Algo Trading vs Manual Trading

With algo trading around, is there any significance in doing manual trading. Attended one algo trading webinar today and feel demoralised.

What were the key points said in the webinar?

This was a question posted on Quora recently which was answered by Karthik.

What would the financial markets be like when all the trading is done by machine learning algorithms?

"Hopefully, this should lead to remove a lot of human emotions, which could imply -

  1. Lesser volatility in the market
  2. Greater market efficiency, hopefully this leads to greater liquidity
  3. Very few or no arbitrage opportunities"

They spoke about ML(machine learning) etc… everything went over me.

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Sir, This Algo Trading is very common in USA. Although Majority of US Trader Trade Options.

My Major subject in College is Artificial Intelligence, Where we write Algorithms in C, C++, Java, To achive any specific Goal in day to day life.
We can also achive this in Trading Using Algorithms.

That day is not very far when 70% of trade will be done by Algo Trading in India.

One of Friend is planning a Startup on Algo Trading They will make Android App and Sell in the open market to Investors & Traders. Already there are some company in Market doing this same work.

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How can an individual compete against present day trading by Algos and HFT ? :

We are talking about trading.

The question is about an individual trader’s position in a market where Algo Trading ( Trading through Algorithm guided software) and HFT ( High Frequency Trading) are the current trend and may become the regular way of trading.

The first point is that the market does not differentiate between traders. All have equal chance of making money or losing it.

Trading in stock market is like trading in any other thing.

You make profit when you sell something at a higher price than what you bought it for.

It does not matter whether it is a stock in a company or just potatoes and onions.

Big traders need big volumes for their trades to go through.

Individual trader can be a part of the same market without getting noticed.

In other trading fields, Individual traders have been competing against Big traders for decades now and have achieved success.

The example can be seen from the Retail Trade.

We have the example of supermarkets like BIG Bazar, D-Mart. MORE and many others in India.

They are into retailing business.

This is a neatly stocked D-Mart store.

It needs a huge number of footfalls and high volumes of sale to make any kind of profits.

This model is akin to High Frequency Trading in the stock market where high volumes are traded for lower margins repeatedly.

Now compare it to this small neighborhood grocery store.

Such stores are also doing business and making money regularly.

They have their own advantages.

They know their customers, are located near to them and occasionally sell on credit. People do not go to big stores for buying bread and eggs on daily basis. That is where such stores have advantage.

Such establishments are similar to Individual Trader in the stock market.

They operate in low volumes but still profitably.

An individual trader does not need huge volumes. For his/her trades, decent volumes of a stock are enough.

Like there is enough business in the retail trade for the big chains and small stores to co exist , there is enough space in the stock market for both the big ALGO/HFT traders as well as the Individual Trader.

The second point is that there is no need to compete.

Both can be profitable without competing with each other.

And both can be losing money.

The risks and rewards of the markets are same for every kind of trader.

We may be reading the stories of success of ALGO trading or HFT, but believe me, they earn a similar profits or loss as an individual trader.

An individual trader has himself to blame in the event of a loss, an algo trader blames the algorithm.

I have known algo traders who have not made a single rupee profit when the markets have gained almost 20% in last one year.

And I have also seen them losing money even while shorting NIFTY on a day when NIFTY fell by almost 100 points.

They just hide behind the excuse that algorithm did not provide for this or that eventuality is now being tweaked.

An individual trader does not have that luxury.

It is better to own up the failure and look up for the next trade set up.

To Summarize:

HFT/ Algo Trading is just another way of trading.

It works only in high volumes.

Individual Trader can participate in both high volume as well as low volume trades.

Risk and reward and trade management are similar.

Let us remain focused.

Our aim in trading is to earn profits through careful trading. It can be done in any manner.

Like travelling to a destination by driving a car.

Any car will take you there.

The big one is HFT.

The smaller one is the Individual Trader.

Both can co exist. Both can succeed.

Trading is about the trader. There is no need to worry about the competitors because they are actually not competing. They are just fellow travelers with bigger car.


Can u please share the link to the webinar.

Link to video:
Link to presentation:

Good day! In general, I like algotrading more because it is faster and more convenient. When you are engaged in manual trading, it is very easy to make a mistake and lose in profit. But when a car does it for you, there will definitely be no mistakes and misses. I suggest you get acquainted with the Streetbeat application that makes stock offers based on real data and machine learning algorithms. Invest as with Robo-advisor. They are also an investment advisor registered with the SEC. And the advantage is that the application works on the basis of exclusive non-public data and algorithms.