The market regulator published a consultation paper in December 2021, saying it was considering a regulatory framework for algo trading by retail investors
While algos may be pieces of code devoid of emotion, the people writing and managing them in real-time are not. Mastering emotions is key to success.
Scaling of a strategy without much damage to the equity curve is an art in itself
Buffett and Munger decoded their strategies and buys, and tore into the market’s newer gambling ways and those who make money off that
While strategies may work well in a simulation, it is crucial to know beforehand if it works in the real world
This week, we will take a deep dive into the process of reviewing your back test results post optimization before you kick off the go live
In the article this week, we will deep dive into the 'Strategy optimization' process
A sound trading journey involves making the right portfolio decisions on matters such as strategy, timeframe and asset classes
The acid test for an individual’s trading psychology is when facing an underwater equity curve and the drawdown stretches longer
Psychologically, a trader can tolerate a lower profit scenario. It is very difficult to tolerate a very high drawdown scenario
Clean data is the foundation of a good backtest. Don’t expect a precise outcome without a good input
After the developer has programmed the trading strategy, the next critical step is to do a logical backtest
If the detailed requirement document is not clear, the programmer will never understand the strategy and the result will surely be a failure
Creating a document is not easy. Even if you document it clearly, the challenge is to explain the strategy to the developer in a language that he understands
Today more than 50 percent of trading volumes in Indian markets are triggered by Algos, while it is more than 75 percent in the US. India has emerged as one of the fastest growing algo markets in the world
The entire problem can be solved through by making those who supply algo trading platforms get a license or certification to practice their trade.
Retail algo traders could face curbs in the coming months with SEBI proposing that their trading strategies and software be approved
Zerodha co-founder and CEO Nithin Kamath also linked his blog post titled 'The rise of Algo trading platforms and everything you need to know', which has been updated on December 9 and the SEBI consultation paper for those interested,
When choosing the best trading system, do not go for winning accuracy alone
The mutual fund industry may still have some time before passive or semi-passive investing makes a dent. But paying a high fee for poor performance is passé.
Agarrwal highlighted that the big shift in the trend is going to happen in the next 10 years as rule-based systems in trading, investments will become more popular.
Investors should be disciplined in their approach and avoid jumping to new systems. Learning coding will also be a big help in tweaking the code, and don’t ignore risk management when trading, says Mehta.
While one can learn algo trading, those who do not have the inclination or time to learn can look for SEBI approved algo system providers
Algo-enabled features like trade notifications via SMS and WhatsApp allows people to strategise their trade with little to no intervention, and helps avoid accidents.
As trade volumes grow rapidly coupled with the entry of tech-savvy Gen-Z traders, algo trading will grow many folds particularly in developing markets like India.