DXtrade: The Options Platform for Your Brokerage

How to build an options trading platform, in-house, custom, or off-the-shelf? This is a perennial question for brokers, exchanges, and other financial services businesses. Is it better to develop these technologies in-house or to outsource this key component to third-party experts?  

As a technology provider in the fintech space since 2002, we at Devexperts have gained a great deal of experience working in a variety of different roles. We’ve established ourselves as a custom development house that’s well-versed in building proprietary fintech systems from scratch.  

We’re also very comfortable working alongside in-house and legacy systems, adapting and extending the capabilities of existing platforms, as well as offering a line of off-the-shelf brokerage components to fit the needs and budgets of a variety of financial players.  

We’ve found that client-facing financial services businesses seldom possess the in-house technical expertise to undertake such demanding development projects without any outside assistance. It’s a simple issue of specialization, the demands of modern traders are such that in-house development is beyond the scope of many brokers, exchanges, and other financial firms. So, when this conclusion is reached, what are the options?

In our experience, futures and options brokers wishing to establish themselves in the market, or to revamp their existing platforms for a new generation of traders, are then torn between whether to outsource the development of a custom proprietary platform or to source a white-label solution.  

Choosing between these two options can often seem like a double bind because custom development is expensive and time-consuming, while white label solutions are sometimes regarded as too cookie-cutter for many trading firms. 

Over the years, we’ve seen this issue repeatedly arise when dealing with prospective clients. We observed a gap in the market that we believed our experience in custom development could address.  

Custom dev features at an off-the-shelf price

At Devexperts, we offer three different levels of customization on our flagship DXtrade options trading platform.  

For start-ups and financial firms on a budget, we offer an off-the-shelf version that benefits from sponsored features. These features go beyond typical white-label branding customizations and offer smaller options businesses the ability to stand out without breaking the bank. 

For more established options trading businesses, we offer an enterprise version of DXtrade in which they can have any functionality and extra features built on top of DXtrade by our experienced team of over 800 software engineers. This can include any unique features that are important to the business in question. 

For options brokerages that want to take possession of their own trading technologies, DXtrade’s source code is available for purchase. This is as close to owning a proprietary, custom-built platform as it comes, minus the lengthy lead times and development costs. This allows brokers to take ownership of the platform and build anything they require on top of it themselves.  

Web application or desktop? 

A common misconception that many people still labor under is that desktop trading platforms are superior in functionality to web-based trading platforms. This is a throwback to the earlier days of online trading when web applications were still rudimentary and limited in their abilities.  

This notion still holds because many trading platform providers (especially those whose flagship platform was developed before the widespread switch to web applications) still maintain different versions of their trading platform, with web versions often lacking in functionality when compared to the “full” desktop version.  

Our options trading platform bucks this trend by being available solely as a web-based application with no desktop equivalent. One of the main reasons for this decision is that we found that there wasn’t a great deal of interest among our clients for desktop versions.  

This is especially so in the case of newer brokers and exchanges who seek to appeal to younger demographics. Desktop is on its way out, so we chose to focus on making a web-based options trading platform that could compete with any desktop version out there.   

Modern browsers are more than capable of handling the performance requirements of today’s trading platforms. Rather than struggling to maintain consistency between different versions as in the case of other platform providers, we decided to put all of our efforts into a technology that’s more likely to stand the test of time, and that offers a consistent experience for all users.  

Also, this consistency translates across operating system environments, which is another issue that many desktop platforms face. DXtrade is available as a single canonical version that looks, feels, and performs better than most other desktop trading platforms out there.  

Options analytics 

Options chains and preset options strategies  

DXtrade offers traders detailed options chain information on all available options contracts relating to an underlying market. This includes price information on different strikes, bid and ask levels, spreads, and the number of outstanding options contracts (open interest). 

The platform also provides information on the options Greeks, including delta (option price change for every unit change of the underlying), and vega (option price change for every unit of change in implied volatility of the underlying), as well as the midpoint between the respective bid and ask prices of each option (theoretical price).   

Option chains are important to option traders as they allow them to research available options contracts, plan future trades, and analyze their potential profits against the risks involved. 

In order to manage the risk/reward profile of potential positions, options traders use combinations of options to swing the odds in their favor and avoid the risk of a naked option incurring outsized losses.  

DXtrade comes bundled with a variety of such options strategies as presets that can be selected from a list at order entry, these include vertical, straddle, strangle, ratio/back, combination, synthetic, covered, calendar, diagonal, butterfly, condor, and iron condor. 

Useful visualization tools 

DXtrade includes a variety of highly useful visualizations that can be customized as per users’ preferred charting layouts to include a variety of market information at a glance. One of the most useful is the DOM (depth of market) ladder that provides level 2 pricing information on the underlying assets pertaining to available options and futures contracts.  

The DOM ladder provides options traders with a view of passive buy and sell orders in the respective order books of the underlying securities being traded. This allows them to observe imbalances between limit buy and sell orders, spot levels that could potentially serve as support or resistance, as well as prices at which large orders are able to be filled without significantly affecting the price of the underlying.  

DXtrade also comes with customizable heat maps, allowing traders to quickly spot trending underlying assets. These heatmaps can be grouped according to the specific index the underlying securities belong to, such as the S&P 500 and Nasdaq Composite. 

Alternatively, for those interested in specific sectors, DXtrade’s heatmaps can also be set to scan specific sectors, including basic materials, communication services, consumer cyclical, consumer defensive, energy, financial services, healthcare, industrials, real estate, technology, and utilities. 

Stock & options screener  

DXtrade’s stock and options screener allows traders to track real-time market behavior, receiving alerts when an instrument or underlying security meets their preset criteria. A comprehensive list of assets is covered by the screener, offering traders the ability to set a variety of search options by which to screen available assets.  

Assets are searchable according to fundamental performance such as price-to-earnings ratio, market capitalization, earnings per share, and more. They are also searchable by technical criteria such as where the stock’s price action finds itself in relation to moving averages, relative strength index, moving average convergence divergence, and many other technical indicators.  

Securities can also be screened by region, instrument type, and built-in presets, with real-time alerts provided whenever an asset’s performance fulfills the criteria of the search.   

SPAN margin calculations 

Options trading requires more complex risk management on the part of traders and the brokers that serve them. In this way, both parties can have access to a comprehensive view of not just any given open position, but the entire portfolio in question.  

DXtrade allows options brokers to calculate margin based on portfolio risk by using SPAN (Standard Portfolio Analysis of Risk) methodology. SPAN lets brokers calculate global one-day risk for each and every trader’s portfolio rather than merely the risk associated with just individual positions. 

Taking price action, volatility, strike prices, time to expiration, and risk-free interest rates into account, the methodology estimates the worst-case single-day move for each portfolio in order to calculate the margin required to protect against this scenario. This also allows excess margin to be freed up for other positions. 

Open APIs 

Whatever options trading platform an interested broker chooses to source, there will inevitably be some software integration that has to take place. Whether this is with legacy systems or with other third-party software, such as CRM, back office, customer service, compliance, or value-added services such as news and analysis.  

These disparate systems will have to be integrated with each other in order for brokerage operations as a whole to run smoothly and efficiently. In order to make these integrations as quick and painless as possible, Devexperts maintains open APIs for our DXtrade platform with full documentation so that it can easily be integrated with a far wider variety of other systems. 

Choosing platform providers that do not provide API documentation can lead to a situation where trading businesses are locked in with their vendors, having to source everything from them or from other businesses those vendors are partnered with. At Devexperts, we do not pursue this walled garden approach, preferring to empower our customers to do more with our software. A lot of this work has already been done by our own developers, with a host of ready integrations with everything from market makers and exchanges to payment providers.  

Enterprise grade market data 

Our DXtrade options trading platform also benefits from access to professional market data via Devexperts subsidiary, dxFeed. dxFeed boasts one of the most comprehensive ticker feeds on the market, offering reliable streaming and historical tick-level data with very low latency. 

Market data can often be a pain point for many options traders, with some platforms requiring users to source their own market data feeds for an added monthly fee before being able to make use of all the features being offered.  

As seen above, at Devexperts, we have already done a great deal of the legwork, with ready-to-go integrations available for customers of the platform so that when a brokerage offers DXtrade to their customers, they can enjoy an all-in-one experience. The same holds true for the provision of market data.

Want to know more?  

To learn more about our options trading solution, the Devexperts development process, or about any of the other brokerage components offered by our business, please reach out to our team.