The dizzying boom of algorithmic trading

The Algo trading India, a contraction of algorithmic trading, is gaining importance in stock markets. If it has advantages, it is not without risk, which leads the regulators to take an interest in this significant financial phenomenon.

Algo trading, a contraction of "algorithmic trading" (also called "high-frequency trading") is gaining importance. This practice is based on "machines capable of executing orders at full speed and thus taking advantage of minimal price differences.

A decade later, the boom in Algo trading is spectacular. In the United States, more than 75% of financial institutions and 95% of institutional traders use algorithmic trading strategies. The idea quite laudable behind this theory is to put aside emotions, as well as all human errors (fatigue, distraction, etc.) to keep only the heart of trading: the rules.

The advantages of automatic trading

- First, the algo trading in India solves one of the most significant problems of the trader: his psychological weakness. A robot will indeed respect the rules of your trading strategy. For example, thanks to him, never again will a stop loss move and trade will never be taken impulsively.

- A robot trades relentlessly and without getting tired. Even if he does not sleep at night (useful for the Forex), it will be just as fresh the next day. He will never miss a trade opportunity 24/24 and will not make false manipulations by fatigue.

- A trading automaton thinks quickly, and well, it allows performing millions of operations per second, which leaves humans far behind. It will enable you to act faster than others, and simultaneously monitor a massive amount of different parameters and markets.

- Finally, a robot does not need you to work. You can go to work, go to bed (I let your imagination complete the list) while respecting your strategy without complaining.

Variety of Algo trading system

We usually talk about algo trading companies in India when it's the second step, the execution, which is automated. The trading algorithm relies on a sophisticated economic and mathematical model to analyze the market and execute a predetermined investment strategy. 

The simplest example is the trading algorithm, whose function is to split orders for large quantities into smaller orders ("child orders") and issue them at a specific time to one or carefully chosen platforms in order to optimize execution conditions (purchase or sales prices and transaction costs).

With high-frequency trading, automation wins the decision process itself, but at a different level. The algo trading in India analyzes real-time market data, identifies imbalances or inefficiencies regarding liquidity or price, translates them into trading opportunities and implements them. 

Automation and very low response times make it possible to take advantage of minimal variations and of very short duration, which a human operator would not have been able to exploit or even detect.

Variety of automated trading systems: All program advisors can be divided into these main groups:

•Programs that replicate transactions. Thus, they can focus on the activities of any trader or combine information on transactions at the same time, a few traders. 

•Programs that can create their trading signals. To this end, a technical analysis of the binary options. We think a program of this type is preferable, since those using less dependent external factors.

•Trade program - a reliable assistant, ready to replace anytime you are not in the mood or not able to trade. In short, everything is almost like trading in other fields of activity: the program cannot replace a human being in its entirety, but the skillful use will greatly facilitate his life!

What is a reliable proprietary trading firm considerations?

Any reputed and known proprietary trading firm has the skills and knowledge to provide you risk management strategy, knowledge, as well as support, while trading. This also includes an enhanced buying power as your account keeps growing to set stop losses on your trade deals. The proprietary trading firms leverage model helps you monitor the trading activities and provides you a comprehensive understanding of what will work and what will not in a virtual good time.

The best of the proprietary trading India will get access to head traders that are available directly on the trading platform or remotely to the investing person. This remote presence is yet another significant advantage for trading with the proprietary trading firm. It is a great option as most of the traders these days prefer to trade from their homes directly.

Traders can follow the senior traders from their groups and watch to learn how they are trading successfully live. Though the ultimate trading decisions lie on you, you will be able to follow up under concrete guidance and leadership of the senior members and come with better trading results.

Any proprietary trading firm leverage model has the right and is required to as well, to keep a certain amount or share of the profits you are making. This percentage depends on some factor, but you should seek those firms that payout around 80% or more of your profit part.

You, as a customer too, should spend some time on understanding and research how the proprietary trading in India work and how they are different from the retail firms or each other. Education, support, and capital are three essential factors."

How to choose the right stock broker

Choosing a broker is one of the foremost requirements for investing in a stock market. A broker is an individual/ organization who are registered members of stock exchange. They act as an agent and have license to buy and sell shares on behalf of people. Selecting the right broker can be quite challenging, especially for a novice investor as not all brokers are right for all investors.

Here are few tips on how to select the right broker that offers fully integrated brokerage services in India.

•  Credentials of broker: Reputation of a broker is very important. Check if there are any complaints against the broker on SEBI online portal. If possible also seek for opinion frompeople who have dealt with the broker.

•  Brokerage: Generally people select broker on the basis of commission on trade. That should   not be a criteria on how a broker is to be selected. A broker should be aware of likes, dislikes, risk profile and favored asset class of an individual so that they can give personalized tips.

•   Range of trading segments: There are different financial products (Equities, commodities,      mutual funds, etc.) that people like to trade/invest. Select the prefer red trading product and see  what different stock brokers can offer.

•  Broker for Institutional clients: For Institutional clients, the ideal broker is the one who can support high trading frequency. Apart from discounts and fee, broker’s trading platform, analysis tool and data offerings are also the important factors to be considered. NSE also offers collocation facility for high frequency traders which allow them to place their computers close to NSE exchange’s system and save trading time. However, NSE colocation facility can be used only for DMA and ALGO trading on NSE. In order to provide this facility to a large number of traders, NSE rents out full rack as well as half rack of computer space.

Significance & Benefits of Arbitrage India Trading

Arbitrage India trading involves buying and selling stocks within the shortest span of time in time. Such Arbitrage opportunities in NSE DMA are available when the price of a security is different from the same or similar security on another financial market. 

While getting into an arbitrage trade, it is important to know that the quantity of underlying asset purchased and sold should remain the same. Traders capture only the price difference as the net pay-off from the trade. The trader also calculates that payoff is sufficient to cover the costs involved in executing the trades (i.e. transaction costs). Otherwise, it won’t make sense to initiate the trade.

For instance, there is usually price difference between the S & P futures and stocks as the stocks trade on the NASDAQ and NYSE while the futures trade on the CME. 

Suppose there is a disparity between the S&P 500 stocks and S&P 500 futures. If the S&P500 stocks are pricing higher than the futures the trader will sell the stocks and buy the futures at the same time to make risk free profits. It is essential to keep in mind that such opportunities usually only last a few seconds since most of the arbitrage India trading has already been taken over by algorithm-based trading in matured markets. It is easy to spot the algorithms and capture the arbitrage opportunities available in the market. Arbitrage India trading allows traders to enjoy risk-free returns and there is no transaction or transportation cost incurred in it. Although, arbitrage strategies seem easy to identify but these are very complicated in the real world. 

Many institutions possess complex and expensive trading software so as to keep a keen eye on such opportunities and grab the opportunities as soon as they arise in the market. 

Tips On Choosing The Best Algo Trading Brokers In India

It is important to choose the best broker so that you can obtain the maximum return on your investment. In many cases, the investors fail to get the right return because of the lack of skill of the broker. This is the reason you must be highly careful while selecting the broking house or the broker.

There are very few trading firms that can offer you the help of Algo trading brokers in India as per your requirements. Here are some useful tips on getting their help.

• Ensure that the company has its own algorithm or computer program that helps them to determine unique trading strategies for their clients.

• Check the reliability of that algorithm in the market. Ask them to show you the result of their algo trading and calculate the ratio of their success.

• Make sure that the broker is able to offer you service whenever you need it. He must have complete knowledge about the current market of share trading as per NSE DMA.

• Check what types of services you can expect from them. There are companies that offer multiple services like asset management, execution services, proprietary trading, etc. Always remember that only a capable, experienced and skilled broker can offer you the right service in all these sections.

• The broker must have a strong track record in the present capital market India. Then only they can guide you at every step of share market investment and ensure that you obtain a good return.

It will be great if you start your investment with the nominal amount with a certain company and enhance that amount gradually if you become satisfied with their services.