This sample bot template introduces a targeted iron condor strategy built specifically for small accounts of around $3k. The strategy focuses on selling neutral, out-of-the-money iron condors on a monthly basis inside a core basket of uncorrelated ETFs. Plus, we've used custom inputs to help control and customize the bot's actions to fit your particular trading style and risk tolerance, as well as a clever little "Switch" to allow the bot to make major decisions about how it can manage open positions nearing expiration.
Here's a quick overview of the core strategy that was built into this bot template for you:
1) Scan a list of 10 uncorrelated ETFs.
2) Sell up to 6 iron condors at least 40 DTE, monthly contracts only, at one time.
3) Place strikes near 20 deltas with exactly $3 wide spreads to control position sizing.
4) Take profits quickly using Exit Options around 30% whenever possible.
The template only requires one scanner automation. This scanner loops through your tickers (currently set with the default ETFs) and makes a number of decisions for you. These decisions include checking to make sure you don't have any existing positions in that symbol that are iron condors, making sure the bot has the ability to open a new position, and evaluating the IVR level for each symbol in your list if you wanted to filter your trades by IVR. As always, these are all customizable if you want to modify or edit your bot that you clone from this template.
Note: You'll see that we've added 10 tickers to our default symbol loop but limit the bot to only enter up to 6 positions at a time, 1 per ticker, so that we keep our total capital allocation in check.
Finally, the bot uses three (3) very specific opportunity filters when evaluating each iron condor:
1) Bid/Ask Spread Threshold = Helps avoid wide spreads and illiquid contracts/strikes during the day.
2) Profit of Pro Threshold = Ensures the iron condor has a high probability of profit.
3) Rate of Return Threshold = Makes sure you're collecting enough premium relative to the risk of the position.
Here's an example of what you might see in the logs for iron condors that PASS some of these filters:
Remember, these opportunity filters are added to help protect your portfolio from entering trades that don't meet your entry criteria. You are always free to adjust/edit the default settings inside the automations.
Iron Condor Setup
Since this bot was curated for small portfolios of around $3k we've specifically set up the template with default iron condor settings that are aligned with intelligent risk management. Assuming a $3k portfolio we ideally want to keep roughly 40-50% of our capital in cash which means that we need to distribute the remaining $1,500 across 6 iron condor positions at any one time. This would mean that we should target around $250 of risk per iron condor position we enter for each ticker ($250 X 6 = $1,500). For this reason, you'll see we set up our iron condor long strikes to be exactly $3 from the short strikes (when available). We do NOT want to trade iron condors, for this particular template, where the spreads on each side are wider than $3. This would increase the risk in the position and thus increase our risk across the rest of the portfolio.
Now, the beautiful thing about bots is that we can specifically tell the bot to look for spreads EXACTLY $3 wide on each side of our iron condor. Depending on the underlying price of the ETFs in our list, the contracts/strikes available for a given expiration month, we may not always find a $3 wide spreads and THAT'S GREAT! We want the bot to look for us and avoid entering new positions when we cannot get a spread width of exactly $3 on each side. For this reason, you might see this text in your decision log when scanning for new positions "Unable to find requested call option" or "Unable to find requested put option."
This again is great to see because we know that the bot looked for our exact spread width but didn't find it for that particular ticker and expiration this time around. This might mean that the strike intervals are $5 for a given expiration month, again something we told the bot we wanted to avoid. Now, if you are comfortable with wider spreads you can easily edit the leg strike selection for the iron condor position in the scanner automation settings.
Note: We've also used Position Tags to tag opened positions as 'iron condor' which might help you organize your positions if you're trading positions in the same symbols across other bots. With tags you can sort and filter positions by tag so you can see which positions were entered under what conditions or the strategy type used across multiple bots.
For this particular bot sample, we are using one monitor automation to loop through any iron condor positions inside the bot. This means you can use this monitor automation inside other bots as well that also have iron condor positions and it would only manage those iron condors. As always, this is just one of a million ways to use bots and automations but we always want to give you more ideas to spark creativity.
With this one monitor automation, we're only looking to do additional management above and beyond the 1-min Exit Options we've set for profit targets and expiration exits. If we are assuming this template will be used for small accounts, then you'll want to check the box for avoiding trading on the same day on Exit Options so you don't get flagged as a Pattern Day Trader (PDT). This decision ensures that any closing of new positions happens at least 1 day after the position was opened.
Next, we encounter a "Switch" for allowing the bot to exit an iron condor IF either short strike is challenged by the underlying symbol. What's so cool about using switches is that you can choose to turn ON or OFF entire management sections within an automation. So if you leave the switch ON the bot will exit any iron condor position that is BOTH inside 3 days from expiration AND is currently being challenged. If the switch is turned OFF, then the bot simply exits any iron condors inside however many days from expiration you use in Exit Options to help avoid holding positions through expiration.
These sample templates are just a starting point for bot building. Post your own modified/edited version(s) of this bot template in the comments below or publicly in the Community to help crowdsource new ideas for your fellow traders.