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SEBI mulls norms to regulate algo trading by retail investors

·         Algorithmic trading (also known as automated trading, black-box merchandise, or algotrading) uses a computer program that follows a defined set of instructions (an algorithm) to place a trade.

·         The trade, in theory, will generate profits at a speed and frequency thats not possible for an individuals dealer.

·         The explain sets of instructions are supported timing, price, quantity, or any mathematical model.

·         Apart from profit opportunities for the dealer, algo-trading renders markets additional liquid and trading additional systematic by ruling out the impact of human emotions on trading activities.

·         algorithmic trading in india|Bharat|Asian country|Asian nation}|Bharat|Asian country|Asian nation} Algorithmic mercantilism was introduced and allowed in India in 2008 by the Securities and Exchange Board of India (Sebi).

·         Initially, it started with Direct Market Access (DMA) and was restricted to institutional investors solely, however because of the price advantage and better execution, the trading community welcome it with open arms.

·         Benefits of algorithmic trading Trades are carry out at the most effective attainable costs.

·         Trade order placement is instant and accurate (there is a high probability of execution at the desired levels).

·         Trades are timed properly and instantly to avoid vital value changes. Reduced transaction prices.

·         Simultaneous automated checks on multiple market conditions. Reduced risk of manual errors once placing trades.

·         Algo-trading will be back tested using accessible historical and time period information to see if its a viable trading strategy.

·         Reduced the possibility of mistakes by human traders supported emotional and psychological factors.