By FMTeam The field of algorithmic trading or popularly known as algo trading has opened itself increasingly to the retail investor in India via technological advancements and regulatory frameworks. If you are considering entering the domain of algo trading, here is a detailed guide to you navigate through the basics.
Understanding Algo Trading
Algo trading is carrying out orders in various ways using computerised assistance, based on certain criteria such as prices, time, or volume. This has added to the automation of trade execution for better efficiency and avoiding emotion-inflicted human decisions in trading. Algorithmic trading is regulated by the Securities and Exchange Board of India (SEBI) to protect investor interests and to maintain the sanctity of the markets.It is a well-known online trading platform India that is easy to use for both new and experienced traders.
Essential Tools and Platforms
To embark on your algo trading journey, you can assess the following components:
1. Trading Platforms
Some platforms like Mastertrust are providing one-stop solutions for algo trading. They provide powerful Trading View charts for easy testing of strategies and trade execution. This platform helps users make decisions in less time by making use of data-oriented strategies, custom indicators, and trading from charts.
2. Programming Knowledge
It is useful to study a programming language as Python. This knowledge would let you document customised strategies and embed them within a trading framework. However, if you lack coding experience, then Mastertrust offers well-designed interfaces for laying out algorithmic strategies.
3. Backtesting Tools
Before implementing a trading strategy, it is essential to assess its effectiveness through historical data analysis. Mastertrust’s platform supports comprehensive backtesting, enabling traders to evaluate their strategies’ performance across different market conditions.
Regulatory Considerations
SEBI has established guidelines to regulate algorithmic trading in India. The key points include:
- Approval and Monitoring: The broker shall seek approval for each algorithm for client use and ensure mechanisms for proper monitoring are in place.
- Audit Requirements: There will be periodic audits on algorithmic trading firms to ensure their compliance with the standards set by regulations.
- Risk Management: The implementation of sound risk management practices is required to decrease market disruptions.
It is essential to stay updated with SEBI’s regulations to ensure your trading activities remain in compliance with the limitations.
Steps to Begin Algo Trading
Educate Yourself: Learn the basics of algorithm trading with a focus on how the market and tools work.
Choose a Reliable Platform: Choose a platform that fits your needs. For instance, Mastertrust is a full-fledged trading platform for citizens and traders of all levels.
Decide Upon or Choose a Strategy: Go for a strategy that you like, or create your own trading strategies. Mastertrust-based indicators can help you choose or build your strategy within the Mastertrust system.
Backtest Your Strategy: Confirmation for your strategy can be done from an examination of the strategy through comparison with the historical data.
Start Trading: Go and live with the strategy you’re good with, keep observing, and adjust it whenever necessary.
Conclusion
There is huge potential in algorithmic trading in India for the trader who wants to exploit the technology for better execution of trading. Once you are acquainted with the tools, platforms, and regulatory framework, you can discover the journey to algorithmic trading. Mastertrust offers the infrastructure and services required to find your way in this fluid trading environment.