Articolo dell’ economictimes.indiatimes.com
As markets and API-driven trading have started flourishing in recent years, Algo-Trading or Quant Trading professionals have seen an upsurge of requests for guidance from students about careers in this area. As a result, there is a significant need for structured resources and advice in this field, and in this article, I will try to give some direction to the interested candidates.
I am a practitioner in the quantitative or algorithmic trading domain. I started working in the field in 2010 when Algo trading started in India. There were no resources for learning algo trading out in the market when I started. Everything we learned came from experience; fortunately, a lot of content in this field is open source, and the internet has a lot of quality content available.
Where to Start Learning?
There are structured courses in algorithmic trading available on popular ed-tech platforms like CFA Institute, Coursera, QuantInsti, and World quant University, which can be extremely helpful. In addition, many universities like BSE Institute have recently started full-fledged programs on Algo Trading.
But one can even start learning from their efforts through a structured learning program. The skillset necessary to create would be:
- Understanding of financial markets, factors influencing financial markets, macroeconomics, financial instruments, and financial data.
Understanding math and statistics is a must. Programming is also a requirement, but one does not need advanced coding skills. However, knowledge of high-level languages like python, R, or even visual-basic us
- used in Excel is an excellent place to start.
- Understanding the regulations and the roles and responsibilities of various financial intermediaries is also extremely important.
There is a wealth of content available on the internet as free blogs, open research, and even YouTube, which is a go-to for me. People interested in this field should look at that and even contribute!
Retail Algo Trading: In India, with the advent of API-based trading on discount brokers, anyone can start trading using algorithms. One needs an understanding of the trading API, the rules of the strategy they want to build, and the ability to back test or validate their trading strategy to get started.
Proprietary Algo-Trading Firms: Large-scale algorithmic trading happens in proprietary trading firms or HFTs that run alpha-generating algorithms at a large scale on personal capital. These are highly lucrative roles where someone who creates a profitable trading strategy can generate big bonuses.
Institutional Algo-Trading Firms: All large brokers have algo trading platforms for client trades. These roles involve the design of execution and arbitrage algorithms for large-scale trading.
- Quant Analyst Roles: Various financial intermediaries like Corporate Investment Advisors, PMSs, Brokers, Mutual Funds, etc., offer roles for data scientists to work on economic data and bring out exciting insights.
- Technical and Data Related Roles: The algo trading industry also employs a lot of software developers and data analysts for several roles.
Future of Algorithmic Trading
Algorithmic trading is transformative in many ways – apart from profit opportunities for the trader, the algorithm makes trading more systematic by ruling out the impact of human emotions and errors on trading activities. It also makes the market more efficient and liquid.
My humble prediction is that the resources for algorithmic trading will evolve and become structured and efficient as the market grows. India has 50-60% penetration of algo trading, but the developed markets have much higher penetration, more complex products, and more accessible regulations. Indian markets and algorithmic trading will continue to grow. We would see fresh new leaders come into the market not just in the alpha generation or portfolio management roles but also in technology, data science, education, and content development.