Best Algo Trading Strategies in India for Beginners

06 Feb. 2025

Best Algo Trading Strategies in India for Beginners | How to Get Started

Algorithmic (algo) trading, also known as automated trading, uses computer programs that execute trades at speeds and frequencies a human trader cannot achieve. The trade is conducted under a defined set of rules and instructions—the algorithm followed by the computer program. Algorithms can be based on such parameters as timing, price, volume, or the combination of several of them.

How Does Algorithmic Trading Work?

Algorithmic trading is also called algo trading, which uses sophisticated coding and mathematical models for autonomous control functions beyond traditional methods of trading.

Human-made codes instruct the systems to make context-driven decisions that can assess market conditions efficiently. For example, traders place trades by automatically analyzing the markets, opening or closing their positions, or turning in or getting out of the market.

Algo trading is especially popular among scalpers, who are investors who buy and sell assets at very high speeds to make profits from small price changes. This helps traders execute numerous trades within a single day by taking advantage of fast trade execution.

Apart from the stock market, algo trading is also found in currency trading, which includes forex algorithmic trading and crypto algorithmic trading.

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Popular Algo Trading Strategies for Beginners in India

For a beginner, it is very important to begin with simple and easy-to-understand algorithmic strategies. Here are some of the best algo trading strategies in India for newbies:

Trend Following Strategy: This is one of the simplest strategies, where the algorithm identifies a market trend and places trades that follow the trend. It is based on the idea that prices tend to move in trends, and traders aim to capitalize on these trends.
Mean Reversion Strategy: This strategy assumes that the price of an asset will revert to its mean or average price after a period of fluctuation. Algorithms using this strategy buy when prices dip below the mean and sell when they rise above the mean.
Arbitrage strategy: This takes advantage of prices that are uneven between different trading exchanges. Automated algorithms execute all trades that use these price inequalities, which tend to be high-frequency.
Statistical Arbitrage Strategy: This strategy works on statistical models to identify an opportunity for price mispricing that exists in the market. These strategies involve selling and buying assets simultaneously within a short duration to exploit minimal price differences between them.
Market-Making Strategy: Market makers bring liquidity to the market by creating buy and sell orders at just slightly different prices. The algorithm system continuously updates orders to ensure that there is liquidity and that profits are made based on the difference between the buying and selling prices.

Also Read: Is Copy Trading and Algorithmic Trading the Same or Different

How to Get Started with Algo Trading in India

You need knowledge, the right tools, and an understanding of the Indian stock market to get started with algorithmic trading. Here's a step-by-step guide to help you get started:

1. Learn the Basics

Before engaging in algorithmic trading, it's crucial to have a basic understanding of financial markets and trading strategies. Additionally, learning programming languages like Python will help build your algorithms.

2. Choose the Best Algo Trading Platform

Execution of successful trades is key to the right selection of a platform. One needs to find the algorithms that support a specific trading platform, like Zerodha Kite, Interactive Brokers, or the best copy trading platforms that integrate with the trading platforms, such as MT4/5, Amibroker, and TradingView.

3. Build or Buy an Algorithm

You either develop your algorithms in coding languages or buy the prebuilt ones from reliable providers. There are pre-configured algorithms in platforms like Combiz Services Pvt Ltd, which can be tuned to fit your needs.

4. Backtest Your Strategy

Test your strategy with historical data first before going live to see how your strategy performs under varied conditions in the market.

5. Go Live

You can deploy the algorithm in a live market environment once you feel comfortable with the performance of the algorithm. First, start by making a small investment and track your trades.

AI BOT Features:

AI BOT-Algo Trading and Copy Trading is a web-based platform
AI BOT supports multiple broker
AI BOT allows cross-broker copy-trading
AI BOT supports algo trading from various trading platforms eg. Trading View, MT4/5, Python, Excel, Amibroker, Ninja Trader, etc.
AI BOT supports direct trading in multiple accounts in one click
AI BOT has basket order and one-click trade features
AI BOT can place a trade in thousands of accounts in one click with mili-seconds latency.
AI BOT your trades can copied even when you are not suitable for part-time traders as well.

Check out the pricing details

Price

Where Can I Trade with Algorithms?

To trade with algorithms in India, you’ll need access to platforms that support automated trading. Some of the top trading platforms that provide algorithmic trading features include:

Zerodha Kite: Known for its simplicity and powerful APIs for algorithmic trading.
Upstox: Offers easy integration with third-party tools and APIs for algorithmic strategies.
Interactive Brokers: A global leader that offers comprehensive tools for algorithmic trading and is widely used by professional traders.
AI BOT by Combiz Services Pvt Ltd: Combiz offers a web-based platform for algo and copy trading that supports integration with various trading platforms like MT4/5, Amibroker, and TradingView. It also supports cross-broker copy trading, allowing you to execute trades across different platforms with ease.

Conclusion

Algo trading is transforming the way traders in India approach the stock market. With the right knowledge and tools, anyone can tap into the power of algorithmic trading to automate strategies and optimize trading efficiency. By understanding the best algo trading strategies in India and selecting the right platform, you can start executing profitable trades while managing risks effectively.