Best trading platform for Automated trading

[terminator_123]

Sanjay and terminator,
I am new to stock markets so please pardon my ignorance. How can SEBI, or anyone, even know whether I have automated my trading or not? E.g. if I have a simple greasemonkey script and use ICICI direct which buys whenever mars is in my fourth house

Have I misunderstood your point, or is this also one of the immature absolutely unenforceable laws of India?

Also, can you tell me the kind of offence automated trading would be? Is it just against SEBI directives, or a civil offence, or a criminal offence? If I remember correctly, SEBI itself does not have powers to punish, so it can only sue me in a court.

thanks a lot
Amit

Hi Amit,
That rule is for service providers( Firms, brokerages marketing algo trading products). Fortunately no one monitors/stops us individual traders from doing that kind of a thing . But you wont be able to market such a thing to others legally under sebi directive

 

[sanjay_arora]

Sanjay and terminator,
I am new to stock markets so please pardon my ignorance. How can SEBI, or anyone, even know whether I have automated my trading or not? E.g. if I have a simple greasemonkey script and use ICICI direct which buys whenever mars is in my fourth house

Well, I guess they cannot, maybe because they are not looking....they have not put a mechanism in place to detect such a thing, in the retail trader arena. But I suspect Brokers who have applied for DMA access are being monitored more closely.

However, assuming you got tons of money and a lightning greasemonkey script, your number of trades, whenever mars is in your fourth house, will clearly show that you could not possibly have executed those trades manually.

Of course, to prove that they would have to let you trade while mars is in the correct place and raid you to seize your computer. Of course, you could be clever as the red man with the pointed tail, and be trading off an offshore server

Have I misunderstood your point, or is this also one of the immature absolutely unenforceable laws of India?

Immature, yes. Unenforceable, No.

But then its always the risk/benefit ratio. Is the culprit big enough for the resources being spent? Will the problem escalate from being an isolated white collar criminal (you & your greasemonkey) or a small group....to being a widespread issue (like say...dabba trading). And of course the policy reason... why they don't want retail traders to algo trade.

Also, can you tell me the kind of offence automated trading would be? Is it just against SEBI directives, or a civil offence, or a criminal offence? If I remember correctly, SEBI itself does not have powers to punish, so it can only sue me in a court.

Nope, SEBI is not involved here. As a retail trader you have no agreement with SEBI. And of course, no right minded aspiring white collar criminal is ever afraid of SEBI!

What you have is an agreement with your broker, who in turn has an agreement with the exchange, which are in turn regulated by SEBI.

Now, depending upon the political mandate, managed of course by various interest group lobbyists, SEBI can ask the exchanges to lean upon brokers to prosecute you for violations of the broker agreement, as given in the agreement...breach of contract, illegally interacting with their software in order to bypass their risk management systems through high speed executions of trades, hacking...who knows what lawyers may come up with

As a regulator however, SEBI can issue you a notice and should you and your greasemonkey be found guilty...you can be slapped with a fine you need not worry about. They tend to be quite gentle there. Few Lakhs in Fine for a multi-crore scam is their usual slap on the wrist and usually one can happily pay it out of the ill-gotten gains of one's white-collar dacoity.

 

[terminator_123]

Well, I guess they cannot, maybe because they are not looking....they have not put a mechanism in place to detect such a thing, in the retail trader arena. But I suspect Brokers who have applied for DMA access are being monitored more closely.

However, assuming you got tons of money and a lightning greasemonkey script, your number of trades, whenever mars is in your fourth house, will clearly show that you could not possibly have executed those trades manually.

Of course, to prove that they would have to let you trade while mars is in the correct place and raid you to seize your computer. Of course, you could be clever as the red man with the pointed tail, and be trading off an offshore server

Immature, yes. Unenforceable, No.

But then its always the risk/benefit ratio. Is the culprit big enough for the resources being spent? Will the problem escalate from being an isolated white collar criminal (you & your greasemonkey) or a small group....to being a widespread issue (like say...dabba trading). And of course the policy reason... why they don't want retail traders to algo trade.

Nope, SEBI is not involved here. As a retail trader you have no agreement with SEBI. And of course, no right minded aspiring white collar criminal is ever afraid of SEBI!

What you have is an agreement with your broker, who in turn has an agreement with the exchange, which are in turn regulated by SEBI.

Now, depending upon the political mandate, managed of course by various interest group lobbyists, SEBI can ask the exchanges to lean upon brokers to prosecute you for violations of the broker agreement, as given in the agreement...breach of contract, illegally interacting with their software in order to bypass their risk management systems through high speed executions of trades, hacking...who knows what lawyers may come up with

As a regulator however, SEBI can issue you a notice and should you and your greasemonkey be found guilty...you can be slapped with a fine you need not worry about. They tend to be quite gentle there. Few Lakhs in Fine for a multi-crore scam is their usual slap on the wrist and usually one can happily pay it out of the ill-gotten gains of one's white-collar dacoity.

LOL thats hilarious

 

[rithikesh]

Dear All
Understand tha Amiborker India has introduced "ACE Nifty Futures Trading System " for Nifty futures intraday trading giving automated buy and sell call.
Please advice on its performance.
Thx in advance.
Brgds
Ravi

Just googled to check out what is "ACE Nifty Futures Trading System".
Firstly, its not introduced by Amibroker, just that it is implemented in there.
Secondly, its not automated trading. Its kind-off Buy/Sell signals that you will get in Ami and you need to punch-in in your trading system.
You may get more info at
http:// www. tradinganalysis. co. in/ page.php?page=Nifty_Trading
Remove spaces in between.

Other good system for buy-sell that i know is
http:// essentialsb4uinvest.blogspot.com/ 2007/01/ live-cross-over-nifty-trading-system_12.html
Remove spaces in between.

Also, there are good discussions in TJ forum's too.
-ritesh.

 

[amitkher]

Interesting and informative replies, thank you guys.

If terminator's answer is the whole and only answer, it seems SEBI is somewhat reasonable in its demands. Its job is of regulating such financial service providers, and if SEBI deems something as bad practices, it is fine to fine them. Anyway businesses routinely have to get audited, have their systems examined by authorities, use only approved software etc.

But if there is a law / guideline stopping retail investor from automating his investments, it shows more stupidity. I can't agree that automated trading can be humanly detected with the help of current technology, given that:

1. Only after reading Sanjay's reply above, I realized that there are "retail" investors making hundreds of trades a day. I was thinking more along the lines of 2-3 trades a month. I think a really smart trading strategy would involve least number of trades. And I am so poor, my trades affecting the market sounds funny . Greasemonkey also has a way to wait a random number of seconds between clicks.

2. In India, we guard our freedom zealously. We are not a police state like China, or erstwhile USSR. So in India, there is no way we can have raids on the basis of small suspicions (barring politically motivated exceptions). We have severely limited law enforcement capabilities.

So any monitoring that has to be done to find out about automated trading, has to be done at the level of broker / stock exchange. To find patterns in these trades, we need millions of data points(records of trade). Even then, there are cryptographic algorithms which can make the trades seem like random to ANY observer, even with millions of data points. Add to it inputs from exotic systems like astrology, climate data and you have an absolutely undetectable automated trading system, not necessarily profitable

 

[amitkher]

Interesting and informative replies, thank you guys.

If terminator's answer is the whole and only answer, it seems SEBI is somewhat reasonable in its demands. Its job is of regulating such financial service providers, and if SEBI deems something as bad practices, it is fine to fine them. Anyway businesses routinely have to get audited, have their systems examined by authorities, use only approved software etc.

But if there is a law / guideline stopping retail investor from automating his investments, it shows more stupidity. I can't agree that automated trading can be humanly detected with the help of current technology, given that:

1. Only after reading Sanjay's reply above, I realized that there are "retail" investors making hundreds of trades a day. I was thinking more along the lines of 2-3 trades a month. I think a really smart trading strategy would involve least number of trades. And I am so poor, my trades affecting the market sounds funny . Greasemonkey also has a way to wait a random number of seconds between clicks.

2. In India, we guard our freedom zealously. We are not a police state like China, or erstwhile USSR. So in India, there is no way we can have raids on the basis of small suspicions (barring politically motivated exceptions). We have severely limited law enforcement capabilities.

So any monitoring that has to be done to find out about automated trading, has to be done at the level of broker / stock exchange. To find patterns in these trades, we need millions of data points(records of trade). Even then, there are cryptographic algorithms which can make the trades seem like random to ANY observer, even with millions of data points. Add to it inputs from exotic systems like astrology, climate data and you have an absolutely undetectable automated trading system, not necessarily profitable

 

[sanjay_arora]

Amit

On a more serious note, your script will not wait to enter trade to simulate human entry like scripts used for click fraud in online advertising. Your trades will be sent by your algo, when it generates a buy or sell signal and if it bothers to emulate human activity, it will lose on profits.

That aside, an average retail investor is never going to be detected. However, if a HNI Trader is scalping in a tick timeframe and doing it on multiple scrips, the trades generated may be detectable, that is if the infrastructure is in place.

I think the logic in barring retail investor from algo trading is that the govt. assumes the retail investor to be a brainless idiot. They don't want fly by night software companies to sell algo software that does not work, except in lab conditions, to general public, who will then go on to lose more money by running those softwares.

What the Govt. has to realize that an investor who is looking to make an easy buck is going to lose his money anyway. If he does not lose it to an algo software, he will lose to a trade call service that provides either wrong calls or calls that reach the consumer late enuff to be almost useless or to a broking company that cares about its commissions only and goes on advising clients to buy/sell when it does not have any real fundamental/TA analysis capability.

Big organizations on the other hand, have money and resources to evaluate such software and would probably not be vulnerable to fly by night operators/software vendors.

However, in this policy, a large segment of retail trader is ignored, who can earn from algo trading. In fact a whole ecosystem can develop around algos for retail traders, where algo sellers, brokers, consultants get together to sell software to investors, generating employment in addition to revenue.

Its not big brother's job to be the smaller brother's keeper. In India, traditionally only those industries have bloomed which have escaped govt. oversight in its infancy, be it cable or software.

That aside, I have a real problem with the way SEBI fines malpractices. Fines should be crushing, not a slap on the wrist.

 

[jdm]

Amit

On a more serious note, your script will not wait to enter trade to simulate human entry like scripts used for click fraud in online advertising. Your trades will be sent by your algo, when it generates a buy or sell signal and if it bothers to emulate human activity, it will lose on profits.

That aside, an average retail investor is never going to be detected. However, if a HNI Trader is scalping in a tick timeframe and doing it on multiple scrips, the trades generated may be detectable, that is if the infrastructure is in place.

I think the logic in barring retail investor from algo trading is that the govt. assumes the retail investor to be a brainless idiot. They don't want fly by night software companies to sell algo software that does not work, except in lab conditions, to general public, who will then go on to lose more money by running those softwares.

What the Govt. has to realize that an investor who is looking to make an easy buck is going to lose his money anyway. If he does not lose it to an algo software, he will lose to a trade call service that provides either wrong calls or calls that reach the consumer late enuff to be almost useless or to a broking company that cares about its commissions only and goes on advising clients to buy/sell when it does not have any real fundamental/TA analysis capability.

Big organizations on the other hand, have money and resources to evaluate such software and would probably not be vulnerable to fly by night operators/software vendors.

However, in this policy, a large segment of retail trader is ignored, who can earn from algo trading. In fact a whole ecosystem can develop around algos for retail traders, where algo sellers, brokers, consultants get together to sell software to investors, generating employment in addition to revenue.

Its not big brother's job to be the smaller brother's keeper. In India, traditionally only those industries have bloomed which have escaped govt. oversight in its infancy, be it cable or software.

That aside, I have a real problem with the way SEBI fines malpractices. Fines should be crushing, not a slap on the wrist.

its not slap on the wrist but a pat on the back, as if a recognition of job done per excellence.

 

[sanjay_arora]

its not slap on the wrist but a pat on the back, as if a recognition of job done per excellence.

I'm sure you have it right

 

[amitkher]

Amit

On a more serious note, your script will not wait to enter trade to simulate human entry like scripts used for click fraud in online advertising. Your trades will be sent by your algo, when it generates a buy or sell signal and if it bothers to emulate human activity, it will lose on profits.

You are right. My interest in the market is more in terms of "investment" rather than "trading". Difference being in time scales i.e. decades vs. hours. The automated trading systems that I was thinking of were of the kind which typically hold stocks for years/decades. The context of automated trading in this thread must have been of short term "trading" rather than "investment", because we are in "trader"ji.com, so, my bad, I misinterpreted it.

If we were discussing an "investment" kind of algorithm, emulating a human wouldn't lose on profits, because there would be, say, 2-3 trades a month. Such algorithms, even if they screw up royally, might still give positive returns in a few decades because of the general direction of stock markets i.e. up.

That aside, I have a real problem with the way SEBI fines malpractices. Fines should be crushing, not a slap on the wrist.

Spot on. But SEBI is not alone in this. Crimes by rich sophisticated criminals are routinely treated thus:

1. Nanda getting 2 years of jail, in toto. In spite of the judge noting that he did everything illegal possible with his money and influence to destoy evidence.

2. Intel and microsoft fined about a billion dollars after years of malpractice which directly led to tens of billions of profit and finished off competition.