Algo-trading in stock market: This system identifies trends, minimises risks and executes order by software—All you need to know
'Algo-trading is the fastest evolving technology with incredible & intelligent functionalities that improve your trading performance and speed effectively'
Imagine if we say that there is technology that can help you trade better online? What would you think?
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Yes, Algo-trading is the fastest evolving technology with incredible & intelligent functionalities that improve your trading performance and speed effectively.
Algo trading or Algorithmic Trading is a method devised by professional traders and stock brokers to trade in the equity markets in which orders are executed by software on their own with predefined strategies or methods.
Algo trading has given an excellent research, expert additions, and immense support to the trading community, and is popularly used by more than several traders and investors now.
Honestly, Algo-trading is phenomenal because it works brilliantly and it doesn’t need any human assistance. Studies also show that there is a massive difference between how a human trader trades and how Algo-trading works.
So, you must be wondering how to identify trends and strategies accordingly in your favour? Are there any parameters that decide strategies?
These strategies are based on volume, price, resistance, support, or any other factor that the trader or investor is comfortable with. Usually, the investor will always pick a strategy that seems more confident, according to her. Now the advantage is that because Algo consumes data, it becomes easier to identify the ongoing trend. It is otherwise a challenge for an investor to act fast while analyzing large chunks of data in less time.
Let's understand this with an example: if you are an investor and have applied 10 different strategies on stock, here we are talking about one stock, and then the system will suggest variations.
Out of these 10 stocks, if 7 show buy signals and 3 shows sell, it becomes evident that you have to buy the stock. The reason is the same because the majority of the strategies are showing you buy signals, so yes it can be favorable.
This is another advantage of our Algo-based trading: you can use multiple strategies at once and decide the net outcome of the strategy.
Hemant Sood, Managing Director, Findoc Group and an Angel Investor in Start-ups
(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)
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