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Algo Trading

Algo Trading Presentation Equity

Algo trading

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.

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.