Revolutionizing Investment: How to Build a Trading App Like Robinhood

Over the last few years, apps for online trading have become the most talked about due to their ease of use and accessibility to stock trading. Making long phone calls or filling out lengthy forms is no longer a hassle because users can track their investments from anywhere. Popular fintech apps like Robinhood are the reason for this revolution. With more than 22 million active users, Robinhood has changed how we think about finance. One of the things that has made Robinhood a desirable investment choice is that it has a zero-commission policy.

Robinhood’s trading application has seen appreciation and notable gains within a few years. It allowed commission-free trading of ETFs and stocks. It had no brokerage costs, attracting younger investors and investors looking to put money into stocks and ETFs with no brokerage costs.

The app’s success has inspired investors to invest in the development of trading apps and to provide similar services. However, not all were adept at analyzing their designs and development strategies. Some failed to design an app identical to theirs and created an ineffective and confusing application, which resulted in company losses rather than profits.

Suppose you’re an entrepreneur who wants to develop a trading application similar to Robinhood. This blog will cover all aspects of trading app development like Robinhood.

What Is Robinhood App?

Robinhood is an online trading platform that does not charge fees. It lets users trade and buy stocks, ETFs, options, and crypto with no traditional brokerage charges. Robinhood was founded in 2013 and rapidly gained popularity thanks to its simple interface. It also made it easier for everyone to access financial markets.

It lets investors with no experience easily trade, thanks to options like fractional shares and the simple mobile application interface. Robinhood has been highly praised for its accessibility but has also been criticized for its business model and gaming. The app is intended to provide financial services for everyone by eliminating the hurdles of entering the market that traditionally come with it.

It allows transactions for gold, cryptocurrency stocks, and more. But there’s no minimum investment required to open an account. This app provides advanced trading tools and functions to those who have paid for the subscription.

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How Does Robinhood Work?

Apps like Robinhood have been designed to provide easy access to trading and investing. They make a fully online discount brokerage and process accessible to investors. Robinhood’s easy-to-use trading application helps make it an ideal choice for newbies. The cost is highly convenient and benefits beginners and younger investors beginning to explore the crypto and stock market.

In addition, the fintech business permits users to purchase fractional shares. That allows them to buy just a part of a stock exchange-traded fund (ETF) share, not all the shares, which benefits investors with a limited budget who cannot invest huge sums of money.

Robinhood is a smartphone app or on the internet platform for online trading. It requires that users have a minimum age of 18 with an active social security number, an official residential address of the country they are living in, and be citizens permanent residents of their country. Once they have formulated their own investment and trading strategy, they must sign up for the service, which will require basic information about themselves and no minimum amount for opening an account.

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Why Invest In Developing a Trading App Similar To Robinhood?

Instead of investing your money in stock markets or other investments, it’s best to go for app development that provides your users various financial services. Furthermore, you stand more chance of being successful in developing your app than investing in the stock market since there are a myriad of frauds perpetrated by manipulators who get all the cash from retailers and traders.

However, manipulating the market does not impact the app’s business since you’ll earn revenue from the app’s customers through trading commissions, among other ways. Developing an app like Robinhood in Canada can help you grow your company faster without taking on any risk. Typically, this is in stocks or cryptocurrency trading.

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Must-Have Features Of Trading Apps Like Robinhood

Trading applications come with various features to satisfy user needs and demands. Below are the best features that should be included within your Robinhood-clone application:

1. Personal Profile Registration

One key element your stock trading application should include is the registration of users’ profiles. Minimizing this process would help guarantee better customer satisfaction. Suppose users cannot sign up or log into their accounts. In that case, they’ll remove the application and move their business elsewhere. Logging in using your customers’ social media accounts is recommended. This stage’s primary focus is implementing secure methods to protect the customer’s data.

2. Dashboard

The Robinhood application provides users with a dashboard. The dashboard is where customers can keep track of their investments and access a watchlist with prices for every cryptocurrency and stock. Like the Robinhood app, you can build an app dashboard. You alter the dashboard with the additional features you require from our app development experts.

3. Market Data

Robinhood app offers up-to-date market information for its users. This data includes all the most profitable stocks and losers according to their price performance. You can also change the data in your application regularly, which will help customers understand all the companies trending on the market.

4. Portfolio

Investors can track their investments across all cryptos and stocks using the Robinhood application’s portfolio feature. This feature allows users to build accounts and monitor their investments without relying on third-party agents. Third-party agents can add filters to assist users in finding the most suitable stocks to invest in and the companies they’re looking for.

5. Scanning Tools

AI-powered scanners scan the stock market for trading opportunities. Like analytical tools, scanners can be used at different degrees of sophistication. Simple scanning tools, for instance, provide insight into the most profitable stocks to buy now, whether they are with sophisticated scanners that could also detect trends to aid your clients in making more informed investment choices.

6. Third-Party Payment Options

Every payment method should be secured to ensure you are not susceptible to financial fraud. We suggest using secure third-party payment APIs to safeguard customer information and ensure the procedure is simple and easy.

7. Fund Transfer

Funds are essential for trading. Provide customers with a method for transferring their funds easily from bank accounts to trading accounts and in reverse. Ensure your system is secured and your users’ funds are protected.

8. Learning Trading

Many of your customers will be novices or have had poor trading experiences. The best way to handle this is to teach users about potential risks involved in trading and help them understand the best investment strategies.

7. Adding Bank Card

This area of the Robinhood-like application should allow users to enter their bank account information, which is essential for trading online applications. The section you are using should be simple to access and safe. You need to integrate this feature within your app with the help of an expert and dedicated mobile app development company in Canada.

8. Transaction Management

Your application requires an automated system for managing transactions that includes options such as transaction history, updates on order status, and the option to cancel or alter orders.  The feature will also allow you to set up customized alerts and notifications for particular events during transactions.

9. News Feed

A crucial feature in trading apps, especially ones targeted at beginners, is the news feed. It should give users information on the current state of the stock market and provide details on any changes to policy that affect stock trading.

10. Trading In Stocks

Customers enjoy their Robinhood app since it offers a superior experience when placing trades and opening positions in cryptocurrency and shares. The app allows users to place trades through their app to trade and buy different stocks and crypto.

The app provides many additional options, including the ability to help customers set up a stop loss to prevent loss and target the profit they want to take out of trading after making a profit. However, it has potential for improvement and could be improved by incorporating additional features like alerts about the trading indicator.

11. Search & Filter

The new feature is designed to simplify trading for investors. Removing unnecessary information from the ledger lets you quickly sort through things and examine stocks and their trading history more effectively. Sorting and filtering can also reduce your time searching for relevant information. Make sure to save the information in the application.

12. Registration And KYC

Investors need to be able to sign up and begin trading in the shortest time possible. It is essential to make app registration minimally demanding. By completing the KYC procedure on the internet, you will simplify and speed up the process for your customers and get them started quickly.

13. Notifications

The Robinhood app alerts users of price fluctuations for their investments through notifications. As with the Robinhood application, you could add a notification function for your app that allows users to keep track of current investment options information, news, the status of payments, and other information.

14. Watchlist

Include the Wishlist feature to help users stay on top of businesses they’re attracted to. Users can add the companies they wish to keep track of to their wishlists. They can then buy these stocks at any time they’d like.

15. Direct Order Routing

This feature is one of the most advanced, offering trading suggestions. A computer algorithm is incorporated into the feature, pulling data from multiple financial sources and offering suggestions in the right direction. Investors can review these recommendations and then choose the appropriate one to place an order.

16. Support

If you create a trading platform for newbies, ensure users can access knowledgeable support staff. This will quickly aid users with their doubts and questions and improve customer satisfaction. Therefore, it’s essential to incorporate support capabilities into the system.

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Steps To Develop Trading App Like Robinhood

If you’re thinking about developing stock trading apps like Robinhood, here’s an extensive tutorial on creating one similar to Robinhood. It covers all the essential aspects and steps to consider in developing your trading application.

1. Conduct Market Research & Define The Technical Objectives

Conduct thorough market research to determine your market’s target customers and their needs, views, and behavior. Research competitors, look into their strategies, find out the latest applications for trading stocks, and understand current market developments, fluctuations, ups and downs, and growth potential. Finally, test your app idea with prospective investors and users to verify market needs and conditions.

Determine the goals of your project, such as the main features, layout of apps and design, target audience, type of app for trading, users’ specifications, requirements for technical specs length, budget, and so on. Prioritizing the key objectives will help develop the following steps and select a development method.

2. Obtain a License 

Robinhood has been regulated for its platform through The Financial Industry Regulation Authority, and you could follow the same procedure to govern your business. Depending on the nation, you can contact lawyers and the government for information on the rules and apply for a permit to register your broker business so your customers can invest and trade.

3. Decide On Design And Development Approach

Understand your app in depth, then create wireframes and prototypes that show the UX (UI) and user experience. You can use the references to the Robinhood technology stack. Choose the technology stack you want to use, which includes frameworks, programming languages, APIs from third-party vendors, and libraries required to perform specific functions. Then, you can tweak the concept based on user feedback and testing usability.

Developing a trading app is a challenging task for a novice. It requires front and back-end development, API integration, the implementation of security measures, and server configuration, among other complex tasks. Even if you have technical expertise, they are not things you can do alone. It is essential to hire mobile app developers to develop the app. When selecting, ensure you have a skilled team knowledgeable about development methods and best practices.

4. Conduct Quality Testing And Publish Your App

Once you’ve developed your trading app, perform rigorous testing to detect technical mistakes such as malicious code, problems with links, bugs, and any other security issues. Repair these issues and secure your app with well-established methods of security. This will allow you to discover the causes of app issues and ensure you’ve resolved them before the app goes live. It will also ensure the application works as expected and can be used. You can then publish the app on the app store.

5. App Support And Maintenance

Be sure to comply with all rules and regulations for trading apps and observe their performance and reviews after launch. In addition, you should frequently update your app to solve bugs, introduce new features, and improve application speed and performance. Be aware of the most recent developments in the financial market and regulatory framework so your app can be shaped accordingly.

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Cost To Build a Trading App Like Robinhood

To determine the cost to develop an app in Canada similar to Robinhood, we must analyze each element of the procedure.

• The primary and crucial element is creating the application itself. The process involves a team of skilled designers and developers committed to building an easy-to-use, bug-free, and reliable app. Based on factors like the number of staff, their hourly rate, and the projected completion timeframe, the project will likely exceed the $50,000 to 500,000 price threshold.
• There are many other expenses to consider. For example, you’ll require reliable and secure servers to host the software and install strong security measures to secure users’ confidential data. These additional aspects can increase the cost by $50,000-$100,000 on top of the total cost.
• Furthermore, the legal costs associated with launching the trading application include licensing costs and ensuring compliance with legal requirements. In particular, if you plan to expand into multiple states, these costs can be substantial, possibly adding $100,000 to $200,000 to your overall budget.
• In addition, ongoing expenses associated with maintaining and operating the app following its release must be paid. These include server maintenance and customer service, which can range between $50,000 and $100,000.
• Developing an app that trades similarly to Robinhood will often cost more than 1 million dollars. But this is just an estimation, as the exact cost depends upon many variables, such as the scope, size, desired features, and the team of developers chosen. However, one thing is sure: creating an app for trading is significant. Guaranteeing its successful development will require substantial time, money, and resources.

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How Does a Stock Trading App Like Robinhood Make Money?

Although many apps for trading stocks allow commission-free trading, others continue earning revenue from commissions per trade users make. However, Robinhood stands out as one of the best companies to offer commission-free trading. Robinhood’s commission-free strategy has attracted prospective and young investors looking to earn income through investing and trading. In addition, Robinhood does not charge the cost of opening accounts, maintaining them, or transferring funds with no fees.

If Robinhood is completely free to use, how do they generate revenue? The fintech firm employs a variety of revenue stream models to generate profits and revenues. These models are among some of the most well-known ones.

1. Payment For Order Flow

PFOF, or Payment for Order flow, is a common practice within the brokerage industry that fintech applications use to earn profits. With PFOF, the trading apps offer their customers’ trading orders to market makers on behalf of their customers. Market players pay brokerage to transfer the orders to the trading applications.

They, in turn, carry out this transaction and earn by gaining small margins on rates of bid. The stock trading app and market makers receive a small amount via the PFOF model. They earn quite a bit when they perform many orders and can generate more revenue.

2. Commission Fees

Apart from earning profits through commission-based transactions, Robinhood can also charge an interest rate on cash balances stored on the application. Suppose customers deposit money in accounts with Robinhood. In that case, the firm will invest the funds in small-term, low-risk assets, which are then used to generate a profit.

3. Selling Data To Third Parties

Robinhood earns income through various means, such as selling market information to third parties. Its extensive customer base allows it to create vast information about trades it sells to companies like brokers and financial institutions.

4. Offering Premium Features

Robinhood provides a variety of premium services that are available only with an annual subscription. These could include access to cutting-edge analysis tools, better quality customer service, and other benefits.

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Tips To Develop a Profitable App Like Robinhood

Suppose you’re looking to construct an effective trading platform. In that case, tackling your task with careful planning and attention to the smallest details is essential. These are the vital guidelines to consider:

1. Analyzing Competitors

The first step is to study all the current trading platforms comprehensively. Knowing their strengths, weaknesses, and distinctive selling factors is essential. This information will form the basis for creating an outstanding platform that differentiates itself from competitors.

Compliance with financial transaction regulations is vital to the trading platform’s effectiveness and reliability. To ensure that the platform complies with the latest regulations, it’s essential to become familiar with all legal frameworks and regulations.

2. Creating a Feature List

Identifying the elements essential to your intended audience is crucial in creating your trading platform. Here, you could expect to engage a React Native app developer who will help you prioritize capabilities for various platforms.

3. Do Competitor Analysis 

Apps for research and investing, such as Robinhood, can help you determine how they are operating their businesses and earning profit from their app. Find other top software for trading stocks to do research into the market.

4. Invest In Hiring App Developers

The team of developers will assist in creating your application starting from scratch by constructing and adding all the features that your app for investing requires, such as Robinhood. They will choose the most efficient technologies to build the trading application that will yield more efficient results.

5. Marketing And Business Model

To successfully launch the trading application, it is essential to develop a comprehensive marketing plan. You should highlight the unique aspects of your application, like commission-free trading, the user-friendly interface, or other features. You should also consider diverse promotional options, custom marketing campaigns, and cooperation with influential people in the world of finance.

When selecting a business model, it is crucial to consider the various aspects. A good example is Robinhood, which uses an array of income streams. These include premium subscription plans, interest income from users’ cash accounts, and payment generated by order flow.

6. Regulatory Compliance

Ensuring that legal compliance is maintained and developing trust is essential for banks to comply with the law and build confidence. Compliance with rules like Anti-money Laundering (AML) and Know-your-Customer (KYC) standards is vital. Following the regulations set out by regulatory agencies such as the Consumer Financial Protection Bureau and the Securities and Exchange Commission is crucial to ensure the protection of user rights.

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Future Scope Of The Trading Application Like Robinhood

The number of traders who want to profit from investments increases daily. It is expected to grow in the coming years. To meet market demands, traders are evolving to meet the needs of technological advancement and innovation. Here are a few hints of the current trends and those for the future:

• The increase in cryptocurrency use has increased the demand for cryptocurrency trading platforms. They have the potential to become mainstream very soon.
• Share investing in fractions allows investors to purchase share parts with limited money. Platforms that offer fractional share trading are becoming increasingly popular with retail investors.
• The trading platforms have introduced robo-advisors, which help investors build and manage portfolios of investments according to their profiles, budgets, and objectives.
• Social trading platforms permit customers to monitor the trading activities of profitable investors. They combine social networks with investing and help novices make better choices.
• Fintech firms will also use Artificial Intelligence and data analytics to create advanced trading strategies and algorithms.
• In a decentralized financial (DeFi) space, Web 3.0 and blockchain technology can disrupt traditional finance and provide new opportunities for decentralized trading platforms and advanced financial products.
• Trading apps can gamify investment through virtual reality. They will create virtual trading competitions, reward points, and interactive features.
• Fintech-based apps that offer access to global markets and emerging economies will surely draw investors looking to diversify their portfolios and profit from the worldwide growth potential.

Conclusion

Developing trading apps like Robinhood is a huge-scale undertaking requiring a complex application structure and logic. Choosing the appropriate technologies, features, capabilities, and development speed makes it possible to define their effectiveness. Investing in developing trading apps has numerous benefits, including revenue streams and improved branding. In addition, a properly designed trading application could be an essential game changer for financial institutions.

After reading this blog post, we hope you will be able to envision what you can do to develop apps like Robinhood. With the advancement of technology within the app development market, it is never easy to satisfy the increasing demands of consumers. Developing apps like Robinhood requires extensive project management and programming knowledge to create from scratch. This is why you must engage an experienced mobile app developer who will help you create an application with sophisticated features and functions.

Get in touch with Techugo today to explore how we can help you develop trading apps like Robinhood and revolutionize the investment experience!