Last year stock trading and investment apps generated about $22.8 billion in revenue, which is almost two times bigger compared to the previous year. It happened because the investment was outsourced to smartphones just like many other daily activities during the COVID-19 pandemic. Nowadays, the investment field sees a spike in usage and brings solid revenues to software owners. In this article, we will focus on how stock trading apps make money, why they are worth investing in, and what trends you can follow to make your solution attractive to investors.

And in case you are searching for a team that can create an investment application or other type of software, you can always contact us regarding your idea. Our team will discuss your requirements, estimate the development price, design a compelling interface, and develop it. We can turn your idea into an effective business tool!

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What are stock trading apps, and how do they make money?

Stock trading apps allow buying and selling financial assets using only smartphones or tablets. The owners of investment applications can make money using different means. Most of them charge a commission when users make transactions. Entrepreneurs who don’t want to charge commissions can use other business models: They can sell premium accounts or charge interest and rebates. Also, some applications use a mix of models mentioned above. Their users have to both buy subscriptions and pay commissions after each transaction. To add, sometimes traders have to pay commissions depending on their account balance or monthly revenue. All in all, there is a wide range of business models that software owners use depending on their business goals and ideas.

Learn about stock trading app development and current FinTech trends in Stories and articles. But what is the main reason for investing your resources in stock market application development? Here’s the answer!

The main reason for creating a trading app

The greatest reason to build a brokerage app is the skyrocketing number of investors that entered the market during the past few years. The market is flooded with newcomers who actively use investment software and bring solid profits to their owners.

During the lockdowns of 2020 and 2021, many people found themselves stuck at home and had to find new sources of income and opportunities to earn money online. So, the pandemic made investing grow in popularity which is proved by the impressive stats showing the immense growth of a few popular apps.

Freetrade. The number of users registered in the Freetrade app grew by six times, from 50,000 in January 2020 to 500,000 in December 2020. Now, this number has exceeded 700,000. To add, about 60% of these users called themselves first-time investors.

Robinhood. The income of the company grew by $1.81 billion, which is a 90% increase compared to the previous year. It is known that Robinhood is going to achieve 15.9 million active investors in 2022. Reddit investors used this platform to trade GameStop stocks and fight off qualified investors from hedge funds. Read more about the stock market revolution below.

eToro. The number of active users reached 28.5 billion in March of 2022, while in 2021, the platform generated $1,234 million in revenue.

These impressive stats show how the popularity of investing keeps growing and how many people are entering it. It can be also proved by the studies of the overall market.

What trends and events make stock trading even more popular?

Fractionalisation.

Investment software is available on many kinds of devices, but it’s not the only reason why people are eager to use it. Applications lower the barrier for those who don’t have trading experience or large capital. One way to make trading available to a wider audience is to make the price of assets accessible. It can be reached by implementing the fraction system that allows you to buy only one fraction of the whole share.

Let’s imagine you have decided to buy a Tesla share that now costs $180. This sum may constitute half or one-third of the capital you want to invest. The fraction system allows you to buy its fraction which can cost as little as $5. Thus, you can enlarge your portfolio and invest in large companies that otherwise might be out of reach.

Nowadays, a lot of popular platforms such as Robinhood, Charles Schwab, and SoFi Invest give investors an opportunity to buy and sell fractional shares, which made the market accessible to people of different ages and incomes and only added to the popularity of trading.

Robo-advisors.

Not only fractionalization attracts first-time investors. Nowadays, many investment apps provide tips and AI-based assistants that help improve trading strategies. One way to give your users investment advice is to create a Robo-advisor. They employ mathematical algorithms to generate investment advice and allocate users’ resources in the most efficient way. Robo-advisors work out the desired strategy after traders fill out the questionnaire about budgeting goals, an initial amount of invested money, risk assessment, and other factors. Here’s an example of the questionnaire.

Surveys show that about 63% of US citizens are ready to employ Robo-advisors to manage their investments. Right now, many millennials and gen Z members are joining the market. These layers of traders are tech-savvy, so automation solutions help retain them. The following graph reflects what people from different generations think about Robo-advisors.

To sum up, Robo-advisors and AI-based assistants make the process of trading inside apps a more understandable and simple task. By using these tools, it’s easy for app owners to make the trade easier for experienced traders, attract beginners, and push the popularity of their application.

Social media.

Not only the pandemic but also meme stocks have been making the market popular. Meme stocks are the assets of different companies that became extremely popular among members of online communities. These groups of people create the hype about company’s stocks and make their price rise.

Shares released by GameStop became one of the most striking examples. GameStop is a US retail chain that sells computer games and consoles. The assets of this company experienced a long price downfall. The Reddit WallStreetBets forum users decided to buy as many stocks of GameStop as possible to support the company’s quotes. As a result, the price of GameStop’s stocks rose by hundreds of percent.

Later the forum users were joined by professional traders, which helped to keep the prices high for quite a long time. All the community members who participated in this process were not experienced traders; they were attracted to trading via social network communities. The fuss around stocks in Reddit can be called another reason why so many first-time investors got attracted to the field in recent years.

Wrapping up

Trading stocks becomes more popular due to the hype in social networks and new technologies and strategies that lower the barrier for users who don’t have vast trading experience. In these circumstances, more people are attracted to investment apps that constantly deliver real-time data and make selling and buying assets convenient and cost-effective. The popularity of investing is the main reason to invest in trading application development.

If you are searching for a software development team that can create stock trading apps or other types of FinTech software, don’t hesitate to contact us.

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