Combining Multiple Moving Averages to Trend Follow with Bots

Use bots to identify trending stocks and automate the trade entry process using multiple moving averages.
Kirk Du Plessis
May 3, 2021

Moving averages are one of the most popular indicators used by investors. Traders may use moving averages to identify trends or determine entry and exit points for positions. However, it can be difficult to catch all the moves if you don’t have constant access to your trading platform. Not anymore. With Option Alpha, you can automate your trading strategies and never worry about missing another opportunity. This video explains how to create a simple automation scanner to target securities in an uptrend.

Automating the entry process for these trades has multiple benefits. You no longer need to be glued to your computer monitor or attached to your phone, awaiting alerts from your broker. Imagine spending hours researching and developing a strategy (you can do that here, by the way), only to miss the buy signal when your conditions are met. With bots, you can scan for trending stocks and immediately send an order to your broker when your conditions are met.

This video example highlights two simple ways to combine multiple moving averages for a trend following trade setup. Decision recipes within a bot’s automation editor enable you to compare multiple moving averages and check if a security’s price is above or below a moving average with a defined lookback period. 

Nested decision recipe with multiple moving average criteria

Different recipes can be grouped together so that multiple criteria must be valid before the bot moves through an automation. This is key if an investor wants to ensure a security’s price is above a short-term moving average and a longer-term moving average, as well as confirming that a short-term moving average is above a longer-term moving average.

If all conditions are met, the bot will trigger an order entry to open a long equity position.

Completed automation with open position action

You now can automate the process of tracking technical indicators such as moving averages to enter and manage multiple positions in your portfolio. With simple decision recipes, you are in complete control of what your bot scans for in the market.

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