Zerodha Streak Review – Algo Trading for Retail Investors

Published on Thursday, April 8, 2021 by Chittorgarh.com Team

Zerodha Streak is a simplified algorithm-based trading tool for retail traders. Streak does not require coding skills. It uses technology to help traders to create, back-test, and deploy their technical trading strategies. It is a good algo trading tool for ordinary traders.

Streak helps individual clients to trade systematically in stocks, commodities, and currency futures. Zerodha Streak tool uses Zerodha's API to execute the orders internally.

Streak is a 3^rd party product offered by Zerodha. It helps to make a trader's life easy as it tracks the markets for them without requiring them to continuously track the market movements and wait for the right price to enter and exit.

Algorithmic trading (algo trading) uses a computer program (algorithm) with predefined trading instructions. It sends the buy/sell orders to the exchange automatically based on the trading strategy defined in the program. Generally, algo trading requires adequate coding knowledge. However, Streak is the retail algorithm-based trading platform that does not require coding skills.

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Zerodha Streak Features

Ever since the launch of Zerodha Streak, the app is continuously being evolved and Zerodha is now out with the latest version of Streak 4.0 with a bunch of features added.

• Zerodha Streak platform supports more than 80 technical indicators.
• Zerodha Streak allows to add upto 5 conditions for entering into a strategy.
• Zerodha Streak offers Paper trading that gives a good hands on experience to the beginners.
• Zerodha Streak provides a Discover feature that has strategies published by Streak for educational purposes.
• Zerodha Streak has Scanner that helps a user with stock selection.

 

 

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How does Zerodha Streak Work?

Zerodha Streak works in three steps which are;

1. Create
2. Backtest
3. Deploy

1. Create Zerodha Streak Strategies

Create is the process in which the user inputs some required parameters to build a trading strategy. To create a trading strategy, you need to;

1. Select the stocks you want to trade in
2. Enter the stop-loss value
3. Enter the target profit percentage
4. Pick and type out the technical indicators.

The most important part in creation stage is understanding the technical indicators and choosing the best that suits your strategy. Ensure to use the assistance while entering the conditions that can help you input your parameters properly for the algos to work well.

The following parameters need to be entered to create a Strategy;

• Scrip/Instrument

  Select the stock, commodity, or currency futures from NSE.

• Candle Interval

  A candlestick chartis a financial chart that describes price movements of a stock, derivative contract, or currency future. Each candlestick typically represents one day. Candlestick charts can also be built using intervals shorter or longer than one day. You have to choose from the available candle intervals in Zerodha Streak.

• Position

  Define if you want to buy or sell a stock or instrument.

• Quantity

  Specify the number of equity shares or future lots for the strategy.

• Indicator

  Specify the condition in a trading strategy in 3 parts:

  • Indicator1 – A Technical indicator from over 70 options offered by the Streak platform.
  • Comparator – A logical comparator such as higher than, lower than, etc.
  • Indicator2 – This is the indicator that is compared with Indicator1. For example, a value such as a number.
• Stop-loss and Target profit percentage

  Enter the stop-loss and target profit percentage, to plan the entry/exit and risk of the strategy.

• Strategy name

  Give a unique name to your strategy. The strategy name once saved, cannot be changed.

 

 

2. Backtest Zerodha Streak Strategies

Zerodha Streak Backtest means to apply a set of rules to historical data to check the effectiveness of your trading strategy in generating profit Zerodha Streak has a powerful backtesting engine that quickly generates performance metrics for multiple stocks and claims to run the fastest backtest in the world.

Once you run a backtest on the strategy created, the following process is triggered;

• The algorithm fetches historical market data for each stock/contract
• It initializes all the parameters defined in your strategy
• Hypothetical trades are performed using the hypothetical initial capital

You can adjust and modify various input parameters defined during the create strategy stage on the backtest page.

 

The backtest results include;

• The profit and loss (P&L) curve
• Maximum gains/losses
• The average gain per winning trade
• The average loss per losing trade
• Maximum drawdown (Max DD) – Max drawdown measures the highest decline in the P&L curve at any given point in time

These metrics show your algorithm's performance before you deploy it in the market.

 

 

Note: It is important to understand the backtest results properly that can tell if the algo worked as expected. The algo is said to have worked well when;

• The maximum drawdown is between 1 to -1.
• The number of wins are more than number of losses.

The trading signals indicate the number of times the algo conditions have been met during the selected period. If the back test results are not satisfactory, optimize the strategy by adding/editing the entry strategies by choosing the right indicators.

3. Deploy Zerodha Streak Strategies

In the Deploy stage, you can bring into effect your trading strategy live in the stock market.

Once deployed, Zerodha Streak tracks the price movements for all the stocks/contracts in a trading strategy. It sends one-click actionable alerts when all the conditions of the strategy are met in real-time. This eliminates the need to manually track the trade.

Zerodha Streak offers two Deployment type

• Live Trading

  It sends an actionable alert if the strategy conditions are met.

• Paper Trading

  Deploying strategies in the Paper-Trading mode allows the user to check the performance of the strategy without risking any actual capital. It is a form of virtual trading using your strategy.

 

 

Note: Deploying a strategy doesn't mean it would get auto-executed. The user needs to act on the notification received within 5 minutes failing which, the strategy applied will get elapsed.

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Zerodha Streak Discover

The Discover feature has strategies published by Streak for educational purposes. It is available on the dashboard of the Zerodha Streak platform.

The Discover feature gives users details of various back-tested sample strategies. It shows the performance of selected top-performing strategies across sectors.

Users can search and filter strategies based on the type of strategy they want. One can edit the strategies by changing the pre-defined parameters (like candle interval, quantity, stop loss percentage, take profit percentage) to optimize them.

These strategies can be backtested to check their performance. If the user is satisfied with the backtest results he/she can immediately deploy the strategy in the live market.

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Zerodha Streak Scanner

The Zerodha Streak Scanner is a discovery tool that helps a user with stock selection.

To use the Scanner, a user has to enter his/her conditions and select the group to be scanned (Nifty50, Banking, Healthcare, etc.). You can save each scan with a unique name for future reference.

The Scanner scans across thousands of stocks and instruments (currencies and commodities) to match the user's search requirements.

When you run a query in the Scanner, it generates a list of instruments that match your conditions. You can directly trade in the stocks/future contracts that have met the scanning criteria or view their technical summary.

You can create a custom basket to monitor a few scrips from the scan result. You can also create a strategy directly from the scan results.

Key highlights of the Zerodha Streak Scanner

• 40+ indicators
• Advance Math Functions
• Lightning speed results
• My scans – A list of all the scans that the user has created/copied, and saved.
• Popular scans – A list of 72 sample scans made for bullish (the market is experiencing an upward price movement) and bearish (the market is showing a downward price movement) trend.
• Custom Basket

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Zerodha Streak Demo

 

 

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Note: Zerodha offers 7-days free trial for Streak. In this plan, you get the following benefits;

• 50 Back-tests per day
• 50 Scans per day
• 5 Live deployments at a time

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*Feature available only in 12 months validity plan

**Feature available only in 6-months validity plan

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Zerodha Streak Download

Zerodha Streak app supports Android and Apple iOS devices and is available for download for Google Android smartphones and iPhone users in Google play store and App Store as per the required preference.

Steps to download the Zerodha Streak app

• Go to Play Store or App Store.
• Search for ‘Streak – Ultimate app for retail traders'in Play Store or ‘Streak Algo trade' in App Store.
• Click on Install.

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Conclusion

Zerodha Streak allows users to do algo-trading without any coding skill. It makes it easy to build your own strategies and provides back-test results to know how effective the strategies are before deploying them in live markets. However, one needs to have a basic understanding of the indicators to be used for a strategy to work well.

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Read more about Zerodha

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