Q1: Is algorithmic trading legal in India?

Yes, absolutely. SEBI officially permitted retail algo trading in 2025. But you must follow the regulations: 1. Get exchange approval for strategies 2. Work through SEBI - registered brokers 3. Follow OTR guidelines 4. Maintain audit trails 5. Don't use unauthorized APIs or unapproved strategies. That's where you get into trouble.

Q2: How much stake is required to start algo trading?

This depends on your method of approach: Minimum: Some platforms allow you to start with as little as ₹10,000-₹25,000. Realistic: ₹1-2 lakhs would be adequate to: 1. Diversify across a few strategies 2. Handle drawdowns without panicking 3. Make meaningful returns Ideal: ₹5 lakhs or more would let you really scale comfortably and ride out volatility. But start small. Does the strategy work, and then scale.

Q3: Do I need to know coding to do algo trading?

No. Platforms like Tradetron, Zerodha Streak, and AlgoTest offer no-code solutions. You build strategies using visual builders. However, Learning to code, especially Python, equips you with: 1. More flexibility 2. Ability to create custom strategies 3. Better understanding of what's happening 4. Independence from platforms If you are serious about algorithmic trading in the long term, learn to code.

Q4: Which is the best algorithm trading platforms in India?

There is not a single best platform. 1. For options: AlgoTest or uTrade Algos 2. For stocks: Zerodha Streak or Tradetron 3. For newbies: Tradetron or QuantMan 4. For advanced traders: uTrade Algos or custom-built solutions Also, try a variety of platforms. To check what suits your way of working.

Q5: Will algorithm trading guarantee profits?

No. Nothing guarantees profits in trading. Algo trading gives you: 1. Speed 2. Consistency 3. Emotion-free execution 4. Ability to backtest But it doesn't eliminate risk. If you don't have a good strategy or poor risk-management, you lose money.

Q6: What is the difference between algorithmic trading and automated trading?

Algorithmic trading: It has really complex mathematical models and algorithms for decision-making. Can be simple in nature or the other extreme in the form of a high-end AI-powered system. Automated trading: Any kind of trade set up to run on a computer is automated trading. This includes algorithmic trading, but it can also mean any simple kind of automation, like auto-execution of manual signals. The terms are often used interchangeably. But algo trading is technically a subset of automated trading.

Q7: How do I backtest a strategy?

Most platforms offer built-in backtesting. Steps: 1. Define your strategy clearly 2. Load historical data (at least 2-3 years) 3. Run the strategy on that data 4. Analyse results (P&L, win rate, drawdown) 5. Include transaction costs 6. Test on out-of-sample data Don't over-optimise to make backtesting look perfect. Reality won't match.

Q8: What is OTR, and why does it matter?

OTR = Order-to-Trade Ratio This ratio equals the number of orders placed divided by the trades that get executed. Example: Say you place 100 orders. 10 orders get executed. Your OTR is 10:1. Why does SEBI care? A high OTR can suggest the following: - Market manipulation - Spoofing (placing fake orders to move prices) - Excessive order cancelling SEBI penalizes high OTR. Hence, choose strategies that execute efficiently.

Q9: Can I use the same algorithm across different brokers?

Most of the time, yes. But it depends on the platform. Some platforms natively support multiple brokers. Others will require one to build the strategy again for each broker.

Q10: What happens if my algorithm makes a mistake and loses me a lot of money?

Short answer: The Responsibility lies with you. Long Answer: This is why risk management is so essential. Every algorithm should have: 1. Stop losses on individual trades 2. Daily loss limits 3. Position size limits 4. Kill switch (ability to shut down immediately)