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...

Automated trading, also referred to as algo trading, utilizes computer algorithms to make trades. Since the computers are much faster, precise and emotionally unbiased, they can really help increase the efficiency of trades. In fact, algo trading strategies have become so popular that almost 40% of all trades conducted on the National Stock Exchange (NSE) are done by using automated trading. Let us take a look at some of the advantages of algo trading that makes this method of conducting trades so popular.   Advantages of Algo Trading: To answer the question of whether or not algo trading is right for you and whether or not you should conduct intraday trading with the help of computers, we need to assess the pros and cons of the method in question. There are undeniably some cons related to algo trading but they are massively over weighed by the pros, which include:   Speed One of the best advantages of automated trading is that since the algorithms are already dec...

Trading is one of the most favoured methods to secure finances and to earn more money across the globe. Though the risk factor is high, with the little study of the market situation, it becomes easy to overcome the risk. Earlier, the process of trading was manual. Buying, selling, even the calculation of risk, was done manually. From the late 90s, to overcome human errors and to reduce costs digital trading came into play. Hence called Automated T rading. Although the use of computers was restricted only up to perform actions as per the commands, it was not suitable for risk management. To manage the risk, algorithms (set of rules for problem-solving operation) were introduced in computer programming. Also, algorithms were used to buy/sell assets at the right time, price and quantity. The process is called Algorithmic Trading . It is the upgraded and more accurate version of Automated Trading . Industry reports suggest algorithmic trading market size is expected to grow from $11.1 bi...

In the world of intraday trading, Algo trading strategies are fast replacing the manual trading strategies amd are becoming popular day by because of a plethora of advantages that they bring to the table. Algo trading strategies have existed in the market for more than three years now, but there is still a large number of traders and investors who are unaware about its advantages over manual trading. Let’s take a look at some of those advantages that are revolutionizing the world of automated trading.   The tendency to get fatigued Humans have a tendency to get fatigued, especially if they have to do a repetitive task. Because of this, no human, regardless of how great he is at his job, can ever deliver his 100% consistently. This is where computer programs emerge as a viable solution. Since programs aren’t capable of feeling fatigued and cannot get bored or disinterested, they can process more information in the same amount of time. This means more trading and more trading m...