What is Algo Trading ?
Algo trading, short for algorithmic trading, is a method of executing trades in the capital markets using computer algorithms. It involves the use of pre-programmed instructions, triggers to automatically place trades on behalf of investors or traders. These algorithms are designed to analyze market data, several other parameters, identify trading opportunities, and execute trades with high speed, discipline and efficiency.
How does Algo Trading Work?
Algo trading relies on computer programs that are written to follow specific trading strategies or rules including trigger conditions. When the conditions specified by the algorithm are met, such as a certain price level or a particular market pattern, the algorithm automatically executes trades in real-time without human intervention.
What are the potential risks or challenges of algo trading?
While algo trading offers many benefits, it also presents some potential risks and challenges, including
- Technical Failures
- Market Risks: Algorithms are subject to market risks and can incur losses if market conditions change rapidly or unexpectedly.
- Regulatory Risks: Algo trading is subject to regulations and compliance requirements that traders need to be aware of and adhere to.
- Lack of Human Involvement: Algorithms lack human involvement and may not account for certain qualitative factors or unexpected events that can impact markets.
It's important for traders to understand these risks and implement risk management strategies when engaging in algo trading. Check out our video for more information - https://youtube.com/shorts/hRL1eKKeup0?feature=share
Do I need programming skills to use Algo Trading?
While having programming skills can be beneficial, you don't necessarily need to be an expert programmer to use Algo Trading. Many platforms like uTrade Algos offer user-friendly interfaces and visual tools that allow traders to create algorithms without any coding knowledge. However, learning programming basics can provide more flexibility and customization options in the algos development.
Check out our video for more information - https://youtube.com/shorts/pta1rnUs6ug
Is Algorithmic Trading risky?
Algorithmic Trading essentially is automating what a human might want to do. It can be risky, just like any other form of trading. Poorly designed algorithms or improper risk management can lead to significant losses. Proper risk assessment, back testing, and continuous monitoring are essential to manage risks effectively.
Is Algo trading legal in India?
Yes, algo trading is legal and compliant in India, and it does not matter whether you are a retail investor or an institution. uTrade Algos is an empanelled vendor with Indian stock exchanges including NSE, BSE, etc.; following all the regulations and mandates by regulatory bodies. Additionally, all pre-made strategies (uTrade originals) are first approved by the exchanges before getting listed on the platform thus ensuring protection of the interests of the investors.
Check out our video for more information - https://www.youtube.com/shorts/POGOJ1ymtAE
Is Algo Trading only for experienced traders?
No, uTrade Algos has something for all levels of traders from beginners to the pros. Professional traders, manual traders, and algo traders can use uTrade algos to automate and enhance their trading styles.
For complete beginners subscribing to a prebuilt algo by Industry experts - uTrade Originals might be considered*. However, understanding basic trading concepts and gaining familiarity with market dynamics is essential to create effective algorithms and manage your strategy’s risk properly.
*This is in no way an Investment advice, please do your due diligence.
Would algorithmic automation help overcome the emotional shortcoming in manual trading?
Definitely! In fact, this is one of the benefits of automating your strategy. Algos are void of emotions which works very well especially in the financial markets, thus relying on an Algo engine does not only ensure better execution but also makes you a disciplined trader.
How is Algo trading helpful for retail traders?
Express speed - Algos have the ability to fire orders within fraction of a second (milliseconds / microseconds), way better than what humans can achieve within a second, trading manually.
Automate execution - Instead of monitoring your trades manually, feed parameters into the order form and let our powerful algo engine take care of the rest.
Achieve Scale – If you can trade in a few products manually, using algos you can scale up the amounts and products you trade.
Become Disciplined and eliminate the emotional bias - Algos are void of emotions which works very well especially in the financial markets
Not convinced? Consider reading more reasons below Blog - https://utradealgos.com/blog/ten-reasons-every-trader-should-get-their-hands-dirty-with-algorithms/
Video - https://youtu.be/pCYi_PS5IRY
Check out our video for more information - https://youtube.com/shorts/fTKOp82l4DQ?feature=share
Do I need a lot of capital to start Algorithmic Trading?
The capital required for Algo Trading can vary depending on your trading strategy and the assets you choose to trade. While it's possible to start with a smaller amount, having sufficient capital is important to cover transaction costs and potential fluctuations while trading in the FnO (futures and options) market.
Can Algo Trading guarantee profits?
No. Neither Algorithmic Trading in general or uTrade Algos in any way guarantee/suggest consistent profits or sure shot returns. Trading, irrespective of the technology involved, has risk involved and is influenced by factors like market conditions, strategy design, risk management, data quality, and market dynamics.
Check out our video for more information - https://youtube.com/shorts/1irtCsDneW0?feature=share
What all things need to consider while Algo trading?
Traders must rely on technology to trade. There can be a risk of failure of the system or a weak internet connection. Thus keeping a broad track of execution status here and there, tracking your strategy’s performance initially before going big, understanding uTrade Originals strategies (prebuilt algos by experts) and in which market scenario it works well could be some steps you can take to ensure better experience with uTrade Algos.
What is the difference between underlying and instrument ?
The "underlying" pertains specifically to the asset upon which a derivative contract's value is reliant. This asset can be diverse, ranging from stocks to commodities. On the other hand, an "instrument" is a broader term encompassing all tradable financial assets, such as stocks, bonds, and derivatives. While the underlying is the asset influencing a derivative's value, an instrument denotes any asset traded in financial markets.
What is the difference between manual trading and algorithmic trading?
|Decision-Making Process ||Human traders analyze markets, news, indicators, and more for decisions. ||Computer algorithms follow predefined rules and criteria for decisions. |
|Execution ||Traders manually input orders into the trading platform. ||Trades are automatically executed by the algorithm once signals are generated. |
|Emotional Factors ||Emotions like fear and greed can impact decision-making. ||Emotion-free trading; decisions are based on objective criteria. |
|Adaptability ||Traders can quickly adjust strategies based on market changes. ||Algorithms execute trades consistently without human intervention. |
|Time Commitment ||Requires continuous monitoring during trading hours. ||Can operate 24/7 without constant human presence. |
|Consistency ||Decision-making can vary due to human biases. ||Trades are executed consistently according to predefined rules. |
|Speed and Efficiency ||Execution speed depends on human capabilities. ||Trades can be executed at high speeds, reducing slippage. |
|Back testing ||Limited ability to backtest strategies with historical data. ||Backtesting allows evaluation of strategies before deployment. |
|Risk Management ||Decision-making is influenced by emotions, impacting risk management. ||Risk management is rule-based and consistent. |
|Learning Curve ||Requires understanding of technical and fundamental analysis. ||Requires understanding of how algos work and monitoring them |
|Flexibility ||Flexibility in decision-making and strategy adjustments. ||no code algo platforms allow quick changes in parameters like adding legs to a strategy, or changing target spreads/stop losses |
Which is better, manual trading or algorithmic trading?
The choice between manual trading and algorithmic trading depends on individual preferences and goals. Manual trading offers flexibility, allowing traders to adapt quickly to market changes and employ qualitative analysis. However, it's susceptible to emotional biases and requires constant attention. Algorithmic trading provides emotion-free execution, high-speed trades, and operates 24/7, making it suitable for quantitative strategies. Yet, it demands programming skills and may miss qualitative insights. The ideal choice hinges on factors like risk tolerance, time availability, and skills. Some traders blend both approaches, utilizing manual trading for qualitative decisions and algorithmic trading for quantitative strategies. Ultimately, success comes from aligning the chosen method with personal strengths and trading objectives while understanding that each approach has its own strengths and limitations.
What factors should I consider when choosing between manual and algo trading?
When deciding between manual and algorithmic trading, several factors come into play. Firstly, assess your preferred trading style and personality. If you enjoy hands-on decision-making and can handle emotional biases, manual trading might suit you. Algorithmic trading, on the other hand, is suitable if you prefer systematic execution and possess programming skills.
Consider your time availability; manual trading demands constant monitoring during trading hours, while algorithms can operate independently 24/7. Your skill set matters; manual trading requires market analysis expertise, while algorithmic trading needs programming and quantitative knowledge.
Risk tolerance is crucial; algorithms offer consistent risk management, but manual trading requires disciplined self-control. Also, factor in your resources; algorithmic trading may necessitate initial investments in software and data, while manual trading could be less technologically demanding. Ultimately, it's worth exploring a hybrid approach, using manual trading for qualitative decisions and algorithms for quantitative strategies. The choice should align with your skills, goals, and resources.
What is the meaning of term "Future" in financial markets?
Is it true that HFT/Algorithmic traders generally beat manual day-traders?
It is not absolutely true to say that High-Frequency Trading (HFT) generally beats manual day traders, it all depends on what kind of day traders we are talking about here. If you are talking about day traders who are taking advantage of arbitrage opportunities or market inefficiencies, then yes, machines can do such things much faster. A machine can send thousands of orders in a second so there is no match here.
Check out our video for more information - https://youtube.com/shorts/_wMVkDMz0dA
How will I know what strategy to be applied when?
Each uTrade Algo strategy is best suited for a particular market condition. It is important to understand the strategy’s nature and the scenario it works best in before deploying it in the live market. You can click on any strategy card to learn more about it.
Will uTrade Algos use/ share my customized strategies with anyone?
We don't have access to your algo logics. We do not and cannot share anyone’s personal or customized strategies with anyone. All the custom strategies made by the user are confidential.
What are the different types of algorithms used in Algo Trading?
There are various types of algorithms used in Algo Trading, including:
- Spreads based Arbitrage Algorithms
- Technical indicators based algorithms
- Short duration directional algorithms
- Momentum-based algorithms
- Mean reversion algorithms
- Statistical arbitrage algorithms
- Market-making algorithms Slicing like Volume-weighted average price (VWAP) / Time-weighted average price (TWAP) algorithms.
And many more
Is the knowledge of Technical Analysis mandatory to start Algo Trading?
Not at all! While Professional traders get an edge using Technical Analysis, uTrade users Platform need not worry about learning Technical Analysis from scratch and even a complete novice in the markets can experience Algo Trading using are Pre-made strategy forms that lets you deploy over 20 strategies with a single click.
What are Options?
Options are financial derivatives that give the holder the right, but not the obligation, to buy or sell a specific asset (usually a stock) at a predetermined price (known as the "strike price") before or on a specified future date (known as the "expiration date"). Options are commonly used in the stock market as both speculative and risk management tools. There are two primary types of options:
Call Options: A call option gives the holder the right to buy the underlying asset at the strike price before or on the expiration date. This means that if you hold a call option, you have the option to purchase the underlying stock at the strike price, regardless of its current market price. Call options are often used by traders who expect the price of the underlying stock to rise. By buying a call option, they can profit from the price increase without actually owning the stock.
Put Options: A put option gives the holder the right to sell the underlying asset at the strike price before or on the expiration date. Put options are typically used by traders who anticipate that the price of the underlying stock will fall. Holding a put option allows them to sell the stock at the strike price, protecting them from potential losses due to a decline in the stock's value.
What are Options Greeks?
Options Greeks are a set of risk measures that help traders and investors assess the sensitivity of options prices (both calls and puts) to various factors or variables. These risk measures are essential for understanding how changes in market conditions, such as price movements, time decay, volatility fluctuations, and interest rates, affect the value of an options contract. The five primary Options Greeks are:
Delta measures the sensitivity of an option's price to changes in the underlying asset's price. It tells you how much the option's price is expected to move for a one-point change in the underlying's price. For example, if an option has a delta of 0.50, it means that for every $1 increase in the underlying's price, the option's price is expected to increase by $0.50. Delta is also used to estimate the probability of an option expiring in the money.
Gamma measures the rate of change of an option's delta concerning changes in the underlying asset's price. In other words, it tells you how much the delta itself changes as the underlying's price moves. High gamma indicates that delta is more responsive to price movements, making the option more volatile.
Theta represents time decay, or how much an option's value erodes with the passage of time. It quantifies the daily decrease in an option's price due to the "time value" component. As an option approaches its expiration date, its theta value typically increases, reflecting accelerated time decay.
Vega measures an option's sensitivity to changes in implied volatility. Implied volatility is a key factor in determining an option's price. When volatility increases, options tend to become more expensive, and vice versa. Vega tells you how much an option's price is expected to change for a one-percentage-point change in implied volatility.
Rho measures an option's sensitivity to changes in interest rates. It tells you how much the option's price is expected to change for a one-percentage-point change in the risk-free interest rate. Rho is more relevant for options with longer maturities because interest rate changes have a more substantial impact on their pricing.
These Options Greeks provide traders and investors with valuable insights into how their options positions will react to various market conditions. By understanding these measures, traders can make more informed decisions about strategy selection, risk management, and portfolio construction when trading options.
Is the knowledge of Option Greeks (Delta, Gamma, Vega, Theta, etc.) mandatory to start Algo Trading?
Since you’re trading in Options- it’s a fair question whether knowing Option Greeks in and out would be a deal breaker or not when it comes to Algo trading. But if you still want to explore the world of Options, simply look for uTrade Originals strategies → understand their execution logic → back test them and get an indication if it’s working well for you. Though its recommended to learn about Options greeks while running options algo strategies
How to login on uTrade algos if you are an existing customer?
How to create an account/ login uTrade algos if you are a new user?
To create an account/ login with uTrade Algos , follow these steps
- Visit https://login.utradealgos.com/auth/login.
- You can login through gmail or click on the sign up button, fill in your details such as name, number, email id, username and password, verify with otp and voila your account is created.
- The other way to login is if you already have a Share India demat account, you can use the same credentials to login
How can I start Algo Trading using uTrade algos?
To trade in uTrade algos you must have a subscription package along with a Share India Demat account. Once you have created an account, kindly connect to a broker which is Share India.
To do that click on the profile tab and then connect to the broker, you will then be redirected to ekyc.shareindia.com Please follow the below steps to open your account.
- Enter your name and mobile number in the designated columns and Click on “Get OTP”, then user will receive an OTP on the registered mobile number
- Enter OTP and click next and now system will take you to the KYC completion page
- Now, you have to enter your full name, pan card details, registered email id and date of birth. You will receive an OTP on the registered email id which you have to enter in the designated space. After clicking the verify button the system will take you to Step 2 page
- You will choose all the segments in which you wish to trade.As per your goals choose whether you wish to continue with algo trading or not. Do read the terms and conditions carefully and then click on agree
- Continue by clicking on Save and Proceed. In Step 3 page enter your bank account details and click verify. In Step 4 page enter your personal details
- As per your convenience check SMS facility option. After clicking on save and proceed the system will take you to the Step 5 page where you have to upload all your documents.
- Click on e-sign using Aadhaar. Next user has to click on a selfie and capture your real time selfie. Post which user has to upload digital signature
- Upload your salary slip or bank account statement. Click on save and proceed
- Now the user has to enter the nominee details. Post which system will redirect to the e-Aadhaar site to verify e-sign. System will authenticate your mobile number by sending an OTP to your registered mobile number.Once the mobile number is verified the system will prompt you to sign a document digitally
- After entering your valid Aadhaar number and verification OTP user is done with the e-sign process. Finally an email is shared with the user post validation which has the user's Share India account credentials.
Can I create my own strategy?
Yes you can absolutely create your own strategy with our Custom Order Form feature.
For details you watch our video on How to create Strategy using Custom Order Form.
Do I need to have a Share India account to access uTrade Algos?
Yes. u Trade algos is a low latency single broker platform. It has been designed to operate optimally with Share India risk management systems. Algo Trading is all about speed and to manage this well and to give consumers a seamless experience, we have integrated only with Share India.
Check out our video for more information - https://youtube.com/shorts/1XWlnIiYSPs?feature=share
You can easily open an account with ShareIndia and get started. Open your demat account here: https://www.shareindia.com/open-demat-account
What documents are required to open an account with Share India and use uTrade algos?
If you are already an existing user with Share India you only need to fill in the credentials and login, but if you are a new user you need to first open your account with Share India. For that you need to have the following documents like : Pan Card, Aadhar Card, 6 months salary slip or income proof, active bank account details, e- Signature
Is it important to share PAN Card details while signing up with Share India?
PAN card details due to regulatory obligations, such as adhering to Know Your Customer (KYC) guidelines, preventing money laundering, and complying with tax reporting requirements. By collecting PAN card details, the platform can verify the identity of the account holder and fulfill its legal and regulatory obligations.
Why am I getting redirected to the e-aadhaar site?
uTrade Algos requires you to link or verify your Aadhaar details to comply with regulatory guidelines, such as Know Your Customer (KYC) norms set by regulatory authorities like the Securities and Exchange Board of India (SEBI). The e-Aadhaar site allows users to access their Aadhaar details online and download a digitally signed copy of their Aadhaar card.
During the account opening process, you may be redirected to the e-Aadhaar site to provide your Aadhaar details and complete the verification process.
How long is the wait time to receive my Share India account credentials so that I can start with utrade algos journey?
It may take 2-3 working days to receive Share India account credentials to start uTrade Algos Journey and trade like a Pro. Meanwhile, you can still explore our platform, get a hang of the features and experiment using the free 15 day trial. Once you’re brokerage account is active, you can then deploy your strategies in the live markets!
Do I have to go through a long KYC process for opening an account with Share India?
No, the account opening process with ShareIndia is fairly intuitive as our KYC process is integrated with Digilocker so once you connect your account and upload the required documents you can easily get started with ShareIndia.
My number linked with aadhaar is not active anymore, can I skip this step to open an account with utrade algos?
If your mobile number linked with Aadhaar is not active anymore, it may create difficulties in the process of opening an algo trading account that requires Aadhaar verification. The Aadhaar verification process often involves an OTP (One-Time Password) being sent to the registered mobile number for verification purposes.
Skipping the Aadhaar verification step may not be possible, as it depends on the specific requirements and policies of the algorithmic trading platform and the regulatory guidelines they adhere to. Many platforms in India mandate Aadhaar verification as part of the KYC (Know Your Customer) process, which is a regulatory requirement.
Does uTrade Algos store any data on its servers?
What all devices are required for algo trading?
In order to trade with uTrade Algos you only need a basic laptop/desktop/mobile and an internet connection as is the case with any trading platform. With uTrade Alogs we brought the convenience of internet based trading, with the power of algorithms without the need of sophisticated expensive infrastructure.
How to login to uTrade Algos with Share India?
Go to login.utradealgos.com After that click on sign in Share India if you are an existing user with Share India, using your Share India user id and password. After login you will receive OTP either on mobile number or on your Email Id. Once authenticated, you click on authorize to link your shareindia account with utrade and begin trading!
Why should I use uTrade algos? What are its competitive USPs?
uTrade algos is one of the latest algo platforms available to retail traders in 2023. Prior to this, uTrade solutions has been offering algo trading platform to HFT firms, large institutions, from india and worldwide, for the last 12 years.
Share India has been a stockbroker since 1994, and algo trader since 2010 or so when algo trading started. Today share india does more than 5% of options turnover on key india exchanges.
uTrade algos is a brainchild of Share India and uTrade. With their decades of proven successful experience in algo trading, they have brought the best possible fully integrated end to end solution for existing and aspiring/upcoming algo traders.
You can expect the best latency, features, risk management (both at parent algo and child order level), competitive costing (per month subscription rather than per trade), etc.
Does uTrade integrate with any other broker? Why not?
We believe that traders want competitive pricing, integrated algo platform with the broker, and lower latencies. These features are only possible via deeper algo vendor – broker integrations. Hence uTrade algos is currently available with Share India broker.
Check out our video for more information - https://youtube.com/shorts/GHzosCu2t9I?feature=share
Will my subscription be auto charged every month?
If the subscriber chooses the auto-renewal option, they'll be charged automatically every month. If not, the subscription gets canceled each month, and the subscriber needs to reactivate it themselves.
How can I deploy a premade strategy on Utrade Algos?
There are 6 uTrade Originals strategies on uTrade which have been built by market experts for different market conditions.
- You can click on any to know more about the strategy and in which market conditions it performs well, the margin requirements etc.
- Subscribe to the strategy which fits with your view of the market and click on the deploy button.
- A dialogue box will appear containing the strategy’s parameters. After reading that carefully, you can click on proceed.
- Your required strategy is now deployed.
What is the minimum margin require to deploy a strategy?
For every strategy you need to have a different amount of balance to deploy. A different strategy has a different set of requirements. To keep you informed, we’ve integrated a margin calculator on our platform so you can always keep track of your margin requirements and make informed decisions.
What is a payoff curve ?
A payoff curve is a graphical representation of the potential outcome and its resultant Payout generated from your strategy. It indicated P&L at different possible underlying price movements, usually intended to depict the outcome at expiry. On the X-Axis is the Price of the underlying, while the Y-axis depicts potential Profit & Loss.One can infer important information about their strategies such as: Break Even point, Max P&L, Options Premium etc.
What is a Margin Calculator?
A margin calculator is a financial tool used to calculate and assess various aspects of margin trading. Margin trading is a method where an investor borrows funds to trade financial assets (such as stocks, currencies, or commodities) with the goal of amplifying potential gains. It allows traders to control larger positions than they could with their own capital alone. However, it also comes with increased risk because losses can exceed the initial investment.
A margin calculator typically helps traders with the following calculations:
Margin Requirement: It calculates the amount of capital or margin required to open or maintain a position. This includes both the initial margin required to open a trade and the maintenance margin needed to keep the trade open.
Leverage: It determines the level of leverage applied to a trade. Leverage is a measure of how much a trader can control with a relatively small amount of capital. It is often expressed as a ratio (e.g., 10:1, 50:1).
Position Size: It calculates the size of a position that can be taken with a given amount of capital, taking into account the leverage applied and the margin requirement.
Profit and Loss (P&L) Projection: It helps estimate potential profit or loss for a trade based on the position size, entry price, and expected exit price.
Risk Assessment: It assesses the risk associated with a trade, including the potential for margin calls (when the account balance falls below the maintenance margin), and helps traders manage their risk exposure.
Stop-Loss and Take-Profit Levels: It assists traders in setting appropriate stop-loss and take-profit levels based on their risk tolerance and the margin requirements.
Margin Call Alerts: Some margin calculators can provide alerts or warnings when an account's equity approaches the maintenance margin level, helping traders avoid unexpected liquidation of positions.
Asset and Market Information: Margin calculators may also provide real-time market data, including current asset prices, which is essential for accurate margin calculations.
Margin calculators are valuable tools for both experienced and novice traders, as they help traders make informed decisions, manage risk effectively, and ensure they have adequate capital to support their trading strategies. However, it's crucial for traders to fully understand the concept of margin trading and the risks involved before using such calculators. Additionally, uTrade algos offers a built-in margin calculator to assist users.
Give an example calculation in margin needed for a call put combination
What is a panic control button for?
Panic control button is in the top right dropdown, once you click there you get two options either to stop all strategies or to pause all strategies.
- Stop all: Terminate all running strategies and square off all open positions in the market.
- Pause all: Stops any further execution while not impacting existing open positions
How can I regularly keep a watch over the market while operating Trade algos account?
While you have logged in with uTrade Algos , on the top right corner you will find Index Watch where you can see the current market situation and pin that dialogue box accordingly.
Where can you read terms and conditions before opening an account with uTrade algos?
Which symbols are supported on uTrade algos?
Currently, uTrade algos support NSE FnO and Currency segments.
BSE, NSE Cash, and Commodities segments shall be added soon.
Will I be charged any tax ?
Tax is not included in the subscription fee. It will be charged based on your country of residence.
What will be the subscription charges on uTrade Algos?
You can choose from a range of multiple plans available on uTrade Algos website. With the help of fixed subscription charges, you get access to unlimited algo trading. For further details please check out the link https://utradealgos.com/pricing/
What is the best subscription plan available at uTrade algos platform?
How many strategies can I deploy in a day? Is there any limit to the number of strategies used per day?
- No. of strategies deployment is totally dependent on the plan you subscribe:
- Free plan- 2
- Beginner- 2
- Pro- 4
- Wizard- 6
- Expert- 10
What is 'Margin Required' ?
Whether you’re creating your own strategy using our powerful strategy builder or subscribing to a pre-defined strategy- ‘Margin Required’ field tells you how much margin would be deducted from your account with the broker. To get an in depth idea about calculation and different types of margins - use our Margin Calculator feature.
How can I calculate my margin?
For predefined strategies, called uTrade Originals - margin is mentioned on the strategy card.
Strategies created through advance order form- have a button of margin calculator. So you can directly check through that.
What happens if I am low on margin money?
Unfortunately in that case you will not be able to deploy your strategies. Every strategy whether its custom made or pre defined will have minimum margin requirement, without sufficient margin allocation you will not be able to execute trades.
How is value of securities pledged by me towards my margin obligations determined?
The margins may be paid either in the form of Cash (or cash equivalent) or Non-cash Securities:
Cash or Cash Equivalent
· SEBI allows investors to deposit margins in the form of Cash (by transferring money from investors’ bank account to Share India’s bank account) or Cash Equivalents (that includes such Sovereign Gold Bonds, Govt. Securities, Treasury Bills and Liquid Mutual Funds etc. which have been approved for the purpose by the Clearing Corporation).
· A complete list of all the securities that are presently counted as Cash Equivalents. - List of Stocks.
· In order to receive margin benefit against cash equivalent securities purchased by the clients, clients shall be required to pledge such securities in Share India’s favor by following pledge/re-pledge mechanism. (Note: appropriate training may also be provided w.r.t. pledge/re-pledge mechanism, if required);
· The margin benefit against such securities is passed on to the client after deduction of applicable haircut which is generally 10% in case of cash equivalent securities (e.g. against a cash securities’ value of say Rs. 1000/-, margin benefit of Rs. 900/- shall be passed on to the client, after completion of pledge process by the client);
· Share India may help clients in buying Treasury Bills (T-bills). The detailed process for the same along with applicable terms and conditions are available at the link: https://www.shareindia.com/t-bill-margin
· Share India may also help clients w.r.t. creation of FDRs against clients’ credit balance available with Share India, the interest for which shall be passed onto the clients after deduction of applicable TDS. The detailed process with applicable terms and conditions are available at the link: https://rekyc.shareindia.com/forms/fd
(Note: In case of FDRs, the clients shall be allowed to use the entire amount of his/her FDR/s for margin purposes);
· Besides Cash Equivalent Securities, the clients are permitted to also deposit approved non-cash securities purchased or owned by them towards their applicable margin requirements (Non-cash securities includes such Equity Shares, Bonds and Non-liquid Mutual Fund Units etc. which have been approved for the purpose by the Clearing Corporation);
· In order to receive margin benefit against cash equivalent securities purchased by the clients, clients shall be required to pledge such securities in Share India’s favor by following pledge/re-pledge mechanism;
· The margin benefit against such securities is passed on to the client after deduction of applicable haircut as is mentioned against each security
How do I pledge the securities held in my demat account towards my margin obligations?
You can submit a pledge request form. This form typically includes details such as the specific securities you wish to pledge, quantity, ISIN code, and any other necessary information. After receiving your pledge request, Share India will create a pledge on your behalf. This process involves freezing the pledged securities in your demat account, preventing their transfer or sale until the pledge is released.
Once the pledge is created, you can utilize the pledged securities' value for meeting your margin requirements. The value of the securities is considered as collateral, which helps cover your margin obligations.
Can I pledge all the securities held in my demat account towards my margin obligations?
No, you can only pledge 90% of all the securities held in your demat account.
What is 50:50 rule w.r.t. margin deposit?
|A. ||Total Cash and Cash Equivalents ||Rs. 100/- |
| ||Total haircut value of non-cash securities ||Rs. 80/- |
| ||Total margin available to client for trading purposes ||Rs. 180/- (Rs. 100/- + 80/-) |
| ||(In this case, client is eligible to receive full margin benefit of non- cash securities as higher margin benefit against cash and cash equivalents is available to him) || |
| || || |
|B. ||Total Cash and Cash Equivalents ||Rs. 100/- |
| ||Total haircut value of non-cash securities ||Rs. 150/- |
| ||Total margin available to client for trading purposes ||Rs. 200/- (Rs. 100/- + 100/-) |
| ||(In this case, client shall be eligible to receive margin benefit of Rs. 100/- only against non- cash securities as the margin benefit available to him against cash and cash equivalents is Rs. 100/- only) || |
| || || |
|C. ||Total Cash and Cash Equivalents ||Rs. 0/- |
| ||Total haircut value of non-cash securities ||Rs. 200/- |
| ||Total margin available to client for trading purposes ||Rs. 0/- |
| ||(In this case, client shall not be eligible to receive any margin benefit against non-cash securities as the margin benefit available to him against cash and cash equivalents is Nil) || |
Share India allows me to use only 90% of my deposits towards my margin obligations. Why is it so?
Share India allows only 90% of your deposits towards margin obligation because; Share India aims to mitigate the risk of potential losses. Also, we require a certain buffer or cushion to maintain the margin level above the minimum required level. By limiting the utilization to 90% of deposits, we ensure that if market conditions change or the value of your positions fluctuates, the margin requirement can still be met without an immediate margin call.
Also, it is important to know that Regulatory bodies such as the Securities and Exchange Board of India (SEBI) set guidelines and regulations for margin trading, including limitations on the utilization of deposits. Share India, as a brokerage firm, needs to adhere to these regulations to maintain compliance and protect the interests of both traders and the overall market.
What is Backtesting?
Test your strategies using a massive pool of historic data and get a taste of how your strategy would perform in the Live market. uTrade’s - Accurate historical data, Comprehensive Reports and Fastest backtesting engine lets you test the waters before stepping into the real market.
Backtesting can be done till what date?
You can backtest data from 1st Jan 2020 till date.
What are the benefits of backtesting?
Backtesting gives you an indication* of how your strategy would have performed in a specific time period in the past using historical data. You can gauge a strategy’s effectiveness in different time periods & market scenarios, and improve it to remove any potential hiccups.
uTrade Algos also generates detailed reports which gives you crucial insights on your strategy’s performance and execution.
*Please note that backtesting is only indicative and in no way a surety of your strategy’s profitability in the future.
Does backtesting assure results?
No, backtesting is only indicative and in no way a surety of your strategy’s profitability in the future. While backtesting provides valuable insights into how a strategy would have performed in the past, it is important to recognize its limitations which could arise due to different market conditions, volatility, system issues and so on.
Can backtesting guarantee future trading success?
No, backtesting in no way guarantees future trading success. While backtesting provides insights into strategy performance based on historical data, it is merely an indication as it does not account for future market conditions, unexpected events, or changes in market dynamics.
What are deployed strategies?
While you may create and save strategies or subscribe to premade strategies, the conditions for different legs don't go to the live market unless you press the Deploy button. Thus, Deployed Strategies are effectively those which are currently running or ‘active’ in the Live market making profits/losses.
What is an Option Strategy?
Option strategies are the simultaneous, buying or selling of one or more options/ futures contracts that differ in one or more of the variables such as: strike price, expiry, option types etc., to hedge a position, benefit from arbitrage, or to profit from a spread widening or tightening.
What are Pre-defined strategies ?
Pre-defined strategy forms are forms for various popular Options Strategies such as: Bull Call spread, Straddle, strangle etc. which are pre-filled with all the necessary basic inputs to be able to execute that strategy. For example, you select a 'Bull Call Spread' --> Now the form would factor in the fact that:1. It's a 2-legged strategy 2. One leg would involve buying an ATM call option, while the other would involve selling an OTM call OptionAnd thus, would come prefilled with this information. Now, isn't this amazing! We've incorporated a bunch of strategies so that you are equipped with a strategy in various market conditions.
What all Pre-defined strategies can I deploy ?
We've incorporated a bunch of strategies so that you are equipped with a strategy in various market conditions.
Some Popular options strategies you can create are:
- Bull/ Bear Call Spread
- Bull/ Bear Put Spread
- Straddle & Strangles
- Long/short Butterfly
- Iron Condor
- and many more!
With custom modifications available the scope to create newer and newer strategies to beat the market is virtually limitless!
So keep experimenting, but remember:
Create a Strategy Logic → Backtest → Paper Trade → Setup Risk Management → Deploy on Live Market
Continually Improve the strategies by analyzing the results generated at each step.
What is Conservative Options Trader?
It is a uTrade original strategy also known as Stable Stride Multi Leg Strategy.
This strategy trades in Nifty and Bank Nifty weekly options. This is an intraday option selling strategy which sells both Call & Put options. This strategy is designed for DIRECTIONAL and NON-DIRECTIONAL movements. This Multi-leg strategy consists of six legs based on three different strategies in this portfolio. Note: - Trading in this strategy should be avoided on an event day.
What is Chakravyuh Ka Tod?
It is a uTrade original strategy also known as OI Based Strategy
This strategy trades in Bank Nifty weekly options. This is an intraday option selling strategy which sells both Call & Put options. This strategy is fully based on ‘Open Interest’. It keeps changing positions based on change in ‘Open Interest’. Note: - Trading in this strategy should be avoided on an event day.
What is Guruvar Ka Guru?
It is a uTrade original strategy also known as Auto Strangle Theta Earner.
This strategy trades in Bank Nifty weekly options. This is an intraday option selling strategy which sells both Call & Put options. This strategy is best suited for range bound markets, neutral and low volatility days
What is Bhramastra?
It is a uTrade original strategy also known as Delta Neutral
This strategy trades in Bank Nifty weekly options. This is an intraday option selling strategy which sells both Call & Put options. We earn theta decay if market is range bound. If market is trending either upside or downside, the strategy becomes directional. Note: - Trading in this strategy should be avoided on Friday or Event day
What Shaant Bazaar Ka Raja?
It is a uTrade original strategy also known as Auto Straddle
This strategy trades in Nifty weekly options. This is an intraday option selling strategy which sells both Call & Put options of same strike. This strategy is designed in a way that it keeps rolling the positions according to market directions. This strategy benefits in low volatile and range bound markets. Note: - Trading in this strategy should be avoided on an ‘event day’
What is Teji Mandi Ka King?
It is a uTrade original strategy also known as Intraday Directional Strangle
This strategy trades in Bank Nifty weekly options. This is an intraday option selling strategy which sells both Call & Put options. This strategy performs well in trending market - either upward or downward. Note: - Trading in this strategy should be avoided on an ‘event day
What is a straddle?
A straddle is an options trading strategy that involves the simultaneous purchase of both a call option and a put option with the same strike price and expiration date. This strategy is designed to profit from significant price movements in an underlying asset, regardless of whether the price goes up (bullish movement) or down (bearish movement).
What is a short straddle?
A short straddle is an advanced options trading strategy where an investor simultaneously sells a call option and a put option with the same strike price and expiration date. Unlike a regular straddle, where the investor buys both the call and put options, in a short straddle, the investor receives premiums from selling both options upfront.
What is a long straddle?
A long straddle is an options trading strategy where an investor simultaneously purchases a call option and a put option with the same strike price and expiration date. This strategy is used when the investor anticipates a significant price movement in the underlying asset but is uncertain about the direction of that movement (upward or downward).
What is a strangle?
A strangle is an options trading strategy that involves buying or selling a call option and a put option simultaneously, both of which have the same expiration date but different strike prices. This strategy is used when traders anticipate a significant price movement in the underlying asset but are uncertain about the direction of the movement (upward or downward).
What is a long strangle?
A long strangle is an options trading strategy where an investor simultaneously purchases a call option and a put option with the same expiration date but different strike prices. This strategy is used when the investor expects a significant price movement in the underlying asset but is uncertain about the direction of the movement.
What is a short strangle?
A short strangle is an options trading strategy that involves selling both a put option and a call option with the same expiration date but at different strike prices. This strategy is employed by traders who expect the underlying asset's price to remain within a certain range, exhibiting little volatility, until the options expire.
What is an iron condor?
An Iron Condor is an advanced options trading strategy that involves combining two credit spreads to create a position that benefits from low volatility and a relatively narrow price range for the underlying asset. It's designed to generate income when the underlying asset's price remains within a certain range, and it's particularly used when a trader expects minimal price movement.
What is a long iron condor?
A long iron condor is an options trading strategy that involves buying both a call option spread and a put option spread with the same expiration date but different strike prices. It's a neutral strategy used when a trader expects the underlying asset's price to remain within a certain range, exhibiting low volatility, until the options expire.
What is a short iron condor?
A short iron condor is an options trading strategy that involves selling both a call option spread and a put option spread with the same expiration date but different strike prices. This strategy is used when a trader expects the underlying asset's price to remain within a specific range, exhibiting low volatility, until the options expire.
What is an Iron Butterfly?
A long iron butterfly is an options trading strategy that involves combining two options spreads with the same expiration date but different strike prices. This strategy is used when a trader expects the underlying asset's price to remain stable and not move much, resulting in low volatility. The long iron butterfly strategy seeks to profit from minimal price movement within a specific range.
What is a long iron butterfly?
A Long Iron Butterfly is a complex options trading strategy that involves four options contracts with the same expiration date but different strike prices. It's a neutral strategy that profits from a stock's price staying within a certain range. The four options involved are:
- Buy 1 Out-of-the-Money (OTM) Call
- Sell 2 At-the-Money (ATM) Calls
- Sell 2 At-the-Money (ATM) Puts
- Buy 1 Out-of-the-Money (OTM) Put
What is a short iron butterfly?
A Short Iron Butterfly is another complex options trading strategy that involves four options contracts with the same expiration date but different strike prices. It's also a neutral strategy that profits from a stock's price staying within a certain range. The four options involved are:
- Sell 1 Out-of-the-Money (OTM) Call
- Buy 2 At-the-Money (ATM) Calls
- Buy 2 At-the-Money (ATM) Puts
- Sell 1 Out-of-the-Money (OTM) Put
What is a long call butterfly?
A Long Call Butterfly is an options trading strategy that involves three call options with the same expiration date but different strike prices. It's a neutral strategy that profits from low volatility and a limited range of price movement in the underlying asset. The Long Call Butterfly consists of the following positions:
- Buy 1 In-the-Money (ITM) Call
- Sell 2 At-the-Money (ATM) Calls
- Buy 1 Out-of-the-Money (OTM) Call
What is a long-put butterfly?
A long-put butterfly is an options trading strategy that involves the use of multiple put options with three different strike prices. This strategy is designed to profit from a specific range of price movement in the underlying asset. It's called a "butterfly" because the options' payoff diagram can resemble the wings of a butterfly when plotted.
What is a short put butterfly?
A short put butterfly is an options trading strategy that involves writing (selling) multiple put options with three different strike prices. Similar to the long-put butterfly, this strategy aims to profit from a specific range of price movement in the underlying asset. The payoff diagram of a short put butterfly can also resemble the wings of a butterfly when plotted.
What is bull call spread?
A bull call spread is an options trading strategy that involves the simultaneous purchase and sale of two call options with different strike prices. This strategy is designed to profit from a moderate upward movement in the price of the underlying asset while also limiting the potential downside risk. It's called a "bull" call spread because it's generally used when an investor expects the underlying asset's price to rise, or in other words, when they are bullish on the asset's prospects.
What is bull put spread?
A bull put spread is an options trading strategy that involves the simultaneous sale and purchase of two put options with different strike prices. This strategy is typically employed when an investor is moderately bullish on the underlying asset's price. The goal of a bull put spread is to profit from a moderate upward movement in the price of the underlying asset while limiting potential losses.
What is bear call spread ?
A bear call spread is an options trading strategy used when an investor expects a moderate decrease in the price of the underlying asset. It involves the simultaneous sale of a lower strike call option and the purchase of a higher strike call option. This strategy aims to profit from a decline in the price of the underlying asset while also limiting potential losses.
What is bear put spread ?
A bear put spread is an options trading strategy used by investors who anticipate a moderate decline in the price of the underlying asset. This strategy involves the simultaneous purchase and sale of put options with different strike prices. The goal is to profit from a decrease in the underlying asset's price while also limiting potential losses.
What is long put ?
A long put is an options trading strategy used by investors who expect a decline in the price of the underlying asset, such as a stock. It involves purchasing a put option, which gives the holder the right, but not the obligation, to sell the underlying asset at a specified strike price before or at the option's expiration date.
What is short put ?
A short put is an options trading strategy in which an investor sells (writes) a put option with the intention of profiting from a bullish or neutral market outlook. When employing a short put strategy, the trader collects a premium upfront but assumes the obligation to buy the underlying asset at a predetermined strike price if the option is exercised by the buyer.
What is long call ?
A long call is an options trading strategy that involves purchasing a call option with the expectation of profiting from a potential increase in the price of the underlying asset. This strategy allows the investor to benefit from price appreciation while limiting the potential loss to the premium paid for the call option.
What is short call?
A short call is an options trading strategy where an investor sells (writes) a call option with the expectation that the underlying asset's price will either remain stable or decrease. This strategy involves taking on an obligation to potentially sell the underlying asset at a specified strike price if the option is exercised by the buyer.
Difference between straddle and strangle ?
|Strike Prices ||Different strike prices for call and put options. ||Same strike price for call and put options. |
|Upfront Cost ||Generally lower due to wider strike price difference. ||Generally higher due to closer strike price. |
|Profit Potential ||Requires larger price movement for profitability. ||Requires smaller price movement for profitability. |
|Loss Potential ||Limited to the total premium paid. ||Limited to the total premium paid. |
|Market Expectations ||Expects high volatility, uncertain about direction. ||Expects high volatility, significant price movement anticipated. |
|Use Case ||Uncertain about the direction of price movement. ||Expects significant price movement, uncertain about direction. |
|Risk Tolerance ||Tolerates higher risk for potentially larger gains. ||Tolerates somewhat lower risk for potentially smaller gains. |
|Maximum Profit ||Lower than straddle due to wider strike difference. ||Higher than strangle due to closer strike. |
|Maximum Loss ||Limited to the total premium paid. ||Limited to the total premium paid. |
How much capital is required to deploy a strategy?
For custom strategies: The capital required to deploy a trading strategy can change depending on several factors, including the type of strategy, the markets being traded, the desired level of risk, and the individual trader's goals and preferences. There is no fixed amount of capital that applies to all trading strategies.
For uTrade Originals: you get to see exactly how much capital is required for each strategy. Currently you need a minimum capital of Rs.5,00,000 for a particular strategy. Please note that each strategy has its own capital requirement, which you can check by clicking on the strategy card.
How can I create my own customized strategies on uTrade Algos?
With uTrade Algos you can create your own customized strategies by clicking on create strategy present on the home page and entering the parameters required. Once you are done with entering your desired parameters you can either deploy or save your strategy for the future. You can leverage upon several existing option algos templates there and create 100s of multi leg strategies.
How can I create my customized portfolio and how can I review it?
On the nav bar you will get the ‘My Portfolios’ option. Herein you can create new portfolios, monitor existing portfolios, edit/delete them, backtest them or deploy them in the live markets.
What is the dashboard?
The dashboard is an overview of your positions taken, total P&L, available instruments, actively traded underlyings. You can also edit the windows as per your preference.
What is a counter?
A counter reflects the number of times a strategy has run after exiting.
So the first time a strategy enters and exits, the counter will be 1. The strategy can be reactivated manually or automatically based on the settings. You can change this in the "Reactivate on exit" setting. If its set to "Never", a exit strategy will not be reactivated. If it's set to 2 minutes, the strategy will be reactivated 2 minutes after it exits and if the entry condition is satisfied it will take a new set of trades. The next time it enters, it will be with counter 2 and so on.
What is the minimum multiple?
A subscriber has full control in deciding position size using the multiple when deploying a strategy. By default the multiple is set to 1x but as a strategy creator you can allow the subscribers to deploy a much lower amount provided your strategy allows you to. You can select a minimum multiple in the “Create/Edit Strategy” page which will be shown to the user when he attempts to deploy your strategy.
So if for example you allow “0.5x” as the minimum multiple, a user will be able to select anywhere upwards from 0.5x and the positions taken in his account will change accordingly vis a vis your default quantities
What is a set?
A set consists of independent entry, repair and exit conditions. Consider them to be fully functional sub-strategies within a strategy. Repair and Exit condition of a set applies only to positions taken by the Entry condition of that set.
The only conditions which apply to all positions irrespective of all sets are the universal repair and universal exit conditions.
What is the meaning of term "Strike Price"?
Strike Price: The strike price is the predetermined price at which the underlying asset can be bought or sold. The relationship between the strike price and the current market price of the underlying asset influences the option premium. In general, as the strike price gets closer to the current market price (for call options) or moves further away (for put options), the option premium tends to increase.
What is the meaning of the term "Expiry Date"?
The term "Expiry Date" refers to the date on which an options contract becomes invalid or expires. It is the last day on which the option holder can exercise their right to buy or sell the underlying asset at the specified strike price. After the expiry date, the option ceases to exist, and its terms no longer apply.
What is Latency?
Algo logic sits on a server that is typically located as close to the stock exchange as possible. Its getting constant exchange market data multiple times in a second. The time taken for an algo to get the market data, process its algo logic, send out the order is referred to as algo trading latency.
What is a Breakeven point?
Break Even point is that price point of the underlying at which your strategy would yield a scenario of no profit no loss - hence breakeven. Good thing that uTrade Algos comes equipped with a powerful payoff graph which gives you vital information such as the breakeven point (s), Maximum P&L, margin required and much more !
Which are the different factors that determine the price of options?
The price of options, also known as the option premium, is influenced by several key factors. Here are the main factors:
- Underlying Asset Price
- Strike Price
- Time to Expiration
- Interest Rates
What is the meaning of the terms ITM, ATM and OTM?
In-the-Money (ITM): If the market price of the underlying asset is:
- lower than the strike price, the put option is in-the-money.
- Higher than the strike price, the call option is in-the-money.
In-the-Money signifies that the intrinsic value of the options contract is positive, that is if the contract is exercised right now, it will yield a positive payout barring the options premium.
At-the-Money (ATM): When the market price of the underlying asset is approximately equal to the strike price.
Out-of-the-Money (OTM): If the market price of the underlying is:
- Higher than the strike price, the put option is out-of-money.
- Lower than the strike price, the call option is out-of-money.
Out-the-Money signifies that the intrinsic value of the options contract is negative, that is if the contract is exercised right now, it will yield a negative payout.
What is net Options Premium and how is it calculated?
Net Options Premium refers to the total amount of premium received or paid for a combination of options positions. It represents the overall monetary value of options premiums associated with multiple options contracts in each strategy or portfolio.
To calculate the net options premium, follow these steps:
- Determine Individual Premiums
- Multiply Premium by Contract Quantity
- Add Up Individual Premiums
- Calculate Net Options Premium
For example, let us say you sold two call options with a premium of Rs.3 each, sold one put option with a premium of Rs.2, and bought three put options with a premium of Rs.1 each. The calculation of the net options premium would be:
(2 * 3) + (-2) + (3 * -1) = 6 - 2 - 3 = 1
In this case, the net options premium would be Rs.1, indicating that the overall premium received for the combination of options positions is Rs.1.
What is mark to market (MTM) and how is it calculated?
Mark-to-market (MTM) is an accounting process used to calculate the value of an asset or position based on its current market price. It is commonly used in trading and investing to determine the unrealized gains or losses on open positions. This process helps traders and investors understand their current profitability or potential risks associated with open positions.
The calculation of MTM involves the following steps:
Initial Position: When you open a position, its value is initially recorded based on the purchase price or the prevailing market price at the time of entry.
Market Price Update: As the market price of the asset or position changes, the MTM calculation reflects the updated value. This is typically done daily or as frequently as required.
Unrealized Gain or Loss: The difference between the initial value and the updated market value represents the unrealized gain or loss on the position. If the market value is higher than the initial value, it indicates an unrealized gain, while a lower market value indicates an unrealized loss.
Margin Adjustments: The MTM calculation also affects margin requirements. If there is a significant change in the market value and it impacts the margin requirement.
Account Balance Adjustments: The unrealized gains or losses from MTM are typically reflected in your trading account balance. Positive gains may increase the account balance, while losses may decrease it.
It's important to note that MTM reflects unrealized gains or losses, meaning they are not realized until the position is closed. Once the position is closed, the final realized gain or loss is determined.
What is the meaning of term "Theta decay" and why does that happen?
The term "Theta decay" refers to the gradual erosion of the time value of an options contract as it approaches its expiration date. It measures how much the option's value decreases as time passes, assuming all other factors remain constant.