Algorithmic Trading

Algorithmic trading is the use of computer programs to place, modify and exit trades automatically according to predefined rules, without a human clicking the buy or sell button. The rules can be as simple as “buy NIFTY futures when the 9 EMA crosses above the 20 EMA” or as involved as a multi-leg options structure that adjusts with market moves. Once the logic is written, the system watches live market data and executes when conditions are met.

In India, retail algorithmic trading runs through broker APIs — Zerodha’s Kite Connect, Fyers API, Dhan, Angel One SmartAPI and others — under SEBI’s framework for API-based trading, which requires algos to be tagged and routed through the broker. It is legal for retail traders when done through these regulated channels.

Example

A trader defines a rule: buy one lot of NIFTY futures (75 units) when price breaks above the first 15-minute high, with a stop-loss of ₹30 points and a target of ₹60 points. From 9:30 am the program monitors NSE ticks. When the breakout prints, it fires the order in milliseconds, places the stop-loss, and squares off by 3:15 pm if neither level is hit — the same actions a disciplined manual trader would take, minus hesitation and screen time. The numbers here are hypothetical, not a recommendation.

Why it matters

Rules that live in code can be tested before they trade. A systematic trader backtests the logic on years of NSE history, paper trades it live, and only then deploys capital — a validation pipeline that discretionary trading cannot offer. Automation also removes the two most expensive human errors: revenge trading and skipping the stop-loss.

In INDfolio AI, you describe a strategy in plain English, and the platform turns it into testable, deployable rules for NSE equity, futures and options — see the AI strategy builder.