Algo trading- An educational guide to retail investors

Transcription

1 Algo trading- An educational guide to retail investors Algo or automated trading has been creating a buzz in the Indian financial markets. Although algo trading started in India in 2005, gained acceptance only in 2008 after SEBI permitted electronic market access with the order books of exchanges. There are a number of brokerages across the country already registered and many more are in the process of registering with the Indian equities and commodities exchanges to permit their clients and authorized personnel access to automated trading. According to an article published by The Hindu business line in August 2012, automated or algo trading accounted for rd 1/3 of all trades carried out on the NSE while in the US and Europe, it is about 70% and 40% of the total trades respectively. Compositedge is among the first exchange traded members already registered for automated trading with the Indian equities exchanges and we offer multiple algo trading platforms to our clientele, based on our clients' preference and requirements. You can make the best use of your talent and experience and the opportunities offered to you as our valuable client. This user manual will take you through the process of setting up your algo trading platform using Nest plus plugin on your NOW TRADING TERMINAL and Amibroker as your real time charting software. Let's get started with understanding how algo trading works and how you can make the optimum use of your trading platform to automate trades Step - 1 Download Amibroker using the following link or login to the global data feed website to subscribe If you wish to test the system by making use of the 3- day free trial offered by GDFL, download NIMBLE DATAPRO PLUS On completion of downloads, you will receive a 1- month free trial of Amibroker and a 3- day trial of real time data-feed from GDFL However, if you do not wish to take the free trial and would like to subscribe directly, you can choose the Amibroker edition which is compatible with your strategies and costs. To check the differences between the standard and professional editions of Amibroker, Click Here Install Amibroker and save the real time data- feed on your computer. 1

2 Step-2 Login to your NOW TRADING TERMINAL Before logging in to Amibroker, please make sure that your NEST PLUS PLUGIN is active and you are logged in If you have not activated your NEST PLUS PLUGIN, you can do so by Clicking Here and hitting the REGISTER NOW button 2

3 Once you complete the registration, sign- in using your username and password. Click on TOOLS OF THE TRADE followed by PLUS TRADING PLUGIN To view the pricing or subscription information, click the PRICING button 3

4 You will be led to the PLUS TRADING PLUGIN page with subscription charges for various time periods such as monthly, quarterly, yearly and so on. Select from the choices and add to cart Once you hit the CHECK OUT button, you will get your subscription details. Continue by selecting your mode of payment and complete your subscription process. At any point in time, if you have any issues or need clarifications, you can chat with the cust. support of Omnesys from the window available at the right- hand bottom of your screen 4

5 On completing your registration with Omnesys, you will receive your username and password in the registered e- mail id provided by you. Login to your NEST PLUS PLUGIN on your NOW TERMINAL Step - 3 Login to your AMIBROKER and NIMBLE DATAPRO PLUS account Setup your window by clicking on the window menu. Select the items you intend to display in your window. To display a new chart, hit the symbol menu followed by new. A small window will throw up. Enter the symbol of the chart

6 For example: If you wish to analyze TCS, type TCS-I for the near month contract, TCS-II for the next month contract and so

7 To activate a new chart screen with the desired index or scrip, drag and drop the PRICE INDICATOR available on the chart window to your left. The chart for the selected symbol will appear. You can change the time interval of the chart by using the drop down button as indicated

8 To create your own trading strategy using technical analysis, hit the analysis menu and select the AFL code wizard Select ADD NEW if you are creating a new strategy. Technical analysis strategies can be created from the list of technical indicators provided by Amibroker. Once you create your strategy, go ahead and save it. Complex strategies that do not involve the technical indicators mentioned can ONLY be created using the AFL or Amibroker fomula language code.

9 If you are not aware of how to create the AFL code, you can build your strategy and you will find a number of software developers on various forums who can program your strategy using AFL code. Besides, global data-feed too have their programmers who can code your strategies- FOR A COST Retrieve your strategy and test it out. Based on the parameters set by you, the chart will display buy/ sell signals.

10 Choose the parameters that best defines your strategy by right clicking on the chart and selecting PARAMETERS. A small window will open up to enable you select the parameters for your strategy. PARAMETERS allow you to select features like stop losses, trailing stops, profit targets, type of orders and so on. You will also be asked for your client id provided by the broker. This is basically to interface your trading terminal and send out alerts as and when a trading signal is generated on Amibroker. Once you set the parameters for your strategies, activate the START TRADING option by selecting YES. Your Amibroker real-time market data software is now configured and ready to to send out trading alerts on to your NOW TERMINAL. At this juncture, we would wish to inform you that we are using one of the sample strategies available on Amibroker to illustrate how trading signals are transmitted from a real- time market information provider to your TRADING TERMINAL.

11 Whenever the trading system or strategy developed by you sends out a signal, you can view the alert on Amibroker and simultaneously on your NOW TERMINAL

12 Exchange guidelines do not permit complete automation of trades for retail clients. Therefore any signal generated on Amibroker will only be sent as an alert on the NOW TERMINAL, with three options. Place- To place the order; Refresh- To view all alerts; Ignore- To ignore the alert If you select to PLACE the order, based on the parameters set by you the order will either be executed at the market and can viewed by hitting the F8 key or in case it is a limit order yet to be triggered, you can view it by hitting the F3 key on your NOW TERMINAL However, if you choose to IGNORE the alert, the order does not get triggered and the same will remain on your system as a passive alert unless cancelled or deleted. With this we complete our session on automated trading employing Nest plus plug-in and utilizing Amibroker to send out realtime market data. Hope the information was valuable to you and if you have any questions or clarifications, please write to us at or call us on HAPPY TRADING