| August 13, 2021
5 important strategies of Algo-trading that you should know!
Imagine if we say that there is a technology that can help you trade better online? What would you think?
Yes, Algo-trading is the fastest evolving technology with incredible & intelligent functionalities that improve your trading performance and speed effectively.
Algo trading has given us excellent research, expert additions, and immense support from the whole team, and we are glad to share that it 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.
We have been working in depth with experienced people in the industry. Our discussion resulted in one common question and we know you too have that in mind right now.
Are we able to eliminate errors or chances of errors while trading with Algo-trading? So, here we are telling you that our Algo trading method will help you reduce the chances of errors in great numbers. Furthermore, you can do a comparative analysis between manual and algo-based trading to check even the minute differences. Surprised but it's true. Gone are those days when you had to spend more than 12 hours to understand trading and bring results. With Algo-trading, it takes a few minutes only!
We are sure that you will get some brilliant insights and a result-oriented strategy based on your trading preference.
- How is Identifying trends in trading helpful?
- How Algo-trading can help in developing delta-neutral strategies?
- How does stop loss modification work?
- Why Position sizing matters a lot?
- What is Scalping all about?
But this blog is dedicated to explaining to you those four strategies used for buying and selling stocks using Algo-trading.
1. How is Identifying trends in trading helpful?
So, you must be wondering how these strategies work? 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, then the system will suggest variations.
Out of these 10 stocks, if 7 show buy signals and 3 show 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 favourable.
This is another advantage of our Algo-based trading: you can use multiple strategies at once and decide the net outcome of the strategy.
2. How Algo trading can help in developing delta-neutral strategies?
If your portfolio as an investor is delta neutral, the chances are that market movement will not affect your portfolio.
Delta means a change in the price of a derivative. It is concerning that price that is underlying an asset. So, in short, delta neutral uses multiple positions to balance both negative and positive deltas.
Now the point is for an investor; delta-neutral strategies are challenging to manage because of the continuous movement of the asset. But Algo-trading software can make it easier for you to know or calculate the delta of your position. So, it is like you are receiving a delta position in every new second which seems like 100 times faster than the manual process.
3. How does stop loss modification work?
Have you ever modified your stop losses?
If not, then it is time to consider it. In the stock market, everything is unpredictable; thus, it is essential to protect your portfolio and manage it correctly. Now, Algo-trading can be a quick help for you here. However, it is generally difficult to look into large portfolios and handle them efficiently. So, what Algo-trading does is that it provides easy solutions which are in-built in our predefined strategies.
No wasting time on screens and waiting for a manual decision-maker to take care of the market movements. Instead, put a stop loss of a certain percentage, and here you go, tackling risk automatically. Isn't it amazing? Wait till you know the next benefit of Algo trading!
4. Why Position sizing matters a lot?
Position sizing is the most crucial aspect of trading in concern to position management. You must have heard a lot of investors discussing this.
The purpose of position sizing is to highlight the key difference between a good and an average investor. Position management under various circumstances is critical. But the good thing is that we have made it simplified for you to improve your position sizing with the help of advanced and intelligent Algo trading methodology.
It is not based on any human emotions and has commands in the systems. These commands are a predefined set of strategies.
For more clarity, let's understand this example.
You have given a command that the value of shares should not be more than 50,000 on any (XYZ) share. Now, if the price of each share will become Rs.50 each, then the system will automatically buy 1000 shares. Of course, the combinations and variations will change, but the value will remain constant. So, even if there will be fewer or more shares, but the value is 50,000, the system will still buy it.
5. What is Scalping all about?
Let’s talk about scalping! It is a trading strategy that is short-term and requires a trader to beat the bid of the offer. But how Algo-trading helps here is it successfully trades through great strategies. Those strategies focus on the ability to gain profit from fewer price changes. It happens between the shortest time frame and by larger position size. Basically, scalping is great for quick executions and speedy actions.
Indeed, scalping is the most famous, and short-term trading strategy algorithm trading that is becoming popular in India. From retailers to traders, all are welcoming towards this great approach in trading. And not to forget that with Algo-trading, it is comparatively low risk.
These are the advantages of our Algo trading, we hope you have well understood them and are ready to give it a shot. We are India's favorite Algo trading software because of our quality commitment to our traders and investors.
With new technology and enthusiasm, we are ready to boost your financial goals with algo-trading.