Algorithmic trading or algo trading is an automated computerized method of stock trading. It has been designed to help traders to minimize their trading costs and efforts. Algo trading involves trading through a program that uses advanced and complex mathematical formulas to make speedy and smart transactions.
Algo trading helps you to place a purchase or sale order at your convenience, automatically generating the timing based upon the parameters specified by the trader. There are no limitations related to the quality and volume of trade.
Algo trading enables you to trade on every opportunity. You not only avail each and every market opportunity but also benefit from risk reduction in case of bigger portfolios. Algo trading includes automated checks, which help you in controlling risk factors.
With an effective Order Management System (OMS) and emotion-free trading, it increases your profitability. This is an outcome of a minimal time lag as the quick execution of trade provides you the best price.
Though Algo trading is not extremely popular at the moment, it is gradually gaining faith as one of the most profitable forms of trading online among investors. Here we are listing seven major benefits of algo trading:
1. Trade on every opportunity
2. Get the best price through quick execution
3. Increases profitability by minimizing time lag
4. Emotion-free trading for best results — eliminates humanly limitations
5. Backtesting of strategies
6. Automated checks for risk reduction, especially with the bigger portfolios
7. Quick and easy trading that drives the best results
Since algo trading comes with so many benefits, various platforms in the Indian finance market are supporting this form of trading. Many of these platforms are allowing both institutional and retail investors to trade through Algo trading or algorithmic trading.
Algo trading is the future of trading in the Indian stock market. Have you tried it yet?
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