Hi tradingqna Community
I am interested to explore algo trading, would like to know how to start on it and who tried it please share any insights as it will be adding great value to my learning phase. thanks in advance
I have experimented with algo trading for a month, starting with just one lot, to gain insight into its workings. I’ve observed two main types of algorithms: 1) Those adhering to a specific strategy, like the 9.20 Straddle. These algorithms execute trades with mechanical precision, devoid of emotion, yielding profits or losses based on market movements. 2) Algorithms that randomly purchase calls and puts based on parameters set by the programmer. The effectiveness of these bots depends entirely on the skill of the coder. While they may sometimes yield favorable results, they can also fall prey to unforeseen market conditions not accounted for in the program. For instance, I once encountered a bot that initiated a long position just below a significant resistance zone due to a price spike. This highlights that algo trading is not akin to an automated teller machine. With countless bots available from various companies, distinguishing the few reliable ones from the many ineffective ones is a challenge. Moreover, a major drawback is the inability to engage in paper trading.
There is a provision to “Forward Test”, you need not deploy money, the same strategy you can test live and observe results.