Algorithmic (Algo) Trading

Algo trading uses automated systems to execute trades based on pre-defined conditions, reducing human emotions in decision-making.

Key Points:

• Uses high-speed computing and mathematical models to trade.
• Includes High-Frequency Trading (HFT), where trades are executed in milliseconds.
• Common in institutional trading and hedge funds.

Time Frames Used:

• Milliseconds to minutes for HFT
• 5-minute (M5) to Daily (D1) for rule-based trading

Example: An algo trading bot executes a scalping strategy on Bank Nifty options based on RSI and Moving Average crossovers.