What is Algo Trading?
Algo Trading is executing your buy and sell orders based on a set of rules that can be programmed and executed by a piece of software code.
With this definition in mind, let us get some facts right.
YES. A poorly designed trading system may end up losing money or make money inconsistently
YES, be it algo trading or manual trading, when your money is on the line, emotions are bound to come in picture. Intensity varies from individual to individual.
YES. You cannot just leave it completely unattended. You need some regular monitoring or alert mechanism that tells you when things go wrong.
NO. Discretionary trading makes money too. The discretionary/manual trading journey usually is a longer one provided you survive in the market long enough.
NO. Any and every form of trading has times when it loses money. You just have to find the style that suits you.
Does Algo Trading Work?
Well, it’s not rocket science.
But let’s take an example of rockets. All rockets from outside look pretty much the same, don’t they?
But are all of them able to reach the moon?
It depends on the people who designed the rocket.
- Did they design it well (basic entry/exit rules)?
- Did they use the right and enough fuel (position sizing)?
- Did they account for all that could go wrong on the way (risk management)?
Based on these, some rockets blast right at the launch pad, some crash and burn mid-air, some reach the moon and some are now even aiming for Mars!
It depends on lot of things going right all the time!
Does Algo Trading Work?
Well, it’s not rocket science.
But let’s take an example of rockets. All rockets from outside look pretty much the same, don’t they?
But are all of them able to reach the moon?
It depends on the people who designed the rocket.
- Did they design it well (basic entry/exit rules)?
- Did they use the right and enough fuel (position sizing)?
- Did they account for all that could go wrong on the way (risk management)?
Based on these, some rockets blast right at the launch pad, some crash and burn mid-air, some reach the moon and some are now even aiming for Mars!
It depends on lot of things going right all the time!
Will Algo Trading work for me? Should I adopt it?
Yes
- If you have a good rule-based system/strategy
- If you are not able to stay disciplined due to your unavailability
- If you are profitable and want to scale up your trading size
- If you want reduce your screen presence during market hours with minimum required regular monitoring.
- If you are willing to make trading boring and make better than average returns from the market.
No
- If the outcome of your trading depends on your experience and decision making
- If you are not able to stay disciplined due to your lack of conviction
- If you are not profitable and think that doing the same thing in algo will make you money
- If you wish to run the algo once and leave it unattended, assuming it will keep making money for you.
- If trading gives you a ‘kick’ of excitement and ego boost when your day-to-day decisions make you money in the market.
How Can We Help you?
Plan A
- You are an experienced and profitable trader
- You have a profitable system/ strategy that is making you money
- You want to automate it
Plan B
- You have a bit of experience in trading and writing code
- You have designed some algo system of your own
- You want to get it verified, reviewed and deployed
Plan C
- You are fairly new to trading
- You think you have a profitable system / strategy that can make you money but you are not sure
- You want to verify the system / strategy and design and deploy if found profitable
Plan D
- You are totally new to trading
- You have no trading system / strategy
- You are willing to adopt off-the-shelf systems / strategies with proven track records.
Where you can get in touch
Request a FREE Face-to-Face Call.