Today, Indian Stock Market has changed a lot so the ways to make money in the stock market have changed. In the past, people used to look at charts themselves, understand prices, and buy and sell manually. But now, Algorithmic Trading Software technology has advanced so much that the computer itself can trade for us.
This modern method is called algorithmic trading, and the most important thing is algorithmic trading software. So, let’s learn today what this algorithmic trading software is, how it works, and what its benefits are.
What is algorithmic trading software?
So what it means, Algorithmic trading software or algo software is a computer based program or web based program that do buying and selling stocks/options as per your pre defined rules and sets. You tell this software to buy the stock when its price reaches a certain value and to sell it when it reaches that value. After this, the software continues trading on its own without your help.
Whether you’re sleeping, at the office, or anywhere else, this software keeps working all the time according to the rules you set.
Great Benefits of Algorithmic Trading Software:
Now let’s understand all its benefits one by one in simple language:
1. Fast and Accurate Trading Calculation
- Algo software runs on computers, and computers are very fast. It can check market data thousands of times per second and place trades at the right time.
- It takes time for a human to think, understand, and connect. But the software works instantly and without delay. A better opportunity than this is never missed.
2. Trading Without Emotions
- Many people make wrong decisions in the stock market due to fear, panic, or greed. But algorithmic software has no emotions.
- It only does what you configure in advance. With this, trading is done exactly according to the rules, no more, no less.
3. 24-hour market monitoring
- Algorithmic software is active all the time. It remains active even when you’re offline.
- As soon as an opportunity arises, the software executes the trade without delay.
4. Saves time and effort
- If you trade on your own, you’d have to spend hours every day looking at charts, reading the news, and paying constant attention.
- But with algorithmic software, you only have to create the strategy once, and then the software does everything on its own.
5. Less chance of error
- Sometimes a person presses the wrong button or loses their attention but the software only works according to predetermined rules and doesn’t make mistakes.
- This greatly reduces the chances of errors in your trading.
6. Multiple trades simultaneously
- Algorithmic software can track multiple stocks simultaneously.
- If you trade on your own, you might only look at two or three stocks at a time. But the software can spot opportunities and trade dozens of stocks at the same time.
7. Records and Reports
- The software keeps a complete record of every transaction.
You can then go back and review each trade to see where you made profits, where you lost, and which strategy worked well.
8. Backtesting Your Plan
- With algorithmic software, you can first check your trading plan against historical stock market data.
This shows how your strategy performed in the past and how many profits or losses it generated.
9. Easy Risk Control
- You can pre-establish in your plan how much loss you can tolerate in a day or how much money you want to invest in a trade.
The software works accordingly, keeping your risk under control.
10. It can be used even without learning to code
Nowadays, many platforms have emerged, such as Tradetron, AlgoTest, Quantman, etc., where you can perform algorithmic trading even without learning to code.
Who can use algorithmic trading software?
- Algorithmic trading software is for anyone who:
- Someone who trades regularly in the stock market
- Who can’t take the time to look at charts all the time?
- Who wants to trade without emotions?
- Who wants to make money according to their plan?
- Who wants to use technology properly?
