Blog

Last week, JamaDhan Stock Market Institute hosted a special session in Jaipur with Dhan, one of India’s fastest-growing trading platforms. The topic? Algo trading.

The room was full of curious traders — students, working professionals, and a good number of housewives exploring the markets for the first time. Everyone wanted to know the same thing: what exactly is algo trading, and is it something a beginner can actually use?

“Most of our students had never touched an algo strategy before. Watching them go from confused to confident within one session is exactly why we brought Dhan in for this.” — Deepak Sethia, JamaDhan

Here’s a recap of what was covered, along with answers to the questions we got asked the most.

What Is Algo Trading?

Algo trading, short for algorithmic trading, means using a computer program to place trades automatically. Instead of you manually watching charts and clicking buy or sell, a set of pre-written rules does it for you.

The program follows instructions like “buy when price crosses X” or “sell when RSI hits Y.” No emotions, no hesitation, just execution.

This is different from manual trading, where you’re the one making every decision in real time. Algo trading removes human delay and bias from the equation.

How Algo Trading Works?

At the event, the Dhan team walked through this in four simple steps.

Step 1: Define a strategy. You decide the logic — what conditions should trigger a buy or sell.

Step 2: Set the rules. These conditions get coded or built using a rule-based tool, no advanced programming required on platforms like Dhan.

Step 3: Backtest it. Before risking real money, the strategy is tested against past market data to see how it would have performed.

Step 4: Let it run. Once live, the algorithm executes trades on its own, based only on the rules you set.

This is also how algo trading works in Zerodha, Angel One, and most modern platforms — the core process stays the same, only the interface changes.

Key Takeaways from the Dhan Session at JamaDhan

Live Demo Highlights

Dhan’s team ran a live demo showing how a simple strategy gets built and deployed on their platform. Attendees saw order execution happen in real time, which made the concept click for a lot of people in the room.

The SLBM Discussion

A good chunk of the session also covered SLBM, or the Stock Lending and Borrowing Mechanism. This lets traders lend or borrow shares for a fee, opening up strategies beyond simple buying and selling.

We’ve covered SLBM in more depth in a separate guide, worth reading if this is new to you.

Q&A Insights

The most common questions from attendees weren’t about strategy — they were about safety, legality, and whether beginners should even attempt this. Fair questions, and ones worth answering properly.

Is Algo Trading Legal in India?

Yes, algo trading is legal in India, but it’s regulated by SEBI. Retail traders need to use SEBI-registered platforms and brokers that follow approved execution protocols.

SEBI issued a specific circular on February 4, 2025 titled “Safer participation of retail investors in Algorithmic trading” (SEBI/HO/MIRSD/MIRSD-PoD/P/CIR/2025/0000013). Under this framework, brokers act as the principal for any algo trades, and algo providers must be empaneled with the stock exchanges.

Retail investors whose algo activity crosses a certain order-per-second threshold also need their strategy registered through their broker. The rules became effective from October 2025. Always check that your broker offers SEBI-compliant algo execution before you start.

Is Algo Trading Profitable?

This depends entirely on the strategy and the person running it. Algo trading isn’t a guaranteed money-maker — it’s a tool, not a shortcut.

A well-tested strategy can reduce emotional mistakes and execute faster than a human. A poorly built one will lose money just as fast, only automatically.

The traders who do well with algo trading usually understand the market fundamentals first, then use automation to execute more consistently. Jumping straight into algo trading without understanding the basics is where most beginners go wrong.

How to Do Algo Trading in India?

The realistic path is: learn trading fundamentals first, then pick a SEBI-compliant platform, backtest your strategy, and start small.

Start by learning the basics of technical analysis and market behavior. You need to understand what makes a good strategy before you can automate one.

Next, pick a SEBI-compliant platform that supports algo trading, such as Dhan, Zerodha, or similar brokers with rule-based execution tools.

Then backtest any strategy thoroughly before going live, and start with small capital until you trust the system.

At JamaDhan, we don’t currently include algo trading as part of our regular course curriculum — our programs focus on building strong technical analysis and trading fundamentals first. What we do offer is events like this one, where students get exposed to newer tools and platforms like Dhan’s algo trading system through live demos and direct interaction with the platform team.

If you’re a beginner, the right starting point is still the fundamentals — understanding price action, risk management, and strategy building — before layering automation on top.

Algo Trading: Advantages and Disadvantages

Advantages:

Speed and consistency stand out the most — algorithms don’t hesitate or panic during volatile moves. They also remove emotional decision-making, which is one of the biggest reasons retail traders lose money.

Disadvantages:

A bad strategy scales losses just as fast as it scales gains. Technical issues, internet outages, or coding errors can also cause unintended trades if the system isn’t monitored properly.

Final Thoughts

The Dhan x JamaDhan event made one thing clear: algo trading isn’t just for coders or Wall Street types anymore. With the right platform and the right foundation, it’s accessible to serious retail traders too.

If you missed the session and want to learn algo trading the right way — starting with the fundamentals, not just the automation — check out JamaDhan’s upcoming workshops in Jaipur.

Related reading: Top 5 Stock Market Institutes in Jaipur (2026 Guide)

Frequently Asked Questions