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Tag: automated trading

  • Algorithmic Trading: How Automated Stock Trading Works

    Walk into any trading room today and chances are, you’ll hear less shouting and more typing. Markets have changed. They’ve become faster, more data-driven, and in many cases — automated. One of the biggest forces behind that shift is algorithmic trading.

    You don’t have to be a hedge fund to use it. And you don’t need to know advanced math to understand how it works.

    This post breaks down what algorithmic trading actually is, how it’s used, and why it matters for anyone who’s part of the markets — investor, trader, or just curious observer.

    What Is Algorithmic Trading?

    At its core, algorithmic trading (or algo trading) is using a set of instructions — an algorithm — to place trades automatically.

    Rather than clicking “Buy” or “Sell” manually, you set up conditions. For example: “If this stock crosses ₹500 and volume spikes by 20%, then buy 50 shares.” Once that condition is met, the trade executes on its own.

    These rules can be simple or complex. Some involve just one indicator. Others might use dozens, tracking price, volume, volatility, time, or news sentiment — all at once.

    The point is to take emotion out of the equation. No second-guessing. No hesitation. Just execution.

    Why Algorithms Took Over

    It wasn’t always like this. Trading used to be more about instinct and gut feel. And in some corners, it still is. But a few things changed:

    • Speed matters: Markets move fast. If you’re placing trades manually, you’re already a few seconds late.
    • Data exploded: We now have access to more data than ever. Algorithms are better at processing it than humans.
    • Consistency helps: A well-tested algorithm doesn’t get tired, emotional, or distracted.

    As technology got better, institutional traders leaned in. They built models, tested them on years of price data (called backtesting), and ran trades automatically. Over time, this approach filtered down to retail platforms too.

    Today, even individual traders can use or build simple algorithms — no programming degree required.

    How Does Algo Trading Actually Work?

    Let’s say you’ve noticed a pattern: when a certain stock’s 10-day moving average crosses above its 50-day moving average, the price tends to rise.

    Rather than wait and watch for that pattern to form, you create an algorithm:

    IF 10-DMA > 50-DMA AND Volume > 1.5x average
    THEN Buy X shares

    Now your system watches the market 24/7. When that condition is met, it triggers the trade.

    Once in, you can also automate exits:

    IF price falls 3%, then exit (stop-loss)
    OR if price rises 8%, then exit (target met)

    Some traders use platforms that let them build these conditions visually. Others code them using Python or platforms.

    Types of Algorithmic Strategies

    Algo trading isn’t one thing. There are different approaches based on what the strategy is trying to do. Here are a few common types:

    1. Trend-Following Algorithms

    These systems look for signs that a stock is gaining momentum and ride the trend. Moving averages, breakouts, and volume spikes are common inputs.

    1. Mean Reversion Models

    Here, the logic is that prices eventually return to average levels. If a stock shoots up too far, too fast, the algorithm might short it, betting on a pullback.

    1. Arbitrage Strategies

    Some algos track price differences between exchanges or related instruments. If a stock is priced slightly higher in one market than another, the algo buys in the cheaper one and sells in the pricier one — locking in the spread.

    1. Market Making Bots

    These algorithms constantly post buy and sell orders to capture small spreads. They’re used by high-frequency traders to provide liquidity and earn micro profits from each trade.

    1. News-Based and Sentiment Algos

    These analyze headlines or social media feeds. If news about a company turns sharply negative or positive, the algo might react faster than any human could.

    How Traders Use Algorithmic Tools

    Not everyone writes code. Many traders use platforms with drag-and-drop builders, backtesting tools, or prebuilt templates.

    These tools help:

    • Create rules visually (e.g., “if RSI drops below 30…”)
    • Test the strategy on past data to see how it would’ve performed
    • Adjust stop-losses and targets before deploying live

    Traders also run these in paper trading mode before going live. That way, they can watch how the strategy behaves without risking money.

    Pros of Algo Trading

    Let’s be real — there are things algorithms do better than humans:

    • Speed: Trades happen instantly. No lag.
    • Discipline: The strategy sticks to the plan, always.
    • Backtesting: You can simulate performance using years of past data.
    • Scale: An algo can track dozens of stocks at once — something a manual trader can’t do efficiently.

    Risks and Limitations

    But this isn’t magic. Algorithmic trading has its risks:

    • Overfitting: A strategy might work great on historical data, but fail in live markets.
    • Technology issues: Power cuts, server crashes, or internet lag can disrupt execution.
    • Changing markets: A pattern that worked last year might not work this year.
    • False signals: Indicators sometimes give conflicting or misleading cues, especially in choppy markets.

    That’s why many experienced traders constantly review their algorithms — tweaking inputs, adjusting filters, or pausing when conditions change.

    Where Do You Run an Algorithm?

    Some brokers offer API access — a way for your algorithm to connect directly to your trading account. Others offer plug-and-play systems. Most allow paper trading, backtesting, and demo environments — so you can experiment before going live.

    Is Algorithmic Trading Right for You?

    If you enjoy strategy building, like testing ideas, and prefer rule-based execution over gut feelings — algo trading could suit you.

    You don’t need to be a quant or a full-time coder. Many tools today let you build logic without writing a single line of code.

    But patience matters. You’ll need to:

    • Test
    • Observe
    • Tweak
    • Re-test
    • And sometimes, walk away from a strategy when it stops working

    It’s not about perfection. It’s about being systematic and adaptable.

    Final Thoughts

    Markets are noisy. Prices move for all kinds of reasons. As a trader, your edge often comes from staying consistent when others react emotionally.

    Algorithmic trading is just one way to do that.

    It lets you step back from the screen, focus on strategy, and let the system handle execution. That’s not just efficient — it’s often more sustainable. But like any tool, it’s only as good as how you use it. Understanding when to run it, when to pause, and how to learn from each trade — that’s the real skill.

    Whether you’re building your first bot or exploring what algo trading can offer, the most important thing isn’t automation.

    It’s intention.

    Disclaimer:
    This blog is for informational purposes only and does not constitute financial advice. Automated trading involves risk. Please consult a registered advisor before making trading decisions. Zebu Share and Wealth Management Pvt. Ltd. does not guarantee the success or outcome of any strategy mentioned.

  • Getting Started with Algo Trading: A Beginner’s Guide

    Algorithmic trading, sometimes known as “algo trading,” is a type of trading where trades are made based on mathematical models using computer algorithms. Since it enables traders to execute transactions more rapidly and accurately than manual trading techniques, this sort of trading has grown in popularity in recent years. However, algo trading might appear difficult and high-level to newbie traders. We’ll go through what new traders need to know about algo trading in this blog article.

    Algo trading is a sort of trading in which trades are carried out using computer algorithms based on mathematical models. The algorithms are made to quickly assess market data, spot trading opportunities, and complete trades. Both institutional and retail traders utilise algorithmic trading to transact in a range of financial assets, such as stocks, bonds, currencies, and commodities.

    Benefits of algo trading: Compared to manual trading methods, algo trading has a number of advantages. Algorithmic trading, for instance, may carry out trades more quickly and accurately while also assisting traders in avoiding the emotional biases that might influence human trading decisions. Trading with algorithms also enables investors to profit from market opportunities that human trading techniques could overlook.

    Algorithmic trading provides a number of advantages, but it also has a number of hazards. Algo trading, for instance, may be impacted by market volatility and prone to hacking or computer faults. Additionally, market circumstances can have an impact on algo trading, and traders may need to modify their algorithms to account for these changes.

    Starting with algo trading: It’s critical to have a firm grasp of trading principles and financial markets if you’re interested in beginning with algo trading. Additionally, you want to become acquainted with the tools and computer languages utilised in algo trading, including as Python, R, and MATLAB. It’s crucial to have a firm grasp of market data and to create a strong trading plan that takes your risk tolerance and financial objectives into consideration.

    Hiring a developer: Algo trading may be difficult and complicated, particularly for novice traders. It could be better to talk to a developer who can offer advice and help if you’re new to algo trading. A specialist can guide you as you traverse the world of algo trading by helping you create a trading strategy, pick the appropriate software and tools, and get continuing assistance.

    In conclusion, traders aiming to execute transactions more rapidly and accurately may find algo trading to be a potent instrument. For novice traders, it’s crucial to be aware of the advantages and disadvantages of algo trading as well as to become familiar with the instruments and strategies employed in this market. New traders may succeed in algo trading and benefit from its numerous advantages with the correct information and assistance.

  • How To Get Started With Algo Trading

    As a regular investor, here’s how you can start Algo trading.

    As top brokers in share market , Zebu, allows you to use algo trading for free, along with offering the lowest brokerage for intraday trading options and proving users with the best trading accounts

    1. Learn about the market

    Before you do any kind of trading, you need to learn about the market. Before you start Algo trading, you should learn as much as you can about the instrument or market you can trade in. This will help you come up with a hypothesis that you can use to guide your trades.

    2. Know how to code

    If you don’t know how to code, you can learn a language like Python and make an algorithm that works for you, or you can pay a professional to do it for you.

    3. Backtesting

    You must test your algorithm before putting it into use. Back-testing is a way to make sure that your strategy will work in the future. You can also use software from a third party to check if your algorithms work. You can change your code based on whether or not they work.

    4. Decide on the Best Platform

    As crucial as your coding is, you must also choose the correct broker and platform. Choose a broker that supports your algorithm and gives you a variety of tools to help you improve your trading strategy. For example, at Zebu we offer a free algo-trading provision that traders can use to execute their trades. If you would like to know more, please get in touch with us.

    5. Go Live

    When you’re happy with your algorithm, take it live. Monitor its market and real-world performance. Your algorithm might not always work. You might then have to start over or make changes to fit your needs.

    6. Keep Evolving

    Even if your first strategy doesn’t work, you don’t have to give up on algorithmic trading. Keep trying out different codes to see what works best.

    If you don’t have the time or skills to make your own algorithm, you can buy Algo software that will do the job for you. Do your research, try out the strategies with past data, and choose the one that works best for you.


    Conclusion

    Traditional investors can boost their trading approach by trying Algo trading. You can take advantage of short-lived trading chances that you would have missed otherwise. Algo trading can help you become a good trader who is quick, efficient, and successful.

    Is algo trading costing you a bomb? Zebu, As top brokers in share market allows you to use algo trading for free, along with offering the lowest brokerage for intraday trading options and proving users with the best trading accounts.

  • The Future Of Algo Trading In India

    There are many opportunities on the stock market. Yes, there is nothing better than believing in a stock and seeing it go up in value by a lot. But since the stock market has grown into a big, complicated beast, there are other ways to make money consistently, like catching a short-term trend or reversal pattern or using options structures to profit from short-term moves.

    Are you in the search best stock trading platform? Then, your search ends here. We make online stock trading easy with our best trading platform.

    If you tried to use these strategies manually in a market that keeps getting bigger and bigger, you probably gave up because it was too hard. But if you use technology and automation to help you trade, you’ll see that you can make trading less stressful and easy. In a nutshell, that’s what Algorithmic Trading has to offer. As Indian markets become more developed, it will change the stock market in a big way.

    Even though Algorithmic Trading has been around for a while in India, it is still in its early stages. Algos make up 70–80% of the global market volume and have many different structures, rules, and participants. In India, however, algos only make up 50–60% of the market volume and are simpler and less understood.

    Around 2010, algorithmic trading began in India, but at first, only Institutions and brokers used it. But now, thanks to the growth of digital discount brokers and API solutions, anyone in the retail market can make algorithms, and the possibilities are endless!

    Algorithmic trading is becoming more popular, and people are learning more about it and getting better at it. But even so, there is a lot of room for growth for Algos in India if you look at how they are used in other markets. Algorithmic trading is different in many ways. Not only does it give the trader the chance to make money, but it also makes trading more systematic by removing the effects of human emotions and mistakes. It also makes the market run better and have more money in it.

    The main reasons why algorithmic trading is better than manual trading are that it is faster, more accurate, and saves money. Algorithms can find patterns and trades in a fraction of a second, which is faster than humans can see. When a machine follows instructions that have already been set, accuracy and precision are good. Also, the algo keeps an eye on your orders all the time without you having to do anything, which cuts down on trading time and costs and saves you a lot of time.

    Most people are interested in algorithms that are used for systematic trading. Trend watchers, hedge funds, and pair traders find that it is much more efficient to programme their trading rules into software and then let the software trade on its own.

    But apart from that, Execution and Arbitrage are two large areas of trading where algorithms are used. Mutual funds, pension funds, and insurance companies use algorithms to split up their orders when they don’t want their single, large-volume trades to affect stock prices.

    And there is arbitrage, which is buying and selling instruments that are highly related to each other to make consistent small profits from the spread and make the market work better.

    Then comes high-frequency trading, which means they trade every millisecond, or medium frequency, which means they trade every few minutes or even days.

    Trend following, also called momentum trading, and mean reversion, also called range-bound trading, are two other important types of algos.

    Smart Beta is a way to invest in market inefficiencies based on rules. It is becoming more popular in India. High-frequency traders use arbitrage and market-making, which is a way to trade on both sides of the range.

    Rules and the Way Forward:
    Along with the growth of markets, India is also changing its rules for Algorithmic Trading. SEBI has recently put out a consultation paper to make automated trading rules stronger and better for the end customer.

    Algos have had their fair share of problems, like the Colocation scam or the way some algo traders take advantage of people.

    But as the industry becomes more well-known, the inefficiencies would be fixed, and algorithms would change the markets by making them more efficient, fair, and data-driven.


    If you are looking for the best stock trading platforms? Then, we are here to help you. We make online stock trading easy with our best trading platform.

  • What is Algo Trading and How Does It Work?

    Algorithms are everywhere. From our smartphones to laptops to anything with technology, algorithms power the functionality of billions of entities. With the rise of more advanced technologies, this piece of logical code is now used in almost every field. Algorithms use user data, patterns from the past, and a set of instructions that have already been decided on to reach their goals. Mutual Fund companies, for example, use an algorithm to take the set amount out of your bank account every month for a SIP

    Algorithms are used in the virtual transaction system to make sure that trading is clear, that users have a good experience, and that there aren’t any hiccups or delays. But depositories and stockbrokers aren’t the only ones who use algorithms. Traders use algorithms to avoid mistakes made by retail traders and increase their chances of making money. Algorithmic Trading or Algo Trading is the name for this process.

    Before we get into what is Algo trading it is important that you understand that it requires a powerful tool. As a share broker company, we understand the requirements of an avid trader and offer a seamless . online trading platform with the lowest brokerage options.

    How does algorithmic trading work?

    Algorithmic trading is a way to trade quickly on the financial market by using trading instructions that have already been programmed. Traders and investors use trading software, which they tell what to do based on time, volume, and price. When the market triggers the set instructions, the investor’s orders are carried out by the trading software. In general, Mutual Funds, Hedge Funds, Insurance Companies, Banks, etc. use algorithmic trading to make a large number of high-volume trades that would be impossible for humans to do.

    Algorithmic trading lets investors make more deals in less time without human emotions and mistakes.

    Take a look at the following example to better understand what algo trading is.

    The following set of instructions can be given by an investor for algorithmic trading to take place:

    Instruction 1: Buy 200 shares of XYZ company if the price goes above its 15 minute high.
    Now, if the price of a share goes above the 15 minute high, the algorithmic trading system will automatically place an order for 200 shares of XYZ company. But the algorithmic trading software won’t do anything with the order unless the conditions are met.

    Instruction 2: Sell 200 shares of XYZ company if its 20-day moving average falls below the 200-day moving average on the 5-minute time frame.
    In this case, the algorithmic trading software will sell 200 shares of XYZ company if its 20-day moving average falls below its 200-day moving average.. If it doesn’t, the order will not be executed.

    For algorithmic trading to work, each set of instructions must be carried out only once. For example, in Instruction 1, the algorithmic trading software will place a buy order if the price stays above the 15-minute high for even a few seconds. After those few seconds, the price might drop back below the entry point and develop a loss. But the order would have already been placed as soon as the conditions are met.

    Algo trading has come a long way in India and is all set to reach greater heights. You can simplify your trading system or add as many data points to it as you want but it is crucial to understand its working and monitor it closely.

    As we mentioned earlier Algo trading requires a powerful tool. As a share broker company, we understand the requirements of an avid trader and offer a seamless online trading platform with the lowest brokerage options.

  • Everything You Need to Know About Trailing Stop Losses

    Online brokers are always looking for new ways to keep investor losses to a minimum. One of the most popular downside protection techniques is a stop-loss order, which automatically sells a position at the current market price if the price drops to a specified level, preventing further losses.

    Before we get into the basics of trailing stop loss, it’s important to know that it takes a certain level of experience before you can become profitable. However, if you would like to get started, you need access to the best trading platform from one of the best online share brokers in the country. At Zebu, we give you all of this and more – we also offer the lowest brokerage for intraday trading.


    Trailing stop-loss order

    Traders can improve the effectiveness of a stop-loss order by combining it with a trailing stop, which is a trade order in which the stop-loss price is set at a percentage or rupee amount below the market price.

    When the price goes up, the trailing stop goes up with it. The new stop-loss price remains at the level it was dragged to when the price finally stops climbing, automatically safeguarding an investor’s downside while locking in profits when the price achieves new highs. Trailing stops can be used with regular stop-loss orders on stock, options, and futures exchanges.

    The Functions of a Trailing Stop

    Consider the following scenario for a better understanding of how trailing stops work:

    Buy price: Rs 100
    Price at the time of setting a trailing SL: Rs 100.5
    Trailing amount: Rs 1
    Immediate SL: 99.5
    If the market goes up to 101, the trailing SL will be moved up to 100.

    If the price goes back to 100, your SL order will be triggered and you will exit with a slight loss (considering slippage, taxes, and fees).

    It’s critical to avoid the need to reset your trailing stop during market dips, or your effective stop-loss will be lower than intended. When you notice momentum peaking in the charts, especially when the stock is hitting a new high, it’s also a good idea to rein in a trailing stop-loss.

    It’s critical to assess your maximum risk tolerance when using classic stop-losses with trailing stops. Set a stop-loss at 2% below the current stock price and a trailing stop at 2.5 percent below the current stock price, for example. As the price of the stock rises, the trailing stop will outperform the fixed stop, making it redundant.

    To make this approach work on current trades, you’ll need to select a trailing stop value that takes into account the stock’s regular price movements while catching just the genuine price decline. This can be accomplished by analysing a stock for several days before engaging in active trading.

    Furthermore, when using a trailing stop, there is the risk of setting it too tight during the early phases of the stock’s support. The consequence will be the same in this situation, with the stop being triggered by a temporary price downturn, leaving traders concerned about a perceived loss. This might be a difficult mental pill to take.

    You need the lowest brokerage for intraday trading as well as the best trading platform. As a leading online share broker, we at Zebu have created the perfect trading platform with an extensive amount of features to simplify trading for you.