Algo Trading with Zerodha

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Algo Trading with Zerodha has its own set of trading benefits and associated complexities. If you are a client of Zerodha, then you must ideally be looking for this set-up in your trading platform. Such form of trading attracts intermediate to expert level traders more as compared to the ones beginning their trading journey.

Let’s try to understand with some of the basics.

Algo trading is an innovative and efficient way of trading. It is different from the traditional manual method of trading in many different aspects. Algo trading involves the use of sophisticated and advanced algorithms to perform the function of trading on behalf of the traders.

Algo Trading with Zerodha Review

The algo trading strategies are formed and predefined into the algorithms, when the opportunity to trade arises, the algorithm recognises it and makes use of the opportunity to place a trade.

The trade then goes through the trading system and gets executed in fractions of seconds. Thus, algo trading is an excellent mechanism for high speed and accurate trading.

Along with the numerous benefits, algo trading also has certain drawbacks.

The procedure involves some complex steps like the formulation of the algorithm through coding, implementing it and executing it.

Therefore, it may get complicated for a trader who does not have a lot of technical knowledge. However, algo trading is only as complex as its tools and platforms.

When algo trading is supported by the innovative and technologically advanced tools and softwares, a lot of complexities get taken care of, and the trader is only left with the task to make good profits using the technology.

There are a few stockbrokers in India who are gradually moving towards this technology-driven concept as differentiation in order to make their customer’s life easy.


How Algo Trading with Zerodha Works?

Zerodha is a financial services company in India, which functions as a discount stockbroker. It offers a variety of services at low brokerage cost and high efficiency. 

The products are available for stock trading in Equity, commodities trading, currency trading, algo trading and much more.

Algo trading with Zerodha makes the entire process very streamlined and easy to use. As mentioned above, algo trading is only as complex as the tools. Zerodha offers a few simplified and easy to use algo trading platforms, which further offer specific functionalities for algo trading. One such tool is called Zerodha Streak.

Thus, algo trading with Zerodha, supported by Streak becomes a simple and highly effective process.

The biggest benefit of algo trading with Zerodha is that the trader does not need to be a coder or a programmer to start algo trading on this software. It provides the capability to create algorithms without the use of coding.

This is the USP (Unique Selling Proposition) of algo trading with Zerodha.

The algorithms can be made in simple English and entered into the system, with specific values for entry and exit positions, and the system converts them into the codes and algorithms on its own. Basically, with the help of Streak, almost anyone can do algo trading.

Algo trading with Zerodha also comes with the feature of backtesting.

This is a definite requirement for algo trading. The algo traders must be able to test their algorithms on the historical data to be able to understand if the algo is working properly or not.

Streak makes it possible to do just the same. Once the algorithm values are entered, algos are created and backtested, it is time to use them for actual trades. As soon as the entry and exit signals mentioned in the algorithm are met, the software sends signals and places the order.

The orders then get executed and there is no requirement for the traders to intervene.


Algo Trading with Zerodha Kite

If you want to perform algo-trading using Zerodha Kite, then Kite Connect would work the best for you. Through that platform, you would be required to integrate Zerodha kite with an external system such as Python, Java, PHP, Node JS etc based on your preference.

Once integrated, you can deploy your back-tested strategies and automated trading will take control from there.

However, you are supposed to perform your backtesting without any warnings/errors before deploying the strategy.


Algo Trading with Zerodha Pi

If you prefer to use Zerodha Pi for your algo trading, then you can use the offering of ‘Expert Advisors’ from this discount broker.

To kick it off, you need to code your strategy post technical analysis in a trade-script. There are quite a few such strategies you can pick and choose from.

Then, you need to use Zerodha Pi in order to backtest this strategy. The trading platform will gauge it by running historical data over the strategy in order to validate it.

From here, you can generate real-time signals for both buy and sell with just a single click.


Algo Trading with Zerodha Python

As mentioned above, Zerodha kite has multiple libraries and API integration offerings, thereby, offering a flexible solution for different trader preferences.

Integration with Python is one of those provisions.

You will need a Zerodha Developer account to access such libraries and APIs and again, it is a pretty straight-forward process too.

The best part is while you are accessing these libraries, there are no separate approvals you need to get as Zerodha as done that already. All you need to do is download the kit and start using your developer account.


Benefits of Algo Trading with Zerodha

Algo trading has evolved at a very drastic speed. Currently, about 40% of the trades on the National Stock Exchange (NSE) are done algorithmically.

If the trades were to be done manually, it requires hours of research and analysis and waiting for a really long time to finally find the opportunity to enter into a profitable trade.

With the tiresome hours and the tedious work, it becomes impossible to enter and execute trades without errors.

The algo trading platforms like Streak of Zerodha does exactly that for the traders. It performs the tedious task of finding the profitable trade opportunities for the traders, based on the backtested strategies and algorithms created, and as soon as an opportunity for a trade is found, the system sends alerts to the trader.

The whole process gives an edge to the trader over the manual trading process and he is able to make the decisions with fewer efforts and more precision.

To add to the ease, algo trading with Zerodha comes with an intuitive interface which does not require the trader to know the computer language. He can simply type out his requirements in his language, after considering the trading indicators that he wishes to incorporate.

The input includes the technical indicators, the stop loss, the profit percentage and the specific stocks that the trader wants to trade-in.

The entry and exit happen automatically based on the strategy chosen and selected. The notifications can also be sent to the mobile phone of the trader on his Streak App and he can access the market and make trading decisions while on the go.

Therefore, it is safe to conclude that algo trading with Zerodha through Streak has brought in algo trading for the masses in India. A trader does not need to be equipped with the technical knowledge to start trading algorithmically.

He only needs to be the best at what he does, and that is trading.

The trader must have in-depth knowledge of the technical indicators and must implement them judicially into his strategies, and incorporate risk management techniques like the stop-loss levels, and after that, he is good to go.

The rest of the task is completed automatically, with excellent speed, precision, low levels of latency and very fewer chances of errors.


Concerns Of Algo Trading with Zerodha

Although, most of the benefits and features mentioned above draw a positive picture for the broker towards these technology-based innovations.

However, there are a couple of concerns you must be aware of:

  • It is relatively a new concept in the Indian trading space and needs to prove its worth among the client base to gain trust.
  • It needs to be verified whether these algo-trading softwares taken trader sentiment into consideration or are just automated platforms running numbers in the backend.

Having said that, most of the stockbrokers coming up with these algo-trading software claim to provide sophisticated usage of artificial intelligence in their respective developments.


In case you are looking to get started with Algo Trading with one of the top stockbrokers in India, just fill in some basic details in the form below. A callback will be arranged for you:

Free Demat Account

 


More on Share Market Education:

If you wish to learn more about Share Market and investments, here are a few references for you:

 

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