What is Algo Trading and It's Benefits

If you want to stay one step ahead in everyday trading, all you need is speed, accuracy and cost reduction. For regular traders, it is possible to achieve all of these through algorithmic trading, also known as algo trading. Over the years, algo trading has become a popular choice among traders because of its benefits against manual trading. Let’s discuss the benefits below.

What is Algo Trading?

Algo trading, or algorithmic trading, is a method of buying and selling securities using a computer program that follows specific rules to execute trades automatically. This approach offers a more structured way of trading than relying on your gut feelings or instincts.

For example: let's say you have a set of rules that tells you to buy a particular stock when its price drops by 5% and sell when it rises by 7%. With algo trading, you would input these rules into a computer program, and it will monitor the stock's price for you. The program will automatically execute the buy or sell orders when the price changes according to your rules.

This method uses advanced mathematical models to analyze market data and identify the best trade opportunities. The program can handle large volumes of data much faster than a human could, helping you make quicker and more informed decisions.

Overall, algo trading can help you trade more efficiently and effectively, following your predefined rules without emotional influence.

In other words
Algo Trading is an automatic trading system, where algorithms are pre-defined to dictate the exact criteria for buying and selling stocks. Simply put, you can automate trading beforehand through coding.

What are the Benefits of Algo Trading?

Speed: Algo trading software helps to scan and execute multiple orders in a fraction of a second. This is practically impossible for any human being. Also as the trades are analyzed and executed faster, it opens the door of more opportunities for traders at unmissable prices.

Accuracy: Another benefit of using an algorithmic trading platform is accuracy. The algorithms are double-checked before installing them on the trading platform. So every time the correct order is entered. Also as there are no manual entries, there are no chances of executing a wrong order which can be caused accidentally due to human intervention.

Cost Reduction: Algorithmic trading can also help in cost reduction for regular trading. With algo trading, there is no need for continuous supervision as the orders will be automatically executed. So there will be no need for monitoring the market continuously, avoiding any delay in order execution and thus lowering the cost of transactions every day.

Human Intervention: Algo trading can also help in recovering losses caused due to human intervention. With the trading decisions adhering to predetermined coding, there will be no chances of irrational decisions often caused because of human emotions. As the orders and execution depend on the algo strategies, there will be no constraints caused by poor decision making often caused by fear and greed.

What is Choice FinX Signal?

The Signal is a semi-algo trading feature in the Choice FinX app developed for everyday traders, majorly concentrating on Intraday and Positional Trades. Signal will help you to identify Scrips regularly, get weekly stock recommendations, techno funda strategy calls, and algo strategies for trading at no extra cost.

It was formerly used for in-house advisory and has a proven track record of almost a decade now. It was initiated after continuous testing and analysis for app users. You can locate the Signal icon in your watchlist section. Signal has a success ratio of 65-70% success ratio.

What are the Algo strategies in Signal?

Intra Spurt Strategy

It is a breakout strategy that analyses pattern breakout on a multi-time frame along with volume criteria. This strategy gives three targets where 1st Target is for Intraday while for 2nd and 3rd targets are for Positional. If the stock gets 1st Target then Raise SL near to Cost and if the stock approaches 2nd Target then raise SL at Par for further good return (Approx. 5% – 7%).

However, one can use this strategy as per the Risk Appetite where if you get entry at the recommendation level then you can book profit as per your comfort level.

Dark Horse Strategy

It’s a Positional Call Strategy that analyses Price and Volume breakout on a different time frame along with expanding volatility which helps the stock to spurt further. It’s a strategy where one can get a positional recommendation for a week for an approx. return of 5% to 10%.

OI Burst

It is a strategy that analyses the overall premium/discount and Open Interest position of Futures and Options with the previous day’s data. Based on the setup, one can get limited recommendations like one or two in a day or sometimes not a single trade based on the position. This Strategy works well for those who want a limited trade with Proper SL and Target.

Index Breakout

Index breakout is a strategy that analyses the previous day’s volatility based on which one can get calls for long and short with Proper Buy and Sell Level, SL level, and Target level. If the Index sustains above the Buy recommendation level then we may see a good upside while if the Index sustains below the Sell recommendation level then there will be a downside move.

Future Trade Simplifier (FTS)

A ‘Trend Following’ indicator is one, which can give you a precise buy or sell signal in a market. As the name suggests, a trend-following indicator is just like a moving average. It’s an indicator where one can get intraday recommendations in the Futures only.

Why is Choice FinX the Best Algorithmic Trading Platform?

Algo trading sure has a lot of benefits, but it has certain demerits as well. Such as the automatic execution of shares which can prove a demerit for traders. Moreover, many traders subscribe to paid services, so money can also be an issue over some time.

But with Signal, since it’s a semi-algo trading system, there is no auto-execution of your orders. It is the call of the holder/ individual/ trader to close the transaction based on the Call whether to Stop Loss or Booking of Profits. Also, it’s a free service for Choice FinX users with a high success ratio, so chances of missing out on trade even for a single day is never a possibility.

Conclusion

Now that you know about algo trading and its benefits, Signal, and its unique and user-friendly algo trading feature, it’s time to take your regular trading a notch up at absolutely no additional cost. With Signal trade fast, trade easy, and trade more confidently.