Algorithmic Trading share in total turnover grows to 50% in 8 years

Algorthmic-Trading-700x372

 

Algorithmic trading in India across the cash and derivatives market as a percentage of total turnover has increased up to 49.8% in eight years from merely 9.26% (average) in 2010. In March this year, 44.8% of the cash market volume and 48.2% of the equity derivatives market was driven by algo, showed NSE data. On the BSE, 37.22% of trade in March 2018 was driven by algo trading.

The daily turnover of equity market is around Rs 25,000 crore to Rs 30,000 crore, and in the F&O market, it is around Rs 3.5 lakh crore to Rs 4 lakh crore on a daily basis. However, as far as awareness of the retail investor is concerned, it is less in India. This is mainly because it requires specialised skills in addition to tools.

Sebi’s recent announcement on steps for strengthening algo trading through shared co-location has boosted the sentiments of algo solutions providers.

Experts believes that in the near future human-machine interaction could go to the next level. Through Deep Learning, AI, algorithms will self-correct and adapt to dynamic markets. Algos will be everywhere, in HFT, mid-to-low frequency, arbitrage, scalping, hedging, market making and anything you can define to a machine.

The efficiency of almost any trading done on the exchanges can be improved by leveraging technology. Automation of the trading process not just improves the efficiency of the trading participants, but also improves the efficiency of the market itself — arbitrageurs use automation to rectify pricing anomalies; and market makers use the power of technology to improve liquidity by providing continuous buy and sell quotes which automatically adjust to events and risks in the market.

Advertisements

Sebi eases Algo trade rules in commodity exchanges

cropped-1-thegoodtheba-1

In a bid to relax algorithm trading norms at commodity derivatives exchanges, markets regulator Sebi today raised the limit to process up to 100 orders per second by a user for such trade from the existing limit of 20 orders per second.

The decision has been taken after receiving representations from exchanges along with views of Sebi’s sub committee — Commodity Derivatives Advisory Committee.

“It has been decided to permit exchanges to relax the limit on the number of orders per second from a particular … User-ID up to hundred orders per second,” Securities and Exchange Board of India (Sebi) said in a circular.

The markets regulator asked exchanges to ensure that the limit it provides is subject to its ability to handle the load.

Besides, the regulator has decided to do away with the requirement of empanelment of system auditors by the exchanges for system audit of algorithmic trading.

Algorithmic trading or ‘algo’ in market parlance refers to orders generated at a super-fast speed by use of advanced mathematical models that involve automated execution of trade, and it is mostly used by large institutional investors.

 

 

 

 

CANDLESTICK PATTERNS

Greek Language (GL) provides a simple, built-in function that can identify one of the two dozen predefined candlestick patterns as mentioned below :

BUY{
CSP() =MORNING_STAR;}

LONGEXIT{
CSP() =EVENING_STAR;}

morningstar_eveningstar

Similarly,

SELL{
CSP() =HANGING_MAN;}
SELL{
CSP() =DARK_CLOUD_COVER;} 

darkcloudcover

SELL{
CSP() =BEARISH_ENGULFING_LINE;} 

Bearish Engulfing

 

Let’s Go, Algo !!!

Why-you-should-be-doing-Algorithmic-Trading_1

With several amendments over the years, India provides a good opportunity for Algo traders due to a number of factors such as co-location facilities and sophisticated technology at both the major exchanges; a smart order routing system; and stock exchanges that are well-established and liquid.

Algo trades account for over 43% of India’s stock market turnover. In the US, where retail investors also engage in Algo trades, 90% of the turnover is from automated systems. The global average is 75%.

SEBI was among the first regulators to issue a discussion paper proposing strengthening of rules on Algo trading in August 2016.

With rules in place, Algo trades in India will rise to the global average, market participants said. There are a lot of startups in this space waiting to enter once rules are in place. This will be a big boost for Algo trading.

Sebi allows options contracts in commodity trading.

Exactly a year after strengthening regulation of the 13-year-old commodity derivatives market, the Securities and Exchange Board of India (Sebi) has taken the first steps towards its growth by allowing exchanges like MCX and NCDEX to launch options in commodities.

Also, it has expanded the list of notified commodities that exchanges can launch by adding to it eggs, diamonds, skimmed milk powder, tea, cocoa, pig iron, biofuels and brass.

Sebi will spell out the details of the type of options and the products on which they can be launched in due course. An advisory committee constituted by Sebi after erstwhile commodity regulator FMC was merged with it on September 29 last year had recommended launch of gold and refined soya oil options initially.

The introduction of new commodity derivatives products is considered to be conducive for the overall development of the commodity derivatives market, attracting broad base participation, enhancing liquidity, facilitating hedging and bringing in more depth to the commodity derivatives market,” Sebi said in a circular. “The commodity derivatives exchanges willing to start trading in options contracts shall take prior approval of Sebi for which detailed guidelines will be issued in due course.”

Other important regulations are allowing equity exchanges like NSE and BSE to launch commodity futures segment and commexes like MCX and NCDEX to launch equities and currency segments.

Sebi will also enable margin fungibility by permitting merger of a commodity subsidiary of a brokerage with itself. In time, other products, like indices, and institutional participants like mutual funds, FPIs etc could be allowed to deepen the market.

Indeed options comprise 75% of NSE’s total derivatives turnover of Rs 404 lakh crore in the fiscal year so far. Average daily turnover of equity derivatives on NSE has been Rs 3.31 lakh crore against just Rs 25,000-30,000 crore for MCX, NCDEX and NMCE, where only futures are traded and institutional participation disallowed.

Since delivery is envisaged, the type of option could be American style though markets have crossed their fingers. “European styled options are being traded in Indian equity and currency derivatives markets, American styled options for commodities are in vogue in developed markets like CME. We are awaiting guidelines from Sebi to decide on the product type,” said Mrugank Paranjape, MD, MCX.

“For farmers, it (options) will be a game changer,” said Samir Shah, MD, NCDEX. “It would help them to sell their produce in the derivatives market and thereby get the benefit of price protection in case the price falls below their cost of production and also derive the benefit of any rise in the price. Options are also a much better hedging instrument as compared to futures for hedgers.”

Source – The Economic Times.(September 29, 2016)

 

Greek Trend Trader

gtt1

There are four cardinal rules which should be part of every traders strategy – Trade with the trend, Cut losses short, Let profits run, and Managing risk.

With GTT now create your own strategies using simple and easy to use strategy/logic designing language, Define your entry and exit parameters using technical as well as quantitative parameters. Backtest your strategy’s financial & statistical result aided by superlative charting tool with latest technical indicators and studies. Test strategies on intraday as well as historical data starting from 2006 till date.

  • Auto execution based on built strategies
  • Multiple strategy execution.
  • Customizable strategies.
  • Backtest strategy results.
  • Strategy Trade pointers on Chart for easy analysis
  • Charting tool with 100’s of technical indicators and studies
  • Multiple Charts windows
  • Live Strategy Scanner
  • Co-location option

BSE plans trading in commodity derivative segment

BSE-has-also-disposed-of-86-complaints-of-investors-90

Leading bourse BSE on Saturday has said that it plans to launch commodity derivative segment which will allow trading in metals and has approached market regulator Sebi for approval.

“BSE plans to set up a commodity derivative segment as soon as approvals are in place. It would consist of non-agricultural commodities like metal, oil and gas,” BSE Managing Director and CEO Ashishkumar Chauhan said.

Post the merger of the capital market regulator Sebi and commodity market watchdog Forward Market Commission (FMC), the exchange members need not create a separate subsidiary to start commodity trading.

“As and when that (merger) process is complete, our members can trade in commodities. Earlier, they had to open a separate subsidiary to become member of commodity exchange.

Now they are allowing us to trade as part of BSE as and when the approvals come,” Chauhan said.

At present, there are two major national and six regional bourses which offers commodity futures trading in the country.

As BSE completes 140 years of operations, Chauhan said BSE wants to position itself as “investment bourse” of any type of asset class rather than just be confined to being an equity trading platform.

He further said that they have got board approval for setting up of an international exchange in Gujarat’s GIFT City.

“We will apply to regulator Sebi. This is first time that an international finance zone is set up and we plan to offer all asset classes which will include equity derivative, currency derivate, interest rate derivative, and international and domestic commodities in the international exchange,” he said.

The new exchange will also help global companies raise finance from other overseas investors.

“We want to raise funds for Indian companies and foreign companies using international finance zone. For international finance zone to succeed and compete with Singapore, Hong Kong and others we need to ensure that it is able to provide all options under one roof,” Chauhan said.

He said the planned international exchange would be a BSE subsidiary through which companies can raise funds through issue of depository receipts.

“Currently, we are in the process of discussion with MCA and others what names are available,” Chauhan said when asked what would be the name of the new exchange in the GIFT City.

GIFT city, situated in Gujarat, caters to India’s large financial services potential by offering global firms a world—class infrastructure and facilities. It aims to attract the top talent in the country by providing the finest quality of life all with integrated townships, IFSC and multi—speciality special economic zone.

 Source – The Hindu (July 9, 2016).