Algo Trading - Algorithmic trading | Robotic trading

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 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.

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.

 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.

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.

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.

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 were 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 institut...