New Delhi, India: As algorithmic trading becomes more accessible to retail traders, misconceptions about guaranteed profits and effortless returns are also increasing. Maya Sharan Singh, Director of Lares Algotech India Pvt. Ltd., stresses that the real purpose of algo trading is not to promise returns but to bring structure, speed, and consistency to trade execution.

According to Singh, algorithmic trading should be understood as a technology-driven method of executing predefined trading rules. The system follows programmed conditions related to entry, exit, position size, and risk management. It does not predict the market with certainty or eliminate the possibility of financial loss.

“Algo trading is often presented as a shortcut to profits, but that is not the right way to understand it. Its actual value lies in systematic execution. It allows a trader to follow predefined rules without changing decisions because of fear, greed, or hesitation,” said Maya Sharan Singh.

Technology Cannot Remove Market Risk

Financial markets are influenced by economic developments, global events, liquidity, volatility, and investor behavior. No trading strategy—manual or automated—can control these factors or guarantee a favorable outcome.

Even a well-tested algorithm may perform differently when market conditions change. A strategy that works effectively in a trending market may not deliver the same results in a range-bound or highly volatile market. Technical problems, sudden price gaps, slippage, and insufficient liquidity can also affect execution.

Singh explains that traders should not evaluate an algorithm only on the basis of its past performance. They should understand the strategy’s logic, risk parameters, suitable market conditions, and potential drawdowns before deploying capital.
The Real Value of Systematic Execution

Manual traders often struggle to follow their own plans. They may enter a trade late, exit too early, increase a position impulsively, or avoid taking a valid trade after experiencing a loss. Algo trading can help reduce such inconsistencies by executing orders according to predefined conditions.

Systematic execution can offer several practical advantages:
• Faster order placement when defined conditions are met
• Consistent application of entry and exit rules
• Reduced emotional interference in trading decisions
• Better monitoring of position size and risk limits
• Improved ability to track and review strategy performance

However, automation should not be confused with complete independence. Traders still need to monitor system behavior, market conditions, available margins, order rejections, and risk exposure.

Risk Management Must Come First

Maya Sharan Singh believes that risk management should be built into every algorithmic trading approach. Before activating a strategy, traders should define the maximum capital allocation, acceptable loss, position size, stop-loss conditions, and circumstances under which trading should be paused.

Backtesting can help traders study how a strategy would have performed using historical data, but it cannot guarantee similar future performance. Strategies should also be reviewed through paper trading or controlled deployment before being used with significant capital.

“Automation makes execution faster, but speed without risk controls can increase the impact of a poor decision. A responsible algo-trading system must combine execution efficiency with clearly defined risk limits,” Singh added.

A More Responsible Understanding of Algo Trading

As participation in technology-led trading grows in India, trader education will remain essential. Investors and traders should be cautious of platforms, advertisements, or individuals claiming fixed profits, assured income, or risk-free returns.

The responsible approach is to treat algo trading as an execution framework—not a money-making guarantee. Its effectiveness depends on strategy quality, realistic expectations, disciplined risk management, reliable technology, and continuous monitoring.

Through her leadership at Lares Algotech India Pvt. Ltd., Maya Sharan Singh advocates a transparent and disciplined approach to market participation. The company focuses on technology-enabled trading infrastructure, efficient order execution, and advanced market analytics while encouraging traders to understand the risks involved.

Ultimately, algo trading does not remove uncertainty from financial markets. It helps traders respond to that uncertainty through predefined rules, systematic execution, and greater operational discipline.

Disclaimer: Trading and investing in securities are subject to market risks. Algorithmic strategies and past performance do not guarantee future returns. Traders should understand the risks and seek professional advice where necessary.