Whether you are a seasoned trader or a regular trader, you must have come across algorithmic trading. If you know how to start algorithmic trading, you can open a big door of opportunities. You can easily take advantage of advanced trading opportunities which would be missed in traditional or manual trading. In algo-trading, you can make your trades quick, efficient, and error-free.
Algo-trading is a method where the process of programming is used to trade on a trader’s behalf. Algo-trading involves computers, so you should be familiar with computer-based trading, programming, and statistics, too.
Table of Contents
What Is Algo-Trading?
Before entering the algo-trading arena, you must know what it is. As you possess both technical and financial knowledge, then understanding and starting an algo-trade will not be a huge task. In algo-trading, you can set up a computer with some instructions and conditions, and the trade will be automated according to your instructions.
As you trade online, setting instructions can be a remote task. Implementing algorithmic trading is difficult at first, but once you have it down, you can easily customise multiple strategies in your stock trading.
What Do You Need to Begin Trading Algorithms?
To start with online trading, you must have proper hardware and software as algo-trading is computer-based trading. The computer must have good configuration which will not interrupt the system in the middle of the trade. Along with that, the Internet connectivity should also be good. Here, you must have a faster and more reliable Internet network.
After the hardware part, you need to have good software. This software must have different indicators and flexibility to customise the trade as per your requirements. Brokers like Share India have a complete software solution for algo-trading. You can contact Share India for algorithm trading in the Indian stock market.
The capital and knowledge of a trader are concerned with trading strategies, and as a trader, you also need in-depth knowledge and a good amount of funds. The size of your capital investment will vary depending on your financial situation and goals. Knowledge about computer programming and financial expertise will help you understand the fundamentals of algo-trading.
The Algorithmic Trading Software
If you’ve been wondering how to get started with algorithmic trading, now is the time. As the algorithm of software starts with the trading community, you can learn and explore different strategies online and simply apply them to your trade.
Create a trading bot from scratch where you can use application programming interfaces (APIs) provided by your broker to automate trades and create algorithms. The APIs allow secure and reliable trading as long as you understand the concept and control your trade and its functionality. But if you wish to build your system or bots from scratch, you can create a bot from scratch.
Building an API from scratch will require a basic programming and coding background.
Use a Ready-Made Trading Bot
As a trader who doesn’t have a technical background but has an interest in trading and needs ready-made trading bots, you can get a ready-made bot from online brokers such as Share India to do algo-trading in the Indian stock market.
All you need to do is implement this software according to your trading needs. So, without any coding, you will be ready to enter the algo-trading world, where your trading will jump to a whole new level.
Easy Customisation
Many algorithm platforms include standard algorithms like the 50-day moving average, the 100-day moving average, and so on. But as soon as the average crosses the 200-day point, the algorithm shows the results. This result can be beneficial or not, but here, you can have the flexibility to do variations in the strategies. In order to improve the results, traders can manipulate the strategies and adjust the moving average parameters down to a 20-day or 30-day moving average as per their needs. If the program does not allow much customisation, then it’s better to change the software and use the customisation feature from another software.
Backtesting Features
You need to consider software that allows you to access historical data. Backtesting is a critical stage in the algo strategy. So, by implementing a backtest, you can test your strategy and remove all the errors and problems that you are facing in the following simulation. A backtesting process lets you think twice before implementing stock trading strategies in the real world.
Steps to Start Algo-Trading
Some things to think about before starting an algo-trade are as follows:
Understand Financial Market
For a start, you need to know your trade. You must be aware of where you are investing your money. A good amount of market and financial instrument research is required.
Coding and Statistics
If you know how to code or have an understanding of coding languages then you can explore more about algorithmic trading. Statistics also plays an important role here. If you know how to calculate statistical problems and advanced charting, then you can easily make better trading decisions.
Platform
You need to rely on brokers and software which provide all the necessary tools for algo-trading. Start algo-trading with a broker which offers support, a number of trading strategies, and an easy onboarding process. Lastly, the cost of the platform is also important.
Testing Platform
It is a smart choice to test a platform before choosing it for regular trading. You can monitor its functioning in the market and keep an eye on the real-world trade as well. Sometimes, the algorithm will not work as expected, or there will be some issues with the modification or working of the algorithm in the trade.
Updates
If your strategy is not working, you may need to make some changes. As you continue experimenting with codes and strategies, there will be a higher chance of mastering the algo trade in the long run.
If you don’t have enough knowledge, then you could learn online by reading relevant blogs, watching relevant videos, etc. To start, you need to understand the concept of the stock market. Beginning with the basics, you will need to backtest the various strategies and select one that meets your needs. Discover algo-trading and its pros and cons to know how it can help you trade smarter and more profitably.
Conclusion
Every sector requires change in today’s world of rapidly evolving and adapting new technology. Traders also need to evolve the way that they trade. Many institutional and retail investors use algo-trading methods for their trading activity.
So, if you start with algo trade, you should note three things that it typically would have, which will be statistics, financial computing, and quantitative trading strategies.
