as triumphs—it’s how things work here.
However, automated systems enable traders to maintain consistency with both their plans and their trades alike.
4. Maintain Discipline
Automated trading ensures that trades are executed in accordance with an established set of parameters and eliminates the need for human error that could lead to lost profits. As trade rules are already established, and the implementation is automatic, traders maintain discipline even during turbulent markets.
Sometimes, discipline is often lost because of the presence of emotional aspects such as a fear of risk or loss. However, automated trading minimizes this possibility, so there will never be an incorrect order placed while trading.
Must-Have Features Of a Successful Algo Trading App
To develop top-notch trading applications, you must adhere to the following essential features of Algo trading apps. Incorporating these features into your app will ensure your application is truly outstanding. So let’s have a look at them.
1. User Interface and Reports
The user interface is one of the most important features of an algorithmic trading app. A good UI should be intuitive and easy to use, with clear instructions on how to set up a trade.
It should also offer an email notification system for anything relevant to the trader’s account, such as alerts about trades that have been executed or any account changes. Reports are another key component in a successful Algo trading app.
These allow traders to review the performance of their algorithm against its benchmark index over various time periods (1 week, one month, three months).
2. Advanced Tools for Back-testing
While creating the Algo trade application, you must ensure the integration of advanced tools. Advanced tools for backtesting help you ensure profitability in the market. This feature allows you to test out different strategies with historical data and see what would happen if they were executed in the past.
It gives traders an idea of which strategies work better than others and how much risk there would be involved in implementing them.
3. Active Triggers and Notifications
An important component of an Algo trading app is notifications. Since they are most often used to notify the trader of various events, active triggers and notifications will help you know when something new has happened with your trades.
Active triggers can be anything from a change in market conditions or a major economic release. It is also important that your app notifies you via push notification when certain events happen, such as if the price of a security you hold changes or if it hits an algorithmic buy point.
Also Read– How to Build Stock Tradaing App Like Robinhood?
4. Broker and Market Data Adapters
To be able to trade successfully, a trader needs access to the markets. This means having reliable market data that is up-to-date and accurate. Algo trading apps can help with this by providing adapters that connect traders with all the brokerages they need.
There are adapters that provide market data from an assortment of providers, such as Bloomberg Data, Thomson Reuters, and Dow Jones. This way, you’ll have access to the data you need without having to sign up for a new service.
5. High Availability and Performance
One of the most impressive features of Algo trading apps is their high availability and performance. Algo trading is a robust, reliable system that can process thousands of transactions per second because it can be designed and developed to use minimal memory while processing lots of threads simultaneously.
6. Business Functions and Automation
Since Algo trading apps fully function based on automation, traders and businesses can easily save lots of time to focus on core business.
Steps To Develop An Algo Trading App
Having discussed the benefits and features of Algo trading apps, lets understand the Algo app development process.
1. Define The Scope Of Your Project
When you decide to develop the Algo trading app, the first thing you should do is plan the scope of your app development project. Discuss with your team the features and functionalities you want to include in your app. Doing so will help you decide to develop an exclusive app.
2. Get your App Secured
You can not overlook the security feature of the Algo trading application since it contains sensitive information about the users. So when you plan to develop the app, make sure you ensure all the security measures to keep your app safe and secure.
You can use cross-site scripting(XSS), bank-grade encryption, multi-factor authentication, next-gen firewalls, etc., to secure the application.
3. Develop the Core Features
Designing and developing the core features of the app is the most significant part. You can develop the APIs for integrating core features. You can also use third-party APIs that are used for additional non-core features such as push notifications.
Doing so will help you create the Algo trading app with an interactive user experience, good performance, and maximum security.
4. Testing, Delivery, and Maintenance
Once you have developed and launched your Algo trading app, you need to go for testing and maintenance of the app from time to time. This way, if you find any existing bugs and glitches, you can remove them with the help of your QA team.
How Much Does it Cost to Build an Algo Trading Platform?
The average cost for developing an Algo app could range anywhere from $35k to $95k. It all depends on the complexity of the app, the features you want to implement, and the platform you want to develop the app for. Moreover, it may also take anything between 5-6 months to develop the app.
Develop an Algo Trading App With Quytech
Algo trading app development is a complex task that involves in-depth app logic and architecture. However, if you employ the right tech stack, essential features, and functionalities, you can develop a top-notch Algo trading app.
Our Quytech software development experts have extensive knowledge of creating robust and feature-rich Algo trading apps. You can create your own Algo trading app incorporating the comprehensive understanding of our Algo trading app development experts.
Having discussed the features of the Algo trading app, the cost of development, and the process to develop the app, you must now have a better understanding of how to develop a top-notch Algo trading app.
While keeping in mind the salient features discussed in the blog and partnering with any customized application development company like Quytech, you will successfully develop the application.