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Algo trading decoded

Understanding algo trading

Algo trading is also referred to as automated trading, algorithmic trading or in some cases- High frequency trading
Algo trading comprises of an electronic platform or platforms such as Nest and Symphony Presto, on which pre- programmed trading instructions are executed from charting softwares such as Amibroker, MT4 and Traders Cockpit, MS- Excel and a few others, in the presence or absence of human intervention
The pre- programmed instructions normally include

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Algo trading has been in existence for more than a decade in the Indian financial markets, although their usage has been limited to a few hedge funds and portfolio managers. However, over the last couple of years, retail participation has increased dramatically and according to the IT arm of the National Stock Exchange (NSE), about a third of exchange trades in India are carried out using Algo trading

Who can implement algo trading in India?
All traders and investors, right from individuals to hedge funds are permitted to use programmed or algo trading.
If human intervention to execute trades is part of the program, exchange approvals are not mandatory. However, if trading is carried out using robots, where manual intervention is not required, prior approvals from the respective exchanges are necessary

Trading tools that can be integrated to algo platforms in India
The most widely used charting softwares to trade algos in India are
- Amibroker
- MT4
- Nest pulse
- Traders Cockpit
- Trade Station

Coding and back- testing trading systems-

What is back-testing an algo strategy and why is it important?
Algo trading, as in any other forms of investment classes, uses past performance to predict future expectations.
Back-testing is a process of exposing your strategy to series of historical data to arrive at the performance of your trading system. It is an essential tool to determine if your strategy is working or not and since accuracy of a trading system is very important, back- testing is the key to identify gaps in a strategy, which can then be filtered out or completely eliminated to meet performance goals
Although back- test does not deliver all the drawbacks of a trading system, it gives an insight into some of the features of a strategy that need to be changed or excluded, before being implemented

What do I look for when I back- test my strategy?
Consider all the essential factors illustrated below when you’re back-testing your strategy

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Code technical analysis strategies on Amibroker/ MT4
If you have a winning technical analysis strategy and not sure on how to code them, we can assist you code the strategies with help from our panel of programmers
What’s more!! You can directly interact with the experts in the arena, explain the strategy to them, get them coded, back- tested before you implement them LIVE.

Does Amibroker have ready-made strategies that I can use?
Amibroker formula language (AFL) is a customized program used to code strategies on Amibroker. The software has all the popular indicators in- built in the system, allowing users to build custom indicators, back- test and screen large databases.
View ready to use strategies from the Amibroker library HERE