Technology has automated and streamlined a lot of industries, and one of the most prominent ones is the trading industry.
Previously, traders had to go to brokerage houses physically to get updates on the market situation and make trades. However, with the introduction of trading terminals, the process has become seamless. The world of business is changing at a fast pace thanks to new technology. You can make trades effortlessly from your personal device, from the comfort of your home. You get real-time key market insights that help you make data-driven calculated decisions and relevant financial tools that help you gauge the analytics better.
The only caveat is that these trading terminals charge a commission fee for their services. Moreover, you might not have a good user experience on some of them due to poor-quality maintenance. So you might now be considering developing your own platform catered specifically to your trading requirements. Although building your own terminal does sound tempting, it may not be as lucrative in the long run. In this article, we give you 11 reasons why developing your own trading terminal will lead to losses.
Reasons Why Developing Your Trading Platform is Not a Good Idea
After conducting thorough research on what goes into developing a trading platform from scratch, we can assure you that it’s not worth the effort. Here are the 11 reasons why you should avoid doing it altogether:
1. High Development Costs
Developing a trading terminal from scratch won’t be cheap. You will first need to shell out some big bucks to buy the necessary hardware, then you’ll need to hire a team of developers and pay for software licenses. These costs can add up quickly and may not be justified if you cannot generate enough revenue from the terminal to cover the expenses.
Getting a return on investment from running a trading terminal will take too long. Your burn rate will most likely go through the roof, and before you know it, you will be in debt. So if you are a day trader or a new retail investor, the risk of setting up a trading platform just does not justify the cost.
2. Time-consuming
Developing a trading terminal can take months or even years to complete. During this time, you will not be able to focus on other aspects of your business, such as trading and market research. This can put you at a disadvantage compared to other traders who are using commercially available terminals.
3. High Maintenance is Required to Upload New Features
Commercially available trading terminals are typically packed with features that are designed to make trading easier and more efficient. Generally, multiple large teams are working tirelessly behind the scenes to provide new financial tools and features. However, when you develop your own terminal, you may not be able to include all of the features initially due to having a smaller team. This will directly hamper your trading performance in the beginning.
4. Risk of Bugs and Errors
Developing a trading terminal from scratch increases the risk of bugs and errors. The trading platform you develop might not be fully optimized to run on your device’s operating system or the web browser of your choice. These can cause delays, crashes, and lost trades. Such errors can be costly to fix, requiring significant time and resources.
5. Difficulty in Integrating With Other Systems
Commercially available trading terminals are designed to be easily integrated with other systems, such as market data feeds and execution platforms. Their platforms are also compatible with different operating systems since they have large developer teams working around the clock. If you develop your own terminal, you will have difficulty integrating it with other systems, effectively limiting its functionality. Testing and tweaking your terminal with every other system will take a lot of effort, which could have been put to better use by making trades.
6. Limited Scalability
Developing your own trading terminal can limit your ability to scale your business. Traditional terminals are designed to handle large volumes of trade and can be easily scaled up or down as needed. If you develop your own terminal, it may not be able to handle the volume of trades that you need to be successful.
7. Lack of Customer Support
Whenever you face a problem executing a trade on a web platform, you can consult customer support for immediate help. The company then works across multiple departments to solve your problem immediately. However, if you develop your own terminal, you will be your own customer support. If you need any help making a trade, you will require outside help or professional consultancy, which tends to cost a lot.
8. Limited Updates
Commercially available trading terminals are frequently updated to fix bugs, add new features, and improve performance. Developing your own terminal means you will be responsible for providing your own updates and maintaining the software. With the ever-changing market, you will also have to constantly integrate new financial tools into your platform to be competitive against other traders. Focusing on this can be time-consuming and may not be feasible if you do not have the resources to provide adequate updates.
9. Limited Testing
Multiple parties have thoroughly tested online trading platforms before they are released. If you develop your own terminal, you will be responsible for testing the software to ensure it is reliable and efficient. There might be an underlying bug or glitch with the algorithm that will hinder your trading performance.
10. Limited Customization
Web-based terminals are customizable to a certain extent, and developing your own terminal can give you more control over the customization of the terminal. However, this can be a double-edged sword, as it may lead to a lack of standardization and increased complexity in the terminal since there is no past user experience to rely on. This can lead to more bugs and errors.
11. Lack of Security
Developing your own trading terminal also increases the risk of security breaches. Not only does this put your financial data at risk, but it also jeopardizes the overall security of your device. On the other hand, commercially available terminals have been designed with security in mind and are typically more secure than those developed in-house.
Smart Alternative
What should you do if developing your own trading terminal will lead to losses? If you don’t want to download a third-party app to do trades, then you can use a web-based trading platform instead, like MetaTrader 5 Web Terminal.
Web-based trading platforms typically come with a simple user interface. They facilitate the trade of forex, commodities, stocks, and indices. The best part is web terminals can be accessed through any browser on your device. You can be in an internet café and still be able to log into your account.
Trading websites grant you quick access to financial markets and provide insightful market analytics. They consist of all the necessary financial tools and features that allow you to manage your portfolio from any device.
Conclusion
Developing your trading terminal may seem like a good idea, but there are several reasons it can ultimately lead to losses. Yes, you get to avoid exorbitant brokerage fees and have a trading terminal tailored specifically to your requirements. However, you will face numerous other obstacles, which will require time, effort, and money.
A reliable web-based trading terminal can handle all the technical hardware and software work for you so you can focus solely on trading. We hope this article helped you make a better judgment about this issue.