Trading in stock is quite common but is also prone to risks because a human might not be able to predict what stock would rise or fall and that’s why Algorithm trading has taken over the market. It has quite rightly become the future of Trading and is fetching far greater profits than manual trading mainly because no emotions are involved. It is purely based on reasoning, history, and growth potential of a stock. It is interesting to note that more than 70% of the trade that is placed today is based on Algo trading and this percentage will only continue to rise. Often referred to as emotion less trading, it does not let your emotions hamper your trading decision thus preventing you from great losses. In this automated trading, there is no human interference, and the computer programs is used to trade and because it is a computer program it can trade high volumes at great speed which is impossible by a human being. It can perform 2 functions; it can suggest trade based on the data that is present in its system or it can execute orders without you having to do it.

When it comes to strategies used in Algo trading in India, there are several however some are used commonly because of improved earning. Few of such are

  1. Trend following strategies- as the name suggests, in this type of strategy trend in moving averages, price level movements is followed. This strategy is rightly categorized as easiest and simplest one because there is no price prediction involved and often it gives great results.
  2. Trading range also called Mean Reversion is based on the fact that there is a average value of an asset and the increase and decrease in its price is a temporary phenomenon. Gradually it returns to its original price. Thus, in this strategy if there is a shift in the average price of an asset then the trades are placed automatically by the computer program.
  3. Arbitrage opportunities is a smart and quick way to earn great profits. In this, a stock is purchased at a lower price in one market and then sold at a higher price in another market. The price difference however is not much but if a stock is purchased in huge volume it is bound to give great returns. It is also very quick because the high price does not exist for a long time and so one must trade quickly and therefore it is impossible to do it manually.

These strategies are time tested and making use of these can prove to be highly beneficial. Algorithm trading is a sure shot way to make bucks as it is fast and trades effectively, also you won’t miss a trading day. Becoming an algorithmic trader is also very easy so why wait? Kick-start your journey to become an Algo trader and take home huge bucks.