Algo Trading Strategies

Although it may seem pretty small in the world market as of now, but the Indian stock market is on am exponential growth curve. With the emergence of startups and other small and large businesses in the country, there has been a growth in the number of investors. In the present scenario, even the people belonging to the middle class are getting interested in the investment business, and this growth has been further augmented by the introduction of automated trading in the Indian stock markets. The growth has been so quick, in fact, that within a short span of time, 40% of all trades that happen on the National Stock Exchange (NSE) are being done with the help of automated trading by employing algo trading strategies. But before we delve deep into studying the Indian stock market, let us first understand what a stock is. A stock is a kind of security that represents an ownership share in the company. When the companies are looking forward to accomplishing feats that require substantia...

Investment and trading are not the same, even though a lot of people are under the impression that they are. To a layman, both these terms sound similar but to experienced traders, who have been into investment and automated trading as well as manual trading for years, they are completely different things.  A key difference between these two relatively similar words is the time horizon. Investment, usually, is for a longer period, whereas, trading can be done on a monthly, weekly or even daily basis (with the help of intraday trading strategies). If you happen to venture into a stock market, you wouldn’t hear too many people calling themselves an intraday investor or a long-term trader. Intraday trading strategies are algorithms that are written in order to generate maximum profits on trades with minimum risk in a given stock market. Those algorithms, however, can’t be haphazardly written and implemented in the market as a lot is at stake. First, they have to be passed by a Cha...

Not long ago, most of the trading in India used to be done manually. But ever since automated trading entered the arena, more and more people have gravitated towards it and now, nearly 40% of all the trades that occur that the National Stock Exchange (NSE) are done via algo trading strategies . The reason why algo trading has become so popular in such a short span of time is that it provides unparalleled speed, accuracy and efficiency that just isn’t possible with manual trading. Since automated trading is done with the help of complex algorithms, the speed and accuracy is maximized while the risk factor of human biasness is minimized at the same time. Not to mention that algo trading strategies help generate massive amounts of profits for the trader because the number of trades that can be executed within a given span of time are enormous. Algo trading utilizes complex algorithms that have been backtested on previous data to generate great liquidity for the trader. The trading alg...

Those who look at the past with a careful eye are the ones who are best prepared for the future, and this applies as much in automated trading as any other aspect of life. Are you wondering how? Let us explain. Whenever an algorithm is written from intraday trading strategies, it cannot be simply implemented in a real life situation. The reason is that the stakes are so high in the trading business, mistakes cannot be afforded. Therefore, once the algorithm is passed and implemented in trading software, it is backtested. The process of backtesting involves using a new algorithm to make trade decisions on past data. Since the results are already known, it works as a litmus test for the efficiency of the algorithm. If the algorithm helps make the correct buying and selling decisions on the past data, it is likely that it would work on the future data as well. Previously, backtesting was an ardous and lengthy process as it was done manually. But nowadays, three are many softwares that...