What is Algo Trading? How Algo Trading Software Works?


Algo trading, also known as algorithmic trading, is a type of trading that uses computer programs to automatically execute trades according to a set of predefined rules. Algo trading strategies can be used to trade a variety of financial instruments, including stocks, bonds, currencies, and commodities.

Algo trading software works by constantly monitoring the market and looking for opportunities to buy or sell financial instruments based on predefined rules. The rules can be based on a variety of factors, such as price, volume, technical indicators, and news events.

Once the algo trading software identifies an opportunity, it automatically places a trade. The software can also monitor the trade and make adjustments as needed. For example, the software may automatically close the trade if the price moves in an unfavorable direction.

Here is a simplified example of how algo trading software might work:

The trader develops an algo trading strategy that looks for stocks that are trading above their 50-day moving average and have a positive RSI.

  • The trader implements the strategy in their algo trading software.

  • The software starts monitoring the market for stocks that meet the criteria.

  • Once the software finds a stock that meets the criteria, it automatically places a buy order.

  • The software continues to monitor the stock and makes adjustments to the trade as needed.

  • The software automatically closes the trade when the stock reaches the trader’s profit target or stop-loss level.

Algo trading software can be very complex, and there are a variety of different types of software available. Some software is designed for beginners, while other software is designed for experienced traders.

Benefits of Algo Trading Software:

There are a number of benefits to using algo trading software, including:

Speed: Algo trading software can execute trades much faster than human traders can. This is because the software can monitor multiple markets and trade on multiple instruments simultaneously.

Accuracy: Algo trading software can execute trades with greater accuracy than human traders can. This is because the software is not susceptible to human emotions such as fear and greed.

Discipline: Algo trading software can follow a trading strategy more disciplinedly than human traders can. This is because the software is not influenced by human emotions or other factors.

Risks of Algo Trading Software:

There are also a number of risks associated with using algo trading software, including:

Complexity: Algo trading software can be complex and difficult to understand. This can make it difficult for beginners to use the software effectively.

Cost: Algo trading software can be expensive, especially for professional-grade software.

Risk: Algo trading is still a risky activity, and there is no guarantee that you will make money.


Algo trading software can be a powerful tool for traders, but it is important to understand the risks involved before using it. Traders should carefully consider their needs and budget before choosing an algo trading software platform.

QuantMan is one of India’s top online platforms for algorithmic trading that allows users to create, backtest, and deploy algorithmic trading strategies without any coding knowledge. It offers a variety of features, including:

  • A drag-and-drop strategy builder
  • A library of pre-built strategies
  • A Backtesting engine that allows users to test their strategies on historical data
  • A live deployment feature that allows users to deploy their strategies to real-time trading

Here are some tips for using the ‘QuantMan’ platform effectively:

  • Start by backtesting your strategies on historical data. This will help you to identify any potential problems and make necessary adjustments.
  • Once you are satisfied with the performance of your strategies in backtesting, you can start to deploy them in live trading.
  • It is important to monitor your strategies closely and make adjustments as needed.
  • Be aware of the risks involved in algorithmic trading.

To learn more about Quantman, Please click on this link: https://www.quantman.in/faq/