How to Automatically Avoid Trading When Markets are in a Downtrend

Markets can be volatile, and you may not want to open new positions if a stock drops under a moving average. With automated trading, you can filter position opportunities for specific market conditions using your favorite technical indicators. 

You can avoid trading when markets are in a downtrend by preceding an open position action with a decision recipe to evaluate the ticker symbol’s moving average.

For example, scanner automations can check if an underlying security is above or below its 200-day simple moving average. The bot will only open a position if the selected ticker symbol is above its 200-day SMA.

If the security is above the 200-day SMA, the automation will continue down the “Yes” path and open a new position. If it is below the 200-day SMA, the automation will end and check again when it runs in the future.

With this trend filter in place, the bot will not enter new positions if the stock enters a downtrend. It will automatically continue opening positions once the stock moves back above the moving average.

You can add additional filters before opening a position.

You can define the trend using any lookback period you want with multiple trend and momentum indicators.

Automating the order entry process makes managing a portfolio with multiple stock and options positions incredibly easy. You no longer have to track individual securities and manually start or stop strategies based on technical indicators.