What are the requisites of a trade platform?

Not long ago, most of the trading in India used to be done manually. But ever since automated trading entered the arena, more and more people have gravitated towards it and now, nearly 40% of all the trades that occur that the National Stock Exchange (NSE) are done via algo trading strategies. The reason why algo trading has become so popular in such a short span of time is that it provides unparalleled speed, accuracy and efficiency that just isn’t possible with manual trading.

Since automated trading is done with the help of complex algorithms, the speed and accuracy is maximized while the risk factor of human biasness is minimized at the same time. Not to mention that algo trading strategies help generate massive amounts of profits for the trader because the number of trades that can be executed within a given span of time are enormous.

Algo trading utilizes complex algorithms that have been backtested on previous data to generate great liquidity for the trader. The trading algorithm also has to undergo severe scrutiny before it can be used in the market – given the high stakes. The entire point of algo trading is to make the process of intraday trading strategies, faster and efficient while minimizing the level of risk associated with trading. The customers invest their hard earned money in the trades and they are taking a big leap of faith by trusting their future to a few lines of code that they themselves often do not understand. This is why it is absolutely necessary for algo trading platforms to perform seamlessly. The desired features of an algo trading platform are as follows:

·         Quick trade execution.

·         Having the option to connect with different exchanges.

·         Both the market data and the company data should be available in real time.

·         Both the latency as well as the time lag should be as low as possible.

·         There should be an option for customization, as different traders have different needs.

·         The platform must have the ability and the infrastructure for backtesting.

·         There should be a provision to conduct trades directly with the broker’s network.

·         The platform must have trained professionals who have expertise in writing trade algorithms that are according to the needs of the specific trader.

A programming language that is independent of the platform is a must have to avoid confusion.