Stock Trading Bot

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 indicators that signal when it should buy. Once the preset buy parameters are met, the bot executes the trade. Likewise, once all the sell parameters are met, the bot executes the sell order.

Functional modules

The trading bot consists of two components:

• The trading algorithm, which is responsible for buying and selling stocks based on the preset rules;
• The admin part, which allows the user to manage risk by controlling the bot: starting and stopping it, changing the amount the bot trades, and adjusting 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 can trade
• adjust the parameters of the trading strategy in the admin panel
• create joint trading accounts to trade on the principle of mutual funds

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 – Itexus’ standard approach to project delivery. Every two weeks, the team delivered and demonstrated results and provided reports on costs, to ensure that the client only paid for what they got. This approach afforded us the flexibility to adjust the scope of the project and functionality as new ideas inevitably emerged following the project start.

Project challenges

When it comes to a 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 the profit from a trade can sometimes be less than the broker’s commission for the order execution.

Given this environment, it was crucial to choose a broker that would allow our bot to place orders immediately and charge low commissions for order execution that would allow intraday trading to remain profitable. After thorough market research, we decided to go with the TD Ameritrade platform, one of the leading market brokers. The platform 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, particularly trading solutions, we were also able to provide the client with improvements to their trading strategy that further helped maximize profits and manage risk.

Need to automate your strategy or want to develop a trading bot? Our experts would be happy to help. Contact us to discuss your project details and get started.