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How to Start Algo Trading in India?

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Stock Market

How to Start Algo Trading in India?

Posted by NIFM
08-Nov-25 03:15PM

The stock market environment is changing quickly, and the biggest driver will be algorithmic trading—often referred to as algo trading. For various investors in India today, the most common way to achieve speed, efficiency, and emotional discipline is to move away from manual trading. If you're wondering how to get started in algo trading in India, this ultimate guide will help map out your plan to automate your investing.

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What is Algo Trading?

Algo trading refers to using automated, pre-programmed computer instructions (algorithms) to buy and sell shares at incredible speeds and volumes. It is not uncommon for algorithms to be programmed to analyze real-time market data (i.e., price changes, volumes, times) and automatically place buy or sell orders as particular conditions materialize.


One of the main advantages of algo trading for beginners in India is that it eliminates human emotion. Where a manual trader may hesitate or panic at the wrong time, an algorithm will only execute trades based on logic (determined by the programmer) and data, and therefore only follow the established strategy.

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Choosing the Best Algo Trading Platform in India

Taking the first step to trading algorithmically requires you to select the appropriate tools. Your choice will depend on your coding skills and how much control you want.

1. No-Code Algo Trading Platforms

These are the easiest programs to start with algorithmic trading for beginners in India who don't have prior coding experience.


  • How they work: No-code platforms offer the flexibility to define rules and create strategies using a simple drag-and-drop process.

  • Examples: Platforms such as Zerodha Streak or external tools such as Tradetron can seamlessly link you to your broker if you use one of the major brokers in India.

  • Advantages: Easy to get up and running, no coding necessary, and quick backtesting ability.

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2. Code-Based Platforms

If you want the most flexibility and full control of your trading system, coding will be required.


  • Programming Language: Python for algo trading is considered industry-standard for the availability of libraries (Pandas, NumPy, and Zipline) for data analysis and backtesting.

  • API: You will have to connect your coded program to the broker's API (Application Programming Interface) to send orders.

Platform Selection Criteria:

Consider the criteria applied to chosen platforms when practicing Algo trading in India:


  • How easily the platform integrates with your brokerage.

  • How timely and reliable the data will be for executing trades.

  • Their backtesting functionality is reliable and effective.

  • How much does it cost to use the platform (subscription fees)?


If you are interested in developing your analytical skills and the skills needed to make winning strategies in trading, then you may also consider our Data Analysis for Stock Market course.

Developing and Backtesting Algo Trading Strategies

Algo Trading is all about strategy. A poor strategy will lose money regardless of how quickly or accurately the algorithm trades.

Simple Strategies for Beginners

Models are simple strategies for novice traders. Think of strategies with indicators some people are already familiar with:


  • Moving Average Crossover Strategy: The algorithm will buy when a shorter-term moving average crosses above a longer-term moving average (the golden cross) and sell when the opposite occurs (death cross).

  • RSI (Relative Strength Index) Based: In this strategy, you can buy when the stock is "oversold" (i.e., RSI < 30), and sell when the stock is "overbought" (i.e., RSI > 70).


Related Read: It is important to understand indicators. Read our article on What Is Moving Average Crossover Strategy?

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The Importance of Backtesting

Once a strategy is developed, you must perform backtesting on said strategy. Backtesting means that you apply the algorithm to historical market data to determine how the algorithm would have performed in the past.


Keys to consider when backtesting:


  • Net Profit/Loss: The overall net amount of money gained or lost.

  • Max Drawdown: The largest peak-to-trough decline over a certain period of time. This is one of the most important measures of risk management in Algo Trading.

  • Win Rate: The percentage of trades that were profitable.


After thoroughly testing your trading strategy with past data, you need to try it through your broker's platform by using a simulated (or paper) trading account, which will allow you to test your strategy with live market data without risking any real money.

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Execution, Monitoring, and Risk Management

The last stage is deployment, and it requires discipline (even from a machine).

Going Live

  • Broker Connection: Be sure to secure a connection to your broker account with your platform or code.

  • Compliance: As a retail trader in India, be sure your automated orders comply with up-to-date SEBI regulations on Algo Trading, which state that brokers will need to authorize your automated order execution, among other factors.

  • Start Small: Begin with only a small portion of your trading capital.

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Comprehensive Risk Management

This is where many beginners go wrong. The algorithm will need to include risk management rules, rules that are defined by you.


  • Mandatory Stop-Loss: Every single trade must have an automated Stop-Loss order if the trade runs against the strategy. The Stop-Loss system will limit movement against the original intent of the order.

  • Position Sizing: The algorithm must risk only a small, fixed percent of your overall capital per trade (for example, it would include using no more than 1% of the capital on any trade).

  • System Shutdown: Define clear conditions under which the algorithm should cease trading, like a maximum daily loss limit, etc.


To gain more insight into derivatives, often a favored asset class for Algo Trading due to liquidity, check out Understanding Open Interest in Derivatives. If you want to learn more about different kinds of market instruments, check out How to Start Trading in the Derivatives Market in India.

Join our Risk Management Course

Conclusion

To say that Algo Trading is the exclusive domain of large institutional players is no longer true in India: it is available to any diligent trader. The process requires learning, rigorous definitions of strategy, and above all, disciplined risk control.


Take advantage of fast and reliable automation in pursuing your edge. Start with a simple strategy, backtest it with rigor, and don’t skimp on risk management.

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