What Percentage of Trading is Algorithmic? | Share India (2024)

The rise of trading in the Indian market, coupled with the Internet and computational technologies, worked together to form a new trading method. This trading is referred to as algo-trading, which works faster.

To answer the question about the percentage of trading algorithms in the stock market, you must know why it’s elevated and the things that can help algo-trading. The algo-trade in India was introduced in 2008 by the Securities and Exchange Board of India (SEBI). At first, it started with Direct Market Access, which was restricted to institutional investors only. Afterwards, the cost advantage and accuracy were adopted by the trading community, and it kept on growing.

Algo-Trading Definition

Algo-trading is a method of trading with the financial market using a pre-programmed trade to monitor the market and execute it accordingly. A major role of algo-trading is to automate trades across all asset classes and market segments. As this happens with zero manual processes, the trades are executed based on pre-written conditions set by the professionals.

First, a trader loads their server with trading algos with specific instructions. These algorithms monitor the markets, look for a specific trade or setup, apply it to single or multiple assets, perform the conditions, and execute. But as a professional, you need to have experience or expertise in spotting the trade, setting up the following algorithm setup, and managing it accordingly. Because the concept of a computer algorithm is to loop a set of criteria, applying the same principle to stock trading can be useful and beneficial if done correctly.

Percentage of Algorithmic Trading

Algo-trade has covered up the maximum place in the stock market. In India, the percentage of traders who use algorithms for trading ranges from 50 to 55 per cent. But in other markets, the percentage of algo-trading is around 80–85% of trade. In the United States, Europe, and other Asian markets, the percentage ranges from 60 to 70% of the total trading volume. As algo-trading has been on the rise in the US and all over the world, the number of trades using algorithmic methods is growing day by day.

Why Is Algo-Trading on the Rise?

The answer will be one word, that is, “convenience”, as the trader can handle multiple trades without a constant monitor and rely on the conditions which work according to their trading strategies. However, for more information and analysis on how much of the market is algorithmic trading and why it is increasing, read the following terms:

Automated Feature

As the algo-trading process is entirely automated, traders can set up identification, order several executions that match the setup condition, and execute trades accordingly. Through algo-trading, you can perform a step-by-step execution of instructions, which makes it objective and rule-based trading.

Know the Probability of Success

Trading algorithms are not so easy. There are several steps to developing trading strategies, and along with that, you need to do backtesting. A backtesting process helps users to trade in the stock market. Backtesting will assist you in changing an issue, such as the odds of your trade, into a better capital allocation. The computer won’t stop, and it can monitor the trade and completely examine all the conditions set by the trader, so in short, there are low chances of things getting out of control.

Quick Execution

In algo-trading, trades are identified, checked, and executed in a faster manner. The algorithm is designed in such a way that the parameters and technical indicators are calculated in a split second and execute the trade immediately. As per the time measured, the algo-trade executes in a split second with a good entry or exit trade. The speedy execution is very important if fast-moving markets or intraday trades are needed. If not, then the order cannot be placed, and trade will reduce the profits.

No Human Interference

As the trader sets the following trade, there will not be human interference, which can lead to the collapse of trade. In the real world, many traders believe that they can trade using their emotions, which can lead to poor decisions and even loss of money. Trading has become more precise as a result of mathematical calculations and computational applications.


Algorithmic trading is dominated by instructional traders, banks, and professional retail investors. This group of traders often do trading as their daily activity. For regular trading, having a consistent plan can let you make a proper plan. Adhering to your plan can be quite difficult due to frequent market fluctuations. But since algo-trading is automated, trades are executed with consistency, which preserves the trading edge of your strategy.

Following Trends

In algorithmic trading, most traders trade by group or institution and buy and sell stocks on their behalf. These can be seen in the following industries: pension funds, mutual fund management, insurance firms, and Exchange-Traded Funds (ETFs).

The algo-trade is done using a huge setup or machine with high-configuration hardware and sophisticated software, along with a fast Internet connection. The algo-trade is usually in huge sizes, but doing this high-frequency trade requires practice, and breaking the whole amount into small parts and continuing to perform the trade in a specific time interval. You can consider an example of 1 lakh shares as a trade where the set algorithm is to set up a trading instruction that will execute 1,000 share trades every 15 seconds. In this way, the whole process is aligned with the market volatility.


There is a rise in the use of algo-trading around the globe. In this article, you learned about how much of the trading is algorithmic and what’s behind the growing popularity of algo-trading.

Frequently Asked Questions (FAQs)

Algo-trading is considered safe and sound if the trader has a proper understanding of the system, market, statistics, and different trading strategies, along with knowledge of computer programs.

Math, such as calculus, is one of the main concepts in algorithmic trading. It is actually termed infinitesimal calculus, which is the study of values that are really small to measure.

If done correctly, algo-trading as a trading career or trade can be extremely profitable. As every trade comes with risk, you need to have a thorough understanding of market statistics as well as coding language. As a trader, you need to have experience, which will help you achieve a profitable algorithmic trade.

What Percentage of Trading is Algorithmic? | Share India (2024)


What Percentage of Trading is Algorithmic? | Share India? ›

In India, the percentage of traders who use algorithms for trading ranges from 50 to 55 per cent. But in other markets, the percentage of algo-trading is around 80–85% of trade. In the United States, Europe, and other Asian markets, the percentage ranges from 60 to 70% of the total trading volume.

What is the success rate of algo trading? ›

The success rate of algorithmic trading varies depending on several factors, such as the quality of the algorithm, market conditions, and the trader's expertise. While it is difficult to pinpoint an exact success rate, some studies estimate that around 50% to 60% of algorithmic trading strategies are profitable.

What is the percentage of traders in India? ›

Approximately 3% of India's population is currently invested in the stock markets.

Does algo trading work in India? ›

Globally, 70-80 percent of market volumes come from algo trading and in India, algo trading has a 50 percent share of the entire Indian financial market (including stock, commodity and currency market).

What is the participation rate in algorithmic trading? ›

We define participation rate as the order size relative to the expected trading volume over the execution horizon. The participation rate determines the order's aggressiveness; higher participation reduces the execution horizon and increases liquidity impact.

Is algo trading profitable in India? ›

Algo trading is not only profitable, but it also increases your odds of becoming a profitable trader., Algo trading is ideal for someone who wants to trade with their full-time job. While they can develop trading strategies in their extra time and which are executed by the system when they are at their job.

Who is the most successful Algo trader? ›

He built mathematical models to beat the market. He is none other than Jim Simons. Even back in the 1980's when computers were not much popular, he was able to develop his own algorithms that can make tremendous returns. From 1988 to till date, not even a single year Renaissance Tech generated negative returns.

What is the success rate of trading in India? ›

As much as 95 per cent of day traders lose money in the market, it demands an investigation. Intraday trading is the most popular, yet data suggests that most intraday traders lose money. A 70 percent don't last beyond the first year, and 95 percent stop trading by the third year.

Why 95 percent of Indian traders lose money? ›

Relying On External Tips. Lastly, a significant reason for the high rate of losses among Indian traders is an overreliance on external tips and advice. Many traders base their trading decisions entirely on trading tips from friends, TV experts or unverified online sources.

How much does an average trader earn in India? ›

Trader salary in India ranges between ₹ 0.8 Lakhs to ₹ 30.0 Lakhs with an average annual salary of ₹ 8.1 Lakhs.

Is algo trading really profitable? ›

Yes, it is possible to make money with algorithmic trading. Algorithmic trading can provide a more systematic and disciplined approach to trading, which can help traders to identify and execute trades more efficiently than a human trader could.

Is algo trading always profitable? ›

Algorithmic trading is beneficial for most individuals, but not always. An algo trading method involves costly and complex technology. Complex strategies might take a long to implement.

What is the most popular algo trading strategy? ›

Top Seven Algorithmic Trading Strategies
  • Momentum. Momentum trading is a classic day-trading strategy that's been around for ages, like over 80 years! ...
  • Trend Following. ...
  • Risk-on/Risk-off. ...
  • Arbitrage. ...
  • Black Swan Catchers. ...
  • Market Timing. ...
  • Inverse Volatility.
Nov 17, 2023

How big is algorithmic trading? ›

Algorithmic Trading Market Size - Global Industry, Share, Analysis, Trends and Forecast 2022 - 2030
MarketAlgorithmic Trading Market
Algorithmic Trading Market Size 2021USD 14.1 Billion
Algorithmic Trading Market Forecast 2030USD 41.9 Billion
Algorithmic Trading Market CAGR During 2022 - 203012.9%
7 more rows

What is the Z score in algo trading? ›

A Z-score (or standard score) measures the distance between the mean of some set of the statistical results and the given observation. In Forex systems, traders are interested in Z-score not of a trade's return (profit/loss size) but rather in a Z-score of the outcome — was it a profitable one or a losing one?

How much can you make in algo trading? ›

Based on the chosen strategies and capital allocation, the traders can make a lot of money while trading on the Algo Trading App. On average, if a trader goes for a 30% drawdown and uses the right strategy, they can make a whopping return of around 50 to 90%.

Is algo trading a good career? ›

Jobs and Career in Algorithmic Trading

Today, algorithmic trading and high-frequency trading are recognized by companies and exchanges all over the world and have become the most common way of trading in the developed markets.

Is algo trading any good? ›

Algorithmic trading provides the following benefits; Trades are executed at the best possible price. Trade is placed instantly and accurately with a high chance of execution at the desired level. Trade is timed correctly and immediately to avoid price change.

How hard is algo trading? ›

(But that would involve paying interest, so it's a bit more complicated) So, algo trading is at the same time difficult and easy, it is difficult because you have to learn programming, mathematics, and finance, but it is easy because it is about going into a position and then getting out of a position.


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