The Indian financial market is evolving rapidly and so is trading. Many leaders in India as well as from international markets are emerging to make healthy financial decisions based on new-age trading systems. They are diminishing the role of humans and opting for algorithmic trading using API-based integrations also known as robo trading.
For effective trading, there are a multitude of methods available to deploy the best strategy. All of them work on specific market conditions – scalping, intraday trading, swing trading and positional trading. Out of all, any trading where time is not too less or not too high is considered ideal for robo or algo trading.
Understanding the concept of robo trading
Robo trading works on a computer program that utilises the intelligence of a bot to buy and sell signals that are further executed by an engine. It works by integrating advanced technologies including AI and Machine Learning. AI platforms through their algorithms identify complex trading patterns across multiple markets. It creates real-time updates to create an efficient trading pattern.
Another effective robo-trading method is the quant-based technique, designed using computer algorithms. These programs are based on simple or complex mathematical models to identify the right trading opportunities available in the market. Quant-based trading is one of the most sought-after robo-trading techniques widely used by new-age traders.
Robo trading steps up the game of new-age traders. Simply put, it takes out a major chunk of hard work out of trading and traders can amp up their profitability without having to spend hours evaluating the stocks on their own.
How it benefits non-expert traders?
Financial planning or decision-making has always been a challenging task for new-age traders. Years of experience are required to evaluate the market conditions and consider investing before making a decision. Furthermore, the complexity and severity of risk involved in trading make it even more difficult for newbie traders. However, technology has transformed the complete scenario.
Traditionally, traders had to interact for security, price and quantity of trade. This required extensive watching of the market during their working hours. This created challenges for non-full-time or non-expert traders to enter the market. With accelerated digital adoption, next-gen traders are leveraging hassle-free trading experiences across the globe. Robo trading controls human-based interferences and helps the traders trade based on the pre-defined condition set in the computer program.
Robo trading is gaining huge popularity due to low barriers to entry and human intervention. However, having a hybrid approach in automating trading can help traders make an improved financial decision while having the perks of algorithm-based evaluation.
The automation of the entire trading system, however, restricts the traders’ interaction with others on the investment decision. Yet, still, robo-trading is benefiting traders with its pre-defined algorithms that help in better financial decision-making.
Robo trading is systematic trading that works on pre-defined logic and controls human emotions. By eliminating the scope of manual errors, robo trading can be executed in lesser time with more accuracy. This gives more confidence to traders in the probability of winning which further gives them peace of mind. As a result, it helps traders to focus on the aspects of improvement and profitability rather than spending their hours watching and analysing the market.
In India, millennials and GenZ are moving towards trading as part of their investment decisions. With Robo trading, they are eliminating the emotional-based decision-making before putting their real money on the market.
(Disclaimer: The author is
Founder, DeMatade Trading Solutions
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