Over the years, algorithmic trading seems to have risen in popularity in India. An increasing number of people are looking at this concept and showing interest in pursuing this trading technique.
The concept of algo trading is not something new and has been in existence for quite some time in developed countries like the U.K and the U.S. If you’re interested in knowing more about algo trading and whether it is possible to use algorithmic trading in India, here’s something that can help you out.
Let’s first begin with a brief overview of what algorithmic trading is.
Algorithmic trading involves the usage of specially coded computer programs to execute trades in the stock market. Unlike the regular way of trading, where every single decision and activity is carried out manually, algo trading seeks to automate everything from trade decisions to order placement. Since it requires writing lines upon lines of computer code, a good foundation or understanding of computer programming languages is necessary.
Now that you know what algo trading is, let’s quickly take a look at the general process that traders use to implement this system. Firstly, they write a computer program using any one of the programming languages like Java, Python, NodeJS. This program is designed in such a way that it allows them to automate every single trading activity.
For instance, algo traders can construct a program in such a way that it automatically purchases a specified number of shares of a stock when it crosses a resistance level or tests a support level and sells the same when it hits a resistance level or breaks through a support level.
They then integrate the program that they constructed with their trading account. This allows them to place orders automatically through their trading account from their specially designed computer program without actually accessing their trading platform. However, integration of their program with their trading account also requires extensive levels of coding and can run into several problems if not done right.
Of course. It is definitely possible to successfully implement algorithmic trading in India. One of the best and easiest ways to start is to make use of trading APIs. Wondering what that is? Here’s some information.
APIs are essentially interfaces that allow two or more different computer programs to communicate with each other These trading APIs are issued by stock broking companies to make it easier for traders wanting to start algorithmic trading in India. These APIs do away with the need to write complex lines of code to integrate the trader’s computer program with the trading account.
With trading APIs, you can get access to live market data feeds, execute trades automatically through your computer program, and manage your account data.
Algo trading is still in the nascent stage in India. That said, many traders in the country have already started to experiment and test out their own programs with varying degrees of success. Algorithmic trading or not, are you interested in investing in the stock market? If so, get in touch with Motilal Oswal right now to open an online trading and demat account for free.