Get to Know How Much of the Market is Algorithmic Trading at Share India (2024)

The rise of trading in the Indian market, coupled with the internet and computational technologies, worked together to form a new trading method. This trading is referred to as algo trading, which works faster.

To answer the question about the percentage of trading algorithms in the stock market, you must know why it's elevated and the things that can help algo trading. The algo trade in India, was introduced in 2008 by the Securities and Exchange Board of India (SEBI). At first, it started with Direct Market Access which was restricted to institutional investors only, but afterward the cost advantage and accuracy was adopted by the trading community, and it kept on growing.

Algo Trading Meaning

Algo trading is a method of trading with the financial market using a pre-programmed trade to monitor the market and execute it accordingly. A major role of algo trading is to automate trades across all asset classes and market segments. As this happens with zero manual processes, the trades are executed based on pre-written conditions set by the professionals.

First, a trader loads their server with trading algos with specific instructions. These algorithms monitor the markets, look for a specific trade or setup, apply it to a single or multiple assets, perform the conditions, and execute.. But as a professional, you need to have experience or expertise in spotting the trade and setting up the following algorithm setup and managing it accordingly. Because the concept of a computer algorithm is to loop a set of criteria, applying the same principle to stock trading can be useful and beneficial if done correctly.

How Much Percentage of Algorithmic Trading?

The algo trade has covered up the maximum place in the stock market. In India, the percentage of traders who use algorithms for trading ranges from 50 to 55 percent. But in other markets,the percentage of algo trading is around 80-85% of trade. In the United States, Europe, and other Asian markets, the percentage ranges from 60 to 70% of total trading volume.As algo trading has been on the rise in the U.S and all over the world, the number of trades using algorithmic methods is growing day by day.

Why Is The Algo Trading On Rise?

Get to Know How Much of the Market is Algorithmic Trading at Share IndiaTo answer this question of why the algo trade is on the rise, the answer will be one word that is “convenience”, as the trader can handle multiple trades without a constant monitor and rely on the conditions which work according to their trading strategies.

The algo trade is done using a huge setup or machine with high configuration hardware and sophisticated software, along with a fast internet connection. The algo trade is usually in huge sizes but doing this high-frequency trade requires practice and breaking the whole amount into small parts and continuing to perform the trade in a specific time interval. You can consider an example of 1 lakh shares as a trade where the set algorithm is to set up a trading instruction that will execute 1,000 share trades every 15 seconds. In this way the whole process is aligned with the market volatility.

Conclusion

As there is a rise in the use of algo trading around the globe. In this article you learned about how much trading is algorithmic, and what's behind the growing popularity of algo trading.

There has been a scenario when the market saw a huge drop-down or crash due to an algo trade gone wrong and it is believed that the huge buying and selling of trades has given birth to this scenario. An algo trade is the trading of the future, and an algorithmic trade analyst can earn between Rs. 27 lakhs and Rs. 50 lakhs depending on their trading experience and other factors.