| January 10, 2022
Why choosing Algo Trading is the right decision for Traders like you
Do you want to make money? You know, like the old days when people made their millions on Wall Street and lived in mansions. Well, those were the good ol' days but there is always a way if we work hard enough at it!
Well heard about "algos"? There are plenty out there that claim they can generate extraordinary returns, so all you have to do is click one button - no big deal right?!
Such hype in Algo trading seems to create a next-level revolution, but is it really true? Let's figure it out ahead in this blog!
- In 2020, it's no surprise that 10% of hedge funds were using algorithms to trade over 80%.
- 52% of the institutional investors surveyed said that workflow efficiency is most instrumental in supporting best execution.
- The recent growth of algorithms in trading contributed to a 60-73% increase for all U.S equity trades last year!
Just to give you an overview: The total market for algorithmic trading is expected to reach $18.8 billion by 2024, and it may even hit a whopping 20$ trillion near-term!
India’s take on Algo Trading
Algorithmic trading is on an unstoppable rise in India. In 2008, the country allowed for algorithms and automated trades to be used by qualified companies only; however this new technology has quickly become one of the biggest contributors (if not THE MOST IMPORTANT CONTRIBUTOR) toward stock market volumes within Indian financial markets over time - controlling nearly 30%+1/3rds percent currently through Algo Trading strategies despite being fully implemented less than 10 years ago!
Algorithmic trading or Algo trading is the use of automated systems that follow a predetermined set of instructions (algorithms) to generate trading signals for making trading decisions in securities, foreign exchange, or futures markets. Algorithmic trading is now used by most traders and it has the potential to change the way traders trade.
Let’s understand this with an example!
Imagine you have a set of rules to follow when investing in stocks. For example, if the price goes above its 30-day moving average, then buy it and sell, if not- this is what we call it moving average strategy.
It seems simple right? Not so fast! If there isn't an automated program that does all of these calculations for you, tracking past performance on charts manually becomes tough due to both time constraints as well any human error factor involved with doing something wrong while trying to calculate profit/losses from before until now (which can happen!).
So how do people who don't know anything about finance make money off their investments?? They use known strategies like scalping or day trading where they can rely on automated generated strategies that signal them about when is the right time to buy or sell a particular stock.
The biggest advantage is that it is much faster than all kinds of manual strategies, and you won't be affected by emotions that often lead to loss. You can rely on different strategies and research-driven resources.
Algo trading platforms are created by professional Algo traders and programmers. The Algo trading strategies are mostly passive, but you can also trade with the help of them. To get it done, you have to contact Algo traders from a platform who will work for your project on-site or remotely.
Advantages of Algo Trading
Algorithmic trading is a powerful and accessible tool that can help you make more informed decisions on when to trade, where your money should go after being invested in stocks or other financial products. Benefits include:
- Algorithmic trading is a very advantageous form of automated investing. When executed correctly, it can increase your chances for high returns by eliminating the riskiest aspects involved in making trades on our own time during market fluctuations all while being safe from missing out on big opportunities.
- Every trader knows the feeling of losing money because you made a mistake. Algo platforms are designed with automated trading in mind, which minimizes human error by sending orders automatically. It is based on an algorithm-driven system that takes into account all available data points for pricing decisions and order placement - especially when it comes to critical events like price changes or support levels being broken!
- With fully automated systems, you can run multiple strategies without wasting time monitoring price action or news. You could even create new markets for your portfolio with ease!
For instance: You could run multiple different types of trading algorithms on the same data feed with minimal effort since these bots are intelligent enough to know when it’s appropriate without overfitting their strategy. It also saves us from having another team member whose job would otherwise go unfulfilled because they lack creativity in generating ideas about where we should put our money next.
- Next, the rise of technology has led to a significant increase in the speed at which trades are executed. By using computers and other high-tech tools, it is possible to make sure that orders get filled quickly without any slippage. Like when one's exchange goes up while another decreases over time (or vice versa).
- The biggest advantage of using Algo for trading is that it makes things systematic, enabling backtesting more comprehensively.
Is there any risk involved while trading with the machines?
So, an automatic strategy is a great way to diversify your investment portfolio, but it can cause volatility in the markets if too many people subscribe and fire orders simultaneously. For example with contracts or stocks that have low liquidity, this could lead to an unstable market price for you as well! So, sometimes choosing a strategy on your own can put you at a risk. To eliminate the risk, you can take help from the experts and ask for advice or consider what they have to say.
The lure of one-click financial returns means there may be a large number of non-savvy users subscribing to these offerings. So for most people, the black box where you can’t see what's happening behind the scene is off-putting and defeats any chance at success or accountability when something goes wrong with your order because they're unregulated platforms!
Ours is not a third-party platform. We are a company that takes complete ownership of our algo trading platform. You can always keep in touch with our experts and ask us questions, or give us your feedback; our executive will be there to assist you at every point of your Algo-trading journey.
Why choose Findoc’s Algo Trading platform?
As we talked about risks in the above section, one thing that you have to understand is that the greatest risk that comes with an Algo trading platform is mis-selling. There are companies that may need to be brought under some regulations so there is accountability and if unchecked they could cause retail customers losses due in part to their unregulated practices for profit instead of providing quality service.
People who trade stocks and want to be successful need more than just knowledge of the market. They also have to keep up-to-date with regulations, which can change quickly!
A good way for retail traders is by using automated software that will help them make wise decisions based on historical data or other technical indicators.
For this, trusting the right platform matters the most with a transparent approach in algo trading strategies and techniques.
Don’t believe us? Check out our dedicated explanation on Algo trading and how it is safe and a right decision for your next trade!