Future of Algo Trading In India – Remodeling the Stock Market
With a boom in the technological advancements in financial market and trading applications, the high-frequency trading and algorithmic trading is accepted and welcomed by exchanges all across the world. Within a year, it is one common way for trading in developed markets and is rapidly spreading in our developing economies as well.It’s necessary to learn algo trading to trade the markets “profitably”. The trading
uses the automated and pre-programmed trading systems to execute the orders in stock exchange. From 2008, algorithmic trading in India has gained huge prominence and many big institutions are using it very efficiently for their benefit so much so that good % of market turnover is done through the same. Hence it’s time we get into the mainstream of automated trading especially now when the exchange itself is thinking to
extend it trading hours from existing 6 ½ hours to approx. 13½ hours. So this is not humanly possible for any individual to trade for such long hours.Its technology which now seems to be so alien rite now will become need of the hour for all institutes &
individuals who are actively trading..
The Indian trading market provides the decently good opportunity to Algo traders with their:-
Difference Between Automated Trading, Quantitative Trading, Algorithmic Trading & High-Frequency Trading
Algorithmic Trading – This type of trading turns the trading idea in algorithmic trading strategy with an algorithm. This trading strategy created can also be back tested with the historical data that will check if it can give good returns. Algorithmic trading method is executed manually or automated way.
Quantitative Trading – The quantitative trading involves making use of the advanced statistical and mathematical models to executing and creating the algorithmic trading plan.
Automated Trading – The automated trading means totally automating the submission, order generation, and order execution process.
High Frequency Trading or HFT – These trading strategies are categorized as the low, medium and high frequency trading strategies according to the holding time. The high frequency strategies include algorithmic strategies that get executed in the automated way in fast time, generally on the sub-second scale. These strategies hold the trade positions for the short time and make the wafer-thin profits every trade, executing many trades daily.
How does algorithmic trading works?
The algo trading India is the process or defined set of rules that are made to carry out some process. The algorithmic trading makes use of computer programs for trading at the volume based and high speeds on many preset criteria, like stock rates and market conditions.
For example, the trader may use algorithmic trading India to execute their orders fast when some stock reaches and falls below the specific price. Algorithm may dictate on how many shares you can buy/sell based on these conditions. When the program is in place, trader then can sit back and wait, knowing that the trades will take place automatically when the preset situations are met.
Benefits of Algo Trading
Algo-trading offers following benefits:
Instant and right trade order placement (thus high execution chances at the desired levels)
Reduced stress levels.
Trades timed instantly and correctly, to avoid any significant changes in the price
Reduced risk of the manual errors when placing any trades
Simultaneous automated checks for multiple market conditions
Decreased possibility of any mistakes by the human traders that are based on the emotional and the psychological factors
Will be back tested, on the available real-time and historical data, and see if it’s the viable trading strategy