Selecting Broker for algo trading in India is easy these days because of competition in stock broking industry. The Indian broking industry has changed dramatically since the advent of discount broking. For selecting broker, Cheap brokerage rates are no longer a decisive factor which traders consider. The new decisive factor is Technology- algo trading, advanced charting, stock screeners and so on. One should consider the following checklist when selecting broker for algo trading:
Exchange Approved ATS
You cannot assume your broker will provide you an approved ATS facility. This is because a broker’s sales team may pitch that their ATS is approved even though the broker may be flouting norms. The easiest way to check for approval is to watch for any published ads on algo trading by the broker on website/print media. Brokers are required to get exchange approval before publishing any advertisement, so advertising about ATS service pretty much verifies it. Alternatively, ask your brokers to email you officially about its ATS services.
As on 26/12/2018, only two broker APIs do not need exchange approval: Zerodha and Upstox. If you trade through an API with any other broker, you may need to go for exchange approval. Disclaimer: this is as per publicly available information.
Server Support for ATS
The execution strategy is often run at broker server’s end (only decisions signals may be sent over the client’s computer). The server should be big enough to support simultaneous trade orders by larger number of clients, and it should be close enough to exchange to minimize latency
Since ATS system have additional layer of risk management by the decision logic, traders often expect high margin from the broker. You can negotiate for margin depending on exchange guidelines and your own trading style.
The quality of technical support is the second best factor in selecting an ATS. This is because ATS are more complicated than simple IBT systems and may require extensive training/query resolution.
Monthly ATS Costs
ATS software may cost anything between zero to Rs. 25,000 per id per month. Add to that the brokerage costs depending upon your expected monthly turnover. It is wise to select a broker which charges low monthly (Software Costs + Brokerage Costs)
Indian Brokers Offering Algo Trading
The recommended top brokers offering Algo Trading in India are:
- Zerodha: Learn more about Zerodha algo trading services
- Upstox: Learn more about Zerodha algo trading services
- Composite Edge: Learn more about CE algo trading services
However, there are many more brokers. Your search for selecting broker for algo trading may just stop when you apply the above checklist with your neighborhood broker!
Getting Started with Automated Trading
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