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Who Designs the Stock Trading Software for Hedge Funds?

The activity of a hedge fund is based on a free choice of investment strategy and necessary instruments. Foundations can take a variety of management approaches that are ultimately profitable. The difference between these institutions of the stock market is that even if the market falls, they can remain in positive revenue. This is because there are plenty of financial opportunities and a huge number of investment options to apply. This freedom of choice is the main feature and principle of hedge funds.

After an investor becomes a contributor to such a fund, practically nothing depends on him. After receiving initial funds, the management of the hedge fund proceeds to the formation of investment portfolios, entering into transactions in various markets, guided by the company’s strategy.

The distinguishing features of one hedge fund from another usually lie not in the number of markets entered, and not even in the size of funds, but primarily in the trading strategy. Choosing a strategy is an essential component of a fund’s success in the market. This step must be taken even with algorithmic trading, in which trades are opened automatically. The program’s action plan is put into the algorithm during the development or customization of a trading robot.

Stock trading software helps foundations with:

  • real-time market simulation to help you learn how to adapt to market fluctuations;
  • backtesting so you can test trading strategies using historical market data;
  • development of a trading or investment plan.

Having accurate information helps you avoid making emotion-driven decisions. The data provided by stock analysis software helps you validate stocks, make informed choices and execute trades. Sometimes you can even do it right inside the software itself.

In their work, hedge funds can use different software to cover different tasks. However, two main areas – where you have to have reliable software – are the generation of trading ideas and the implementation of these ideas in the markets.

There are many small to mid-sized trading platform software firms that perform most of the core functions: trading, portfolio management, risk management, regulatory compliance, accounting, charting.

Some funds stick to working with industry leaders like Goldman JP or IB, while many big players use Bloomberg or Reuters, which provide full analytics for execution-oriented solutions that are now included in Bloomberg Terminal or Reuters Eikon, respectively.

There are hundreds of other software vendors with specialized services. Some of the more well-known software providers are Deltix, MetaQuotes, Backstop, Hedgeguard. They provide a variety of software for research, risk management, CRM and account management, due diligence, quantitative algorithmic and automated trading systems, and various other aspects of a fund’s life cycle.

They are specifically targeted at asset managers, family offices, asset managers, support stores and start-up funds – all in the area of ​​alternative investment management.

It is difficult to imagine a successful hedge fund that will use third-party software to generate a trading strategy. More often than not, these ideas are generated using proprietary software that runs on proprietary models. The data, in this case, can be borrowed from a widely used portal like Bloomberg, which can be thought of as conventional data retrieval software.

But even if the secret of success lies in generating trading ideas, then using the right trading software used to make trades is what allows funds to achieve this success. Even the most talented and trained rider cannot prove himself without a strong and reliable horse.

Software developers of tools for testing and implementing trading ideas


Deltix is ​​a company founded in 2005 specializing in the development of software and services for financial institutions. Deltix works with hedge funds, private trading firms, investment management companies, and banks.

Deltix is ​​a leading provider of quantitative research, algorithmic and automated systematic trading software and services. Deltix software provides an environment for processing or developing and implementing tightly integrated technologies for generating and / or executing strategies.


MetaTrader is an information and trading platform for traders that allows them to trade on financial markets.

The trading platforms developed by MetaQuotes Software Corp. have long gained popularity among traders from all over the world. The most famous products are MetaTrader 4 and MetaTrader 5. Many people mistakenly believe that MetaTrader 5 is an updated version of the previous platform, but there is a significant difference in the terminals: MT4 is intended for trading on the currency market, MT5 is a universal product that works both with currencies and stock exchanges.

In 2020, a separate product, MetaTrader 5, was released for hedge funds: a platform that gives investors real-time access to the performance of their assets. Hedge funds may also be interested in MQL5-based functionality and a cloud-based system for fast forecasts based on historic market data.


Backstop Solutions Group provides CRM software suites for investment managers, portfolio managers, hedge funds, endowments, pensions, and more.

Features of Backstop include management of sales and marketing operations, partnership allocation, general ledgers, portfolio planning, private equity, and more. Backstop’s customer relationship management (CRM) tool allows asset managers to track client and partner activities, research materials, create investment documents and communicate via emails.


HedgeGuard provides trading and portfolio management software as well as middle office services to Crypto Asset Managers.

Its cloud-based Portfolio Management System and outsourced Middle Office service allow users to achieve optimal portfolio management and operational efficiency. These solutions have been built by ex-buyside professionals who know the challenges faced by portfolio managers in today’s increasingly competitive environment.

Original Source: ” Who Designs the Stock Trading Software for Hedge Funds?”, Data Driven Investor, June 30 , 2021

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