Setting up my Algo-trading business
- Thread starter sus19in
- Start date
Hi Friends,
Couple of months back, i wanted to check if i can set up a personal Algo-trading business. Like any business, my objective was profit maximization. But not at the cost of quality. I should have the option of scaling my infrastructure as per my business need. Also in future if i get clients, i should have the option of accommodating them without much headache.
So having all these things on mind, i started a small project with an initial capital of Rs.50,000. I was not sure if it could be done and if possible, why others have not try it. There must be a catch. So i decided to burn my fingers and try to figure out for myself.
My first problem was infrastructure. That is computer, internet, power, anitvirus, etc. If you the maths properly, it should add upto Rs.1699. The breakdown is as follows-
Computer -> cost is Rs.25,000, considering life is 5 yrs. So per month it works out to Rs.416
Internet -> Airtel connection, around Rs. 1000 per month
Antivirus -> Quickheal, Rs. 1000 per year or Rs.83 per month
Power -> Lets assume we shell out Rs. 200
So without placing a single trade i am spending more than Rs.1699. On top of this, system expansion was a problem and steady power supply was not garenteed. So what do i do? i had to find an alternative.
After some searching, i found the solution. It was cloud computing. There are lots of service providers. Some offering free service, whereas others offering the same service at a jaw dropping price.
Finally, i settled with Amazon EC2 server. It gives 1GB memory and 30GB storage space for free (for 1 year). This was great news for me. This translates to free service for first year and from second year around Rs.300 per month. Awesome...
Second, i needed a trading software and data source. I choose Amibroker for this purpose. This is compatable with most brokers who offer Algo-trading service. Also, its free and much better compared to Metastock. But, if you go with the free version. Then you cannot save the charts. I was fine with it, as i could open keep the chart open in the server and forget about it.
Data provider is the trickiest of the lot. There are lots of data provider in the market. I choose a Nest to Amibroker terminal offered by Zerodah. It costs Rs.11000 per annum. (http://zerodha.com/main/zerodha-trader-plugin-amibroker.html)
Thirdly, broker. I wanted to go with deep discount brokers. Only two brokers i considered, Zerodah and Compositeedge. I found composite to be better as they charge 0.006% as brokerage. I can also add in my own clients when needed. My only advice regarding brokers is, if you are planning for Algo then forget big names. Only consider those brokers who can give you less than 1 paise of brokerage. Negotiating with big brokers is a waste of time.
Fourth, amibroker and deal terminal bridge. Well there are lots of options here. I personally choose Symphony for it. For multiple client bridge, it cost Rs.35000 and single user cost Rs.25000. I am planning to go with Rs.35000 plan as i already have my first client
Lastly and most important is trading strategy. If you have your own strategy, but not coded in Amibroker. then you can get it done by a freelancer. They cost around Rs.20000. In my case, i had already coded, backtested and optimized it myself. You can search on the net and find a lot of ready made AFL available on various forums. You need to test these extensively before using it.
So, i had been successful to set up my algo-trading business for Rs.46000 (for first year) and from second year it goes up to (Rs. 49,600). My system is fully scalable and i can add in new clients when needed without any hassle.
If anyone can provide me ways to reduce my cost even further, plz let me know.
Do let me know if you have any questions....
Couple of months back, i wanted to check if i can set up a personal Algo-trading business. Like any business, my objective was profit maximization. But not at the cost of quality. I should have the option of scaling my infrastructure as per my business need. Also in future if i get clients, i should have the option of accommodating them without much headache.
So having all these things on mind, i started a small project with an initial capital of Rs.50,000. I was not sure if it could be done and if possible, why others have not try it. There must be a catch. So i decided to burn my fingers and try to figure out for myself.
My first problem was infrastructure. That is computer, internet, power, anitvirus, etc. If you the maths properly, it should add upto Rs.1699. The breakdown is as follows-
Computer -> cost is Rs.25,000, considering life is 5 yrs. So per month it works out to Rs.416
Internet -> Airtel connection, around Rs. 1000 per month
Antivirus -> Quickheal, Rs. 1000 per year or Rs.83 per month
Power -> Lets assume we shell out Rs. 200
So without placing a single trade i am spending more than Rs.1699. On top of this, system expansion was a problem and steady power supply was not garenteed. So what do i do? i had to find an alternative.
After some searching, i found the solution. It was cloud computing. There are lots of service providers. Some offering free service, whereas others offering the same service at a jaw dropping price.
Finally, i settled with Amazon EC2 server. It gives 1GB memory and 30GB storage space for free (for 1 year). This was great news for me. This translates to free service for first year and from second year around Rs.300 per month. Awesome...
Second, i needed a trading software and data source. I choose Amibroker for this purpose. This is compatable with most brokers who offer Algo-trading service. Also, its free and much better compared to Metastock. But, if you go with the free version. Then you cannot save the charts. I was fine with it, as i could open keep the chart open in the server and forget about it.
Data provider is the trickiest of the lot. There are lots of data provider in the market. I choose a Nest to Amibroker terminal offered by Zerodah. It costs Rs.11000 per annum. (http://zerodha.com/main/zerodha-trader-plugin-amibroker.html)
Thirdly, broker. I wanted to go with deep discount brokers. Only two brokers i considered, Zerodah and Compositeedge. I found composite to be better as they charge 0.006% as brokerage. I can also add in my own clients when needed. My only advice regarding brokers is, if you are planning for Algo then forget big names. Only consider those brokers who can give you less than 1 paise of brokerage. Negotiating with big brokers is a waste of time.
Fourth, amibroker and deal terminal bridge. Well there are lots of options here. I personally choose Symphony for it. For multiple client bridge, it cost Rs.35000 and single user cost Rs.25000. I am planning to go with Rs.35000 plan as i already have my first client
Lastly and most important is trading strategy. If you have your own strategy, but not coded in Amibroker. then you can get it done by a freelancer. They cost around Rs.20000. In my case, i had already coded, backtested and optimized it myself. You can search on the net and find a lot of ready made AFL available on various forums. You need to test these extensively before using it.
So, i had been successful to set up my algo-trading business for Rs.46000 (for first year) and from second year it goes up to (Rs. 49,600). My system is fully scalable and i can add in new clients when needed without any hassle.
If anyone can provide me ways to reduce my cost even further, plz let me know.
Do let me know if you have any questions....
a) VPS from webappzlive @ Rs.1099 per month & PC to watch system intermittently alongwith internet connection ;
b) AMIBROKER -Free + Strategy (his own);
c) RT data @ 500 per month for NSE + MCX;
d) NEST Trader- Free;
e) Monthly Brokerage fixed @ 1000.00 + Service Tax per month (unlimited for all segments cash+FnO+MCX+Currency). This comes from MyValueTrade;
f) Auto Trading Plugin @ 1500 per month;
So, for a retail trader, the set up will minimum cost 4100.00 per month for Algo. This is recurring monthly cost.
Please advise if it can be economized.
In my case, i dont require a VPS. Also my setup is in cloud so speed is actually not a big factor me. As for data feed, i would rather spend a bit more on it. I would prefer plugins which derive data from ODIN or NEST terminal. This will avoid a lot of un-necessary problems like data delay,etc.
Myvaluetrader's brokerage is Rs.25 per order. Which turns out to be Rs.50 for each buy and sell. This is very very high. I prefer Compositeedge's structure, 0.006% or Rs.20 whichever is lower. Do the math and you will see my logic.
Plugin is broker dependent and you cannot do much about it. choose your broker dependent on brokerage and service provided and then go with whatever plugin they give. Not much choice there...
But anyways your options were rally good and made me think about the current structure...
Myvaluetrader's brokerage is Rs.25 per order. Which turns out to be Rs.50 for each buy and sell. This is very very high. I prefer Compositeedge's structure, 0.006% or Rs.20 whichever is lower. Do the math and you will see my logic.
Plugin is broker dependent and you cannot do much about it. choose your broker dependent on brokerage and service provided and then go with whatever plugin they give. Not much choice there...
But anyways your options were rally good and made me think about the current structure...
Check your details again.with myvaluetrade brokerage plans it is rs 10 per executed order
http://www.myvaluetrade.com/Pricing-Plans.aspx
And
Fixed brokerage of 1000 rs (all segments NSE Equity,F&O,Commodities and Currency) per month + service tax.
or
Fixed brokerage of 10,000Rs per annum.
The fixed brokerage plans would save much compared to composite edge.
But since you are opting for symphony you don't have any choice.
http://www.myvaluetrade.com/Pricing-Plans.aspx
And
Fixed brokerage of 1000 rs (all segments NSE Equity,F&O,Commodities and Currency) per month + service tax.
or
Fixed brokerage of 10,000Rs per annum.
The fixed brokerage plans would save much compared to composite edge.
But since you are opting for symphony you don't have any choice.
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