Algorithmic trading – Algorithmic trading or Algo Trading, simply means turning a trading idea into a trading strategy via an algorithm. The trading strategy thus created can be backtested with historical data to check whether it will give good returns in real markets. The strategy can be executed either manually or in an automated way. Algorithmic trading has revolutionized global financial markets, making them more efficient.

In developed markets such as the US, it stands at approximately 70- 80% of the equity market turnover. Algo trading India has also increased up to 49.8% of total turnover from 9.26% in 2010. In March this year, 44.8% of the cash market volume and 48.2% of the equity derivatives market was driven by algo trading, as per NSE data. On the BSE, 37.22% of trade in March 2018 was driven by algo trading.

Benefits of Algo Trading

The benefits of algo trading exist for everyone; including the layman investor, a professional trader or a financial institution.

Intellectual Engagement

Algorithmic trading automates the trading function which is incredibly advantageous to traders, which makes sure that the trades are carried out at the right time during optimal market conditions which increases the chances of high returns. The traders do not face the risk of missing out on important opportunities in the market.

Minimise Human Errors

Every active trader loses money to manual errors like punching wrong order quantity, wrong order price or sending the order in the wrong scrip. Algo platform minimizes such errors.

Minimize Emotions

Another key advantage of algorithmic trading is that it removes human emotion from the trading equation as the trades are defined by preset conditions. This is advantageous because human emotions can cause investors to make irrational decisions based on fear and greed.

Save Time

With fully automated systems, there’s no need for teams of analysts to monitor price action or market news. You could run multiple strategies, each consuming all the market data it needs to make optimized decisions. This frees you up to discover new markets and new strategies that can diversify your portfolios.

Backtesting

One of the biggest advantages of using machines for trading is the fact that it makes things systematic, hence enabling the possibility to perform backtesting more comprehensively.

Inculcate Discipline

Trader’s emotions are eliminated in algorithmic trading as the decision making occurs according to the trading algorithm, bringing in a higher level of discipline in trading.

Diversify Trading

Automated trading platform permits the user to trade multiple accounts or various strategies at one time. This has the potential to spread risk over various instruments while creating a hedge against losing positions. What would be incredibly challenging for a human to accomplish is efficiently executed by a computer in a matter of milliseconds. The computer is able to scan for trading opportunities across a range of markets, generate orders and monitor trades.

Speed

Due to the use of computers and technology to implement trades, the execution speed is increased tremendously which helps avoid slippage, which is the difference between the market price at the time when the order was placed and the price at which the trade actually gets executed.

Our Features

Customized OMS

OMS or an Order Management System is an electronic system designed to facilitate and manage the execution of trade orders using algo trading.

You can fill orders for various types of securities, track the progress of each order, and check regulatory compliance including real-time position monitoring of trades.

Every trade order includes details about the security identifies, order type (buy, sell, etc.), order size, order type (market, limit, etc.), order instructions (day order, fill or kill, etc.), and order transmission (broker, ECN, etc.).

Multi-Exchange Multi-Client Setup

You can create a multi-exchange multi-client trade execution strategy to intelligently execute entry-exit into the market using well-tested algorithms.

You can easily integrate multiple data feeds and trade in multiple exchanges. This will help you conduct effective trade order management for multiple client accounts based on a single or multiple entry trigger from multiple logics.

Trade Management

With customized trading algorithms, you can manage trade orders to make market-efficient transactions and get good returns.

Algo trading ensures a systematic and more disciplined approach for trading that can help you eliminate emotional pitfalls and survive in uncertain and highly-volatile markets.

You can track the progress of each order, do position sizing, and tweak your trading strategies to ensure that you get good returns in real markets.

APIs (Application Program Interface)

An application program interface or an API establishes a connection between your custom coded trading algorithms and preferred broker platform. APIs help you collect real-time pricing data and place orders.

Basically, APIs are crucial to implementing an automated trading strategy.

You can either use third-party applications that require access to broker APIs or develop your own automated trading systems to access pricing data and place trade orders.

Dedicated Support Desk

A dedicated algo development and support desk helps ensure a transparent approach to managing trade orders for multiple client accounts.

You can talk to financial experts and enquire about your trade orders and progress.

Inhouse Development

Algo trading is not just about trading. You also need to have knowledge of quantitative analysis/modelling as well as programming skills in C++, Java, Python, etc.

Trading knowledge about different types of trading instruments and trading strategies is crucial in creating robust trading programs. After coding the trading idea, the algorithms are tested and optimized to generate better results by changing some parameters.

Smart and well-tested algorithms can help mitigate risks and get you good returns in real markets.

Are you ready to make money with algo trading? Contact us now!

Why invest with Findoc ?

State of art Infrastructure

Dedicated Algo development and support desk.

Ensure a transparent approach to clients.

Best software / application platforms available.

Access to extensive research.

Large investment selection.

Our Testimonials

Frequently Asked Questions

Does algo trading work?

a. In simple terms, algo trading is making use of algorithms to structure as well as execute your trading strategies. To answer whether this works or not, put some highlights on the trading logoc. Algo Trading is responsible for about 60-75% of global trades while 40-50% turnover of Indian cash and derivatives market which is magnificent. If you are well equipped with notable coding skills (you may also outsource this to your broker) and your strategies are rewarding, you won’t find algo trading counterproductive. Since algo trading is free of human interventions, it can turn out to be even more beneficial as compared to manual trading.

Is algo trading profitable?

a. Algo trading can be immensely profitable due to several factors attached to it. Primarily, since this is technology-based trading the chances of any opportunity getting missed are almost zilch. Secondly, the speed of order execution is unparalleled as compared to manual ones which can altogether turn the deal from losing to winning in a jiffy. Next comes the ease with which the algo trading explore prices and provide liquidity. Finally, it comes with an advantage of no human intervention and hence no emotional conflicts whatsoever. Beyond the shadow of a doubt, algo trading can be conducive enough to be profitable in the market.

Is algo trading safe?

a. Since nothing in this world is perfect, algo trading also comes with some of the risks associated with it that can’t be ignored. To start with, the algo trading is completely dependent on your IT Infrastructure which can be problematic if the system is down due to any reason. Secondly, the system might not be configured to digest the unexpected happenings that are a part of the stock market. One of the other risks associated is the difficulty in tracing the error once coding and optimization are completed.

How do I become an algo trader?

a. For you to become a successful algo trader, you should be well-equipped with excellent software and a few necessary algo skills. Starting with the very basic of all, the skill of trading should be must, you should be trading to the core. A few of the other skills to focus as a beginner algo trader is being good at math, understanding your software and finally programming abilities. There are some of the pitfalls that you as algo traders should avoid. Some of them are making the model too complicated, unnecessary backtesting and optimizing.

Who uses algorithmic trading?

a. Algo trading can be done by anybody who has the upper mentioned skills and desire to accomplish. However, the popularity and demand amongst the institutional traders like hedge fund managers have no bound since it is extremely difficult for them to manage manually. Apart from them, the retail investors, quants, and Proprietary traders are also acclaiming the algo trading especially by the scalpers and even day traders.

What is the best algorithmic trading software?

c. The importance of algo trading software lies in the fact that you put your hard-earned money in that. It becomes extremely critical for you to select a good fit. A few of the important factors to consider while selecting the software are the availability of market data, latency issues, configurability, customization, and ease of writing programs. With the ever-increasing market of algo trading, the options have no limit. Still, a few of the top software that you can select from are, NEST, Greek Soft, uTrade, Trade Lab API, Amibrokers, MT4, Interactive Brokers, and E-options for options trading.

Algo Trading Blogs

Algo Trading India | Algorithmic Trading Strategies

Algo trading is on the rise across the global trading markets. Most noticeable is the India Share Market which covers about 50% of overall NSE values. There are many significant benefits to algorithmic trading (Algo trading) that should be considered by every trader looking for new ways to build their portfolio. ....

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Algo Trading: A Customized Investment for Future Possibilities

Algo Trading  “Why is Algo trading such a hot topic these days in the markets?” asked curious Rajesh while talking to his old friend Anil over a cup of coffee. Anil has been a mastermind in trading for the Indian markets for the past 15 years and always looks out for evolving technologies to gain profits from t....

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What is a more effective way of executing automated trading

In this age of advanced technology, the trading world has seen a tremendous growth in terms of digitalization. One of the modern-day system famous in the trading world is automated trading system. The automated trading system simply allows the traders to program specific rules for entries and exits to execute automa....

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Disclaimer The information contained in this file is provided for informational purposes only, and should not be construed as legal advice on any matter. The content and interpretation of the law addressed herein is subject to revision. We disclaim all liability in respect to actions taken or not taken based on any or all the contents of this file to the fullest extent permitted by law. Every effort is made to avoid errors. In spite of that, errors and discrepancies may creep in. It is expressly stated that neither Findoc Investmart Private Limited nor any of the contributors of updates will be responsible for any damage to anybody on the basis of this document. Readers are, therefore, requested to cross check with the original sources e.g. Government publications, Orders, Judgments etc., before taking any action or making any decision. These services are being provided through our group companies Findoc Capital Mart Pvt Ltd and Findoc Finvest Private Limited

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Important Message The information contained in this file is provided for informational purposes only, and should not be construed as legal advice on any matter. The content and interpretation of the law addressed herein is subject to revision. We disclaim all liability in respect to actions taken or not taken based on any or all the contents of this file to the fullest extent permitted by law. Every effort is made to avoid errors. In spite of that, errors and discrepancies may creep in. It is expressly stated that neither Findoc Investmart Private Limited nor any of the contributors of updates will be responsible for any damage to anybody on the basis of this document. Readers are, therefore, requested to cross check with the original sources e.g. Government publications, Orders, Judgments etc., before taking any action or making any decision. These services are being provided through our group companies Findoc Capital Mart Pvt Ltd and Findoc Finvest Private Limited

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