Showing posts from February, 2016

One of the cool feature of Zerodha Pi unaware and ignored by most of traders

One of the cool feature of Zerodha Pi unaware and ignored by most of traders As all traders knew markets moves on news. market information is very important for a trader to keep track of his Trading. Zerodha Pi has one of the very cool feature, but i think most of the traders are not utilizing it and ignored as they are unaware of it.
If you have used Zerodha Pi you might have familiar with this menu bar as shown in below screenshot image. The News Reader in zerodha Pi works based on RSS feeds, which is very cool feature and an opportunity to get real time market news. you might have got this Question..! What is RSS? RSS (Rich Site Summary) is a format for delivering regularly changing web content. Many news-related sites, weblogs and other online publishers syndicate their content as an RSS Feed to whoever wants it. Why RSS? Benefits and Reasons for using RSS? RSS solves a problem for people who regularly use the web. It allows you to easily stay informed by retrieving the latest co…

Optimal Approach to Algorithmic Trading

Optimal Approach to Algorithmic Trading The best execution through use of algorithmic tools depends to a large extent on the presence of various critical ingredients, such as:
Clear understanding of portfolio management strategies and objectivesRobust pre-trade modelsBalancing timing and impact cost issuesEffective intelligent integration of OMS and direct market access trading platformsClose, iterative relationships with algorithmic trading providersThorough post-trade analysis and feedback  All these critical requirements make the design of the algorithmic platform a Big challenge requiring the following attributes:
Adaptable:Providing high speed transmission of market data and transaction messages to other applications and usersOffering a vendor independent platform that is able to accept and distribute data from any market data vendorHaving pre-integrated security and monitoring for both compliance and cost effective operations Streamlined: Ensuring optimized acquisition, processi…

Trading Algorithms: Areas of Concern

Trading Algorithms: Areas of Concern Lack of Visibility We know what a specific algorithm is supposed to do, measure its pre-trade analytics and see how the post-trade results match up to that expectation. But if the trader didn’t select the most optimal algorithm for that trade little can be done. This problem is caused by a lack of visibility and transparency into the algorithm while it is executing orders.
Algorithms Acting on Other Algorithms If fund managers trading pattern is spotted and regular; tracked with the use of algorithms, then these algorithms are liable to be ‘reverse engineered’. This implies that their buy and sell orders are pre-empted and used to the maximum effect by their competitors. Here, algorithms are acting on other algorithms.
Which Algorithm to Use for Trading? With brokers offering many algorithmic strategies, one concern is that buy-side institutions lack the tools to understand which algorithm to use for a particular stock. The lack of a standard benc…

Algorithmic Trading Trends in Stock Markets

Algorithmic Trading Trends in Stock MarketsAlgorithms have sparked a fundamental change in everything an exciting era of opportunity for those who innovate. It is difficult to explain precisely all the concepts of algorithmic landscape. But some broad trends are referred in this post. In the coming years, the evolution of the algorithmic landscape will result in firms re-evaluating and evolving their views, trading strategy, asset-class mix, the relationship between buy-side and sell-side, the very composition and skills of the people they employ and information technology.
Customized Algorithms The buy-side until now predominantly access algorithms pre-built by sell-side brokers. Buy-side players are gradually moving away from “commoditized” algorithms in order to capture their own intellectual property in customized algorithms.
Algorithms Migrating to Currencies The use of algorithms in multiple asset classes will continue to increase. There are strong indications to date that algo…

Algorithmic Trading Life Cycle of Algo Components

Algorithmic Trading Life Cycle of  Algo ComponentsAlgorithms are used extensively in various stages of the trading cycle. we can classify them into pre-trade analytics, execution stage, and post-trade analytics.
The Pre-trade analytics involve thorough analysis of historical data and current price and volume data to help clients determine where to send orders and when; whether to use algorithms or trade an order manually we can call this as back testing the algorithm etc.,. The pre-trade analysis is designed to help buy-side traders understand and minimize market impact by choosing the level of aggressiveness and a time horizon for trading various stocks. Traders can select varying levels of aggressiveness and visualize them against the time horizon for completing the trade. Most compare the spread between bid and ask prices, reference that against the volatility of a given stock, and attempt to create a range of potential outcomes. A lot of the broker-sponsored algorithmic trading sy…

Developing Algorithms for Trading

Algorithms for Trading In Present market Traders uses various kinds of algorithms according to there strategy the most Popular Algorithms in practice which is most commonly used algorithms in the market place are: volume weighted average price (VWAP), time weighted average price (TWAP), arrival price,  market-on-close (MOC), and implementation shortfall and the difference between the share-weighted average execution price and the mid-quote at the point of first entry for market or discretionary orders. Arrival price is the midpoint of the bid-offer spread at order-receipt time, and it also notes the speed of the execution. VWAP is calculated by adding the Points traded for every transaction in terms of price and multiplying that by shares traded, and then dividing that by the total shares traded for the day. MOC measures the last price obtained by a trader at the end of the day against the last price reported by the exchange. Implementation shortfall is a model that weighs the urgen…