Stick to algos vetted by exchange or a reputed broker, advise experts

Go with players who can provide audited records of performance

The Securities and Exchange Board of India (Sebi) issued a circular on June 10 warning investors against dealing with unregulated platforms that offer algorithmic (algo) trading. The circular warns investors against falling prey to claims of huge returns, or being impressed by ratings assigned to strategies by such platforms.  

Be wary of claims of high returns

Experts say building an algo that can consistently produce reasonable returns, after factoring in all transaction costs, is difficult.

“Usually, these unregulated algo platforms attract customers with claims of unrealistic returns based on backtests that are either cherry-picked and/or conveniently ignore transaction costs,” says