Is Algo Trading In India Used In The Indian Capital Market?

Posted by Nagaraj SEO on February 24th, 2022

Algo Trading India is very widely used in the developed market. Algo trading India is introduced in 2008 and from then this is a common trading mechanism in the country. With certain conditions, SEBI has allowed Algo to trade India. It includes a lot of risk management systems and even annual audits of brokers systems by CISA which is Certified Information System Auditors. This is machine-driven trading that enables the traders to trade based on the data fed into the system or it may also trade automatically on behalf of the traders.

What is the basic job of Algo trading India?

In a stock market in India Algo term is derived from Algorithms which are software programs mainly designed to gather data required for trading and back-testing the profit and loss historically. The system also trades automatically on behalf of the trader.

To bring the data from the market as input and feed this into the system. Based on this data order is placed automatically based on the trading signals which are generated by the system.

Algo trading India is a concept that is widely accepted in the Indian Capital Market

In Algo Trading India if the user is applying algo to backtest tactics or produce manual alerts, the only directive that is required is to be worried about is the exchange data vending regulation. A brokerage firm is only allowed to give data to their trading customers for free. There is only one challenge if anyone consumes data from any broker, it cannot be republished without exchange approvals.

Advantages of Algo Trading India

Algorithmic Trading India is a new concept but is widely used in the capital markets in India as the program used for such mechanism is user friendly and takes much less time for trading high volume portfolios.

• Trading is carried out at the best price.

• Algo trading India does not involve any human psychology.

• Reduces the transaction cost.

• Order placement in trading is accurate and instant.

• There are no manual errors during placing the trades.

• Such trading can be carried out in multiple markets and in involves automated checks.

Common functions of Algo Trading India

Algo Trading India involves many forms of trading and investment.

. Midterm to Long term investors uses Algo trading for investing in pension funds, insurance companies, mutual funds. Algo Trading is also used to buy stocks in large volume.

. Market makers, speculators, and arbitrageurs benefit a lot from Algo trading. They can create lot of liquidity for sellers in the market.

. Systematic traders – trend followers, pair traders, hedge funds find the program very efficient and they let the program trade automatically on their behalf.

Technical requirement for Algo Trading India

The user must implement the algorithm by using the computer program for algo trading. The following are the basic requirements for Algo trading.

. Computer programming knowledge

. Network connectivity and access to the trading platform

. Access to capital market data feedbacks that are checked by algo.

. The ability and the infrastructure to backtest the system.

. Access to the available data for backtesting depending on the complexity of the rules of algo.

Conclusion:

Algo trading India is a new concept and not very easy to execute and simple. Experienced and expert algo traders can be a good help to start with.