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Stock Trading Bot

A cloud-based trading bot that automatically trades stocks per intraday scalping strategy following pre-configured buy and sell rules.

Industries
Technologies/Platforms

About the client

Our client is an investment company specializing in active stock trading.

Client's request

The client approached us to implement a trading bot to automate one of their proprietary stock trading strategies. The strategy is based on the scalping style which specializes in profiting off of small price changes and making a fast profit off reselling.

Engagement model

Time & Materials

Effort and duration

3 months

Solution

Stock Trading Bot

Project team

1 Tech Lead, 1 Developer, 1 Project Manager, 1 Business Analyst, 1 QA Engineer ​​

Tech stack / Platforms

Solution overview

The bot is a cloud-based application connected to a brokerage account via an API. It automates stock trading by executing trades based on preset requirements such as a stock’s price, time of day, past trades that week, and technical indicators such as RSI (Relative Strength Index). The bot tracks stocks throughout the day, looking for a few indications as to when it should buy. Once the preset buy parameters are met, the bot executes the trade. Once all the sell parameters are met, the bot executes a sell order.

custom trading system development

Functional modules

The bot consists of two components:

  • The trading algorithm that is responsible for buying and selling stocks based on the preset rules;
  • The admin part allows the user to manage risk by controlling the bot – start and stop it, change the amount the bot trades, and adjust the parameters of the trading strategy such as indicators’ parameters, risk management, and leverage.

The administration part of the system allows users to:

  • link a broker account to the profile
  • start bot
  • stop bot
  • set the percentage of account amount the bot trades
  • adjust the parameters of the trading strategy in the admin panel
  • create joint trading accounts to trade on the principle of mutual funds

Third-party integrations

Project approach

On this project, we applied modern agile development practices, with frequent deliveries, full transparency, and close collaboration with the client on a daily basis, which is Itexus’ standard approach to project delivery. The team delivered and demonstrated results and reported costs every two weeks so the client only paid for what they got. This approach allowed flexibility to adjust the project scope and functionality as new ideas inevitably emerged after the project started.

custom trading system development

Technical solution highlights

Initially, the client wanted the bot to trade within the Thinkorswim desktop app. But that idea was limiting in one crucial way – a trading bot created as part of a desktop trading app only trades when the app is running. Also, a stable internet connection is required for the bot to work.

We suggested an advanced solution: a cloud-based bot with a simple web admin panel. The cloud-based bot connected to the broker via an API will work 24/7 provided a stable Internet connection is guaranteed and the bot is hosted in a well-managed, secure data center.

As the main technology for this project, we used the .NET Core framework because it is a mature, stable, secure, and open-source enterprise technology. It has a large community and is widely used for enterprise fintech solutions. This framework provides the means to quickly deploy robust, secure, and high-performance applications by reusing many existing components and mechanisms for authentication, authorization, data protection, and attack prevention.

stock trading solution architecture

 

Project challenges

When it comes to the scalping strategy, order execution speed is critical. For our client, it was extremely important that the bot could instantly place orders. At the same time, intraday trading is all about building up small profits through many trades throughout the day, rather than making a large profit in one fell swoop. This means that sometimes the profit from a trade can be less than the broker’s commission for order execution.

Given this environment, it was crucial to choose a broker that would allow our bot to place orders immediately while taking affordable commissions for order execution and remaining profitable for intraday trading. After thorough market research, we decided to go with TD Ameritrade Platform as one of the market leading brokers, that provides good connectivity (APIs), allows trading with all required instruments, and offers commission-free trading plans.

Results

It took only 10 weeks to implement and launch the trading bot, which allowed our client to automate the strategy and increase trading profits. Thanks to our extensive experience in developing fintech software in general and trading solutions in particular, we were also able to provide the client with some improvements to their trading strategy that helped maximize profits and manage risk.

Need to automate your strategy or want to develop a trading bot? Our experts will be happy to help you with that. Contact us to discuss the details of your project.

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