The computerized order flow was introduced in the year 1970 but executed in India in 2009. Algorithmic or Algo Trading often refers to Automated Trading System. The name itself carries the meaning of the system. Computers execute orders automatically by following traders’ instructions. The popularity of this system become so high that world’s trading one-third percent comes from Algo Trading. Previously, I have written a content based on Automated Trading System, you can check the write-up for basic information purpose. Today along with the definition of AT, there are steps to start Automated Trading in NSE or MCX.
What is Algo Trading?
Before steps into the function of Algo Trading, you need to understand Algorithm first. An Algorithm refers to a series of data which a computer follows to calculate specific things. Sometimes, manual speeds and frequency are not enough, the automated trading system was introduced for this reason. Hence, traders instruct the computer by providing certain specific codes or algorithms. After getting pre-programmed instructions, computers execute orders through Algo Trading.
Automated Trading Strategies
So, there are numbers of strategies of Automated Trading System as stated below:
- Arbitrage Opportunities
- Mathematical Model Based Strategies
- Volume Weighted Average Price (VWAP)
- Percentage of Volume (POV)
- Sideways Market Strategy
- Trend-following Strategies
- Index Fund Rebalancing
- Trading Range (Mean Reversion)
- Time Weighted Average Price (TWAP)
- Implementation Shortfall
How to Do Automated Trading In NSE Or MCX?
Amibroker= Amibroker+Pi Bridge+Pi
Pi= Conduct through Pi Bridge
Kite= Amibroker+Kite Connect+Kite
Excel= Excel+Pi Bridge+Pi, Excel+Kite Connect+Kite
Python= Pi Bridge+Pi, Kite Connect+Kite
Besides these above process, there is another option Zerodha streak by which you can trade without any coding language. Zerodha launched this system to promote the easier Automated trading system. On the front page of Zerodha streak, traders can find a video link. Traders can get a basic guidance regarding this particular trading.
Basic Guide Video
There is a classic way to to do Algo, that is Nest Trading. A basic guide video is attached below on Nest trading. The process is Nest Trader + Nest Pulse or Nest Trader + Amibroker + Nest Plus. The trading platform performs Algo from Net Plus or from Amibroker.
Points to Remember
- If traders want to play safe, they can apply Algo strategies on a bulk of securities, known as Basket.
- After adding baskets, run the backtest option to test the strategies.
- In order to get a secure and strong server option, connect VPS (Virtual Private Server).
- Though it is a computerized trading system, manual checking is quite important after a certain time span.
However, if you want to know more about this trading system, you can check out the link below.
Besides this, there is a PDF of SEBI (Securities and Exchange Board of India) on Algorithmic Trading and Co-location.