How algo-trading is changing the way people invest in stocks market
Stock market investors are always in search of opportunities that can help them make better investment choices. Mostly, people either follow some experts or some news reports or even do research of their own to decide the stocks they want to invest in.
Stock markets are definitely one of the best investment options that people consider to get better than average gains. However, at the same time, it is volatile and therefore, risky. Not only novices, even market experts have lost money in the stock markets, but having said that generally investors have successfully multiplied their wealth by investing in equity.
Stock market investors are always in search of opportunities that can help them make better investment choices. Mostly, people either follow some experts or some news reports or even do research of their own to decide the stocks they want to invest in. However, over the last few years, a new trend has taken root in India and that is related to algo-based trading systems.
"Algo-trading is a machine trading where a strategy is put into a system and trade happens based on the strategy. This is basically a mathematical formula based system where no manual intervention and emotions work," said Anuj Gupta, Deputy Vice President - Research (Commodities and Currencies), Angel Broking Limited.
Gupta also said that algo-based systems are very useful for traders who want to trade in the market with high frequency and without manual intervention and emotion.
Companies like Zerodha Streak, Kuants, ODIN, Amibroker, and Ninja Trader are providing people the experience of algo-trading which is becoming popular among investors not only because it's fast but also because it's data-driven and provides emotion-less predictions.
A company called Kuants, is the new kid on the block. It is a stock market back-testing system founded by two IITians, Ayush Gangwar (24) and Mohit Bansal (25) in July 2018. Kuants uses algorithmic trading to provide buying and selling ideas using computer programs.
"Kuants has a web-based application which is a ' ready to use' tool with the software, data feed and connection to the stock market already in place so that people focus more on developing the core algorithm rather than the auxiliary technology aspects," said Gangwar.
The application is design such that no programming or coding is required to develop a strategy.
"The core product of the company is the Backtesting System which is a replica of the historical stock market. It lets users know if their trading idea is good or bad by testing it on the historical data of the stock markets. Just select the stock and write your trading idea and submit. Instantly within 3 mins, the entire analysis of the strategy is done by the backtesting system. The entire architecture is cloud-based, accessible anywhere any time ready to use," said Bansal adding to his partner's response.
He said that once a successful trading idea is verified by the system, it can be traded live in the markets. be that as it may, the ultimate proof of the pudding is in the eating. So, are there any takers for such a system in India?
"Currently, there are more than 900 registered users on our platform. The back-testing system is currently free for all our users. We plan to monetise it in the future through a monthly subscription option. Our current focus is to ensure price doesn't act as a constraint to people who want to take up the wagon on algorithmic trading," said Gangwar.
Kuants has 1.5 years of historical data fed into it and can do a robust testing of their trading ideas within minutes, claim the founders.
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One of the users of the Kuants, Nilanjan Sarkar said that his experience with the system has largely been positive adding that it still needs some improvement.
"I have been using the Kuants system since some time and till now I experience has been largely positive. Kuants can become one of the best systems in India for traders in future in price and function. However, the system still needs improvements like adding the Options market in their program" said Sarkar.
The founders said that several new features will be added to the system by the end of this month.
The growth of the algo-based trading in India indicates that soon this will become one of the most popular back-testing system for making trade decisions.