Indian traders and investors are quickly catching up with algo trading, a gift of technical advancement to the stock market. Professional traders and arbitrageurs use modern technology tools to increase speed of execution in order to keep up with changing times. And algorithmic trading has proven to be useful. It has played an immense role in the development and growth of Indian share market as traders have gained a lot of knowledge, exposure and confidence with regards to trading and investing.
Initially, algorithmic trading was used to speed up the most basic tasks, such as buying something on one exchange and selling it on another, and profiting from the difference as an arbitrage profit. They became more sophisticated after that by using futures or options, to produce profitable trades that entered and exited in milliseconds.
On the client side, Algo trades account for about half of all orders (more than 50%) at both the NSE and the BSE. SEBI, the market regulator, recently strengthened the framework for algorithmic trading, making it more widely accepted and unobtrusive.
Indian stock market is filled with enthusiastic traders and investors who are keen to explore every inch of the market in order to exceed in their trading journey. Algo-trading gave such traders an opportunity to explore different stocks and markets with ease and providing assistance in opening and closing positions spontaneously by responding to the volatilities.
Algorithmic trading is widely used by traders and investors as it helps save time on trades, especially in the market where time has a lot of value. Complex Algo-trading is expected to take over the manual trading system in stock market soon as technology and its use is upgrading every single day.
Before staring algo trading, the retailers must ensure that they have regulatory approval. The Securities and Exchange Board of India (SEBI) has laid guidelines for algo trading and complying with them is compulsory for the retailers.
