Bots automate your strategies, which is great. But, what if you don’t want a strategy to run if market volatility suddenly spikes? Don’t worry; Option Alpha has you covered.
You can easily add a global filter to any automation to define market conditions based on the VIX.
Adding a VIX filter to the beginning of a scanner or monitor ensures the bot will reference volatility first before continuing through the automation.
Any automation can be modified to quickly add the decision recipe for comparing VIX properties. While it may not be necessary for all your positions, it is something to consider when building your bot if you are concerned about an unexpected event that could affect the entire market.
In this example, we have a bot that uses RSI levels to potentially enter a swing trade. If RSI is below a defined level, a bullish put credit spread is opened. If RSI is above a defined level, a bearish call credit spread is opened.
This video will show you how to precede the automation with a VIX filter so the bot doesn’t enter any positions if volatility increases.
The “Precede with” setting automatically sends everything that follows down a “Yes” path. So the automation will begin by confirming that the VIX is below 40 before advancing to the remaining recipes. If the VIX is above 40, the automation simply ends.
This is a straightforward and creative way to add a VIX filter to the beginning of a scanner automation. The same decision recipe can also be added to a monitor automation. Using the same recipe, you can add a closing action to immediately close all positions if the VIX is above 40.
Simply place the decision recipe before a repeater action, and the bot will check the VIX level first. Add a close position action if the VIX is above 40, and the repeater will ensure that all positions of a specific type will be closed.
Thanks to the power of bots and detailed decision recipes, you can rest easy knowing that your automations will keep an eye on market volatility for you and take the appropriate actions based on current market conditions.