Trading stocks in the market is not an easy job. Algo traders in India should have very vast knowledge about the market, the technology, the trend, and most importantly, the strategies. Without a strategy in hand, failure is inevitable, and it becomes even more critical when it comes to Algorithmic trading.
Algo trading involves a pre-computed program that follows a series of steps to place an order at the correct time and in a very efficient way. Such high technology trading operations call for a perfect trading strategy. Algo traders in India should know all about the market strategies to get maximum results.
FEATURES THAT A GOOD TRADING STRATEGY HAVE:
- BACK-TESTED: A new strategy cannot be applied directly in a transaction. Your strategy should have a history of success and should be back-tested properly. Algo traders in India should always check the history of the strategy they are using before deciding.
- RELEVANCE: All successful strategies may not be relevant for you. Algo traders in India should remember Algo trading. One system failure can cost you everything. Hence, that strategy you choose should have relevance to your transactions and should give maximum results.
- FOLLOW THEORY: To perform better, any strategy should be in agreement with trading theories. Any strategy too far from theories has more chances for failure. Algo traders in India should keep in mind that even if a particular theory comes well decorated, you should always judge its acceptability with trading theories.
- BACKUP: Your strategy should come with a backup itself in case it fails. Having a backup in the fluctuating world of trading is always wise. Algo traders in India should invest in a strategy that has a pre-planned backup ready.
TRADING STRATEGIES THAT SHOULD BE ON YOUR LIST
- TREND FOLLOWING: The most common and the most basic of all the Algo strategies is the Trend Following Strategy. This strategy stresses following the trend of the moving averages, breakouts, pricing fluctuations, and other digital indicators.
- RISK-FREE STRATEGY: Anyone with deep knowledge about pricing in the market can make good use of this strategy. This involves buying a bi-listed stock from a market at a low price and subsequently selling it at a high price in an adjacent market at differential arbitrage.
- PROVEN MATHEMATICAL MODELS: These strategies have a higher chance of success and need to be formulated by a professional. Mathematical models like Delta Neutral trading strategy are made, keeping all the market constraints in mind.
- REBALANCING: Algo trade market rebalances their Index funds from time to time to keep sufficient records of their transactions. Such refluxes make good opportunities for Algo traders in India as they offer 20-80 basis points for profit.
Apart from these, numerous strategies are waiting for you to try. Make sure to find the right one for you.
With the right strategy in hand, you can be the king of the trade market in no time. As a stock trader in the Algo market, you must know by now how important it is to have a good trading strategy. So, list out your needs, and do your research to find the right Algo trading strategy for yourself.