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Best Practices

Here is what you need to know as you plan your trading bots from start to finish.

Thinking your way through the entire trading process may be the greatest challenge with automated trading. Planning your trade from start to finish has always been a best practice. Previously, you could approach trading dynamically — you could log in to your brokerage account and make changes.

Autotrading requires you to think through the entire trade process from entry to exit. Now, this is structured in the bot-building process. Automations are the bot's instruction manual and nothing more than your trade plan articulated through decision actions.

Before you begin building your bot, you should think through your trading strategy completely and in a logical manner. Bots use a structured approach with if/then statements following a yes/no path. The framework is in place, and you are responsible for filling in the actions.

You should map out a strategic approach for every decision the bot will make, effectively planning the trade from entry to exit. It may be helpful to plan out the process on paper with a detailed trading plan. With a structure in place, it is much easier to transfer the strategy into an automation. Scanners and monitors provide many options to enter, manage, and exit trades. You simply tell the bot how you want it to execute your pre-planned strategy.

Think about the big picture of the bot and narrow down your objective:

  • Do you want to trade stocks, ETFs, or options? 
  • How much of your total capital do you want to allocate? 
  • How many positions do you want to enter daily? Total? 
  • Are you bullish, bearish, or neutral on the underlying asset?
  • What market criteria do you want to evaluate?
  • What kind of indicators do you use?
  • When and why do you plan to exit the trade? 

Once you've created a framework for the entire trade duration, you can automate the bot’s execution process in the automation editor. The bots make sure that you define what to do, when to do it, and how much capital to allocate. Automations only begin running once you've turned them on. Bots have a built-in checklist with multiple safeguards and limits to protect traders.

After building a bot, the recommended best practice is to turn on the paper trading feature before trading in a live account. Paper trading your bot allows you to test your logic and strategy in the current market environment and answer key questions about the bot's functionality:

  • Did the framework you created do what you expected?
  • Did the bot enter the positions you anticipated?
  • Did your closing actions exit positions according to your plan?

Ultimately, you, the trader, are responsible for planning your trade and telling the bot how to execute your strategy.


Can a bot enter a position without using automations?

Yes, you can manually open a position in the Position Statement.

How can I remember why I built a bot the way I did?

You can always create a bot template for a strategy and add detailed notes in the description.

Where can I add notes and research about a bot strategy I'm running?

You can create a template for any bot and add notes and research insights in the notes section.

Should I run a bot in paper trading before converting it live, and if so, for how long?

You should run all bots you build or clone from others in paper trading mode through several trading cycles before trading live money. This is a critical part of being an effective trader.

Can I manually trigger my bots in paper trading mode to see what the filled position looks like to confirm it matches what I wanted?

Yes, in addition to paper trading, it is always good to use the test button in the automation editor or fully run the bot and examine its results to be certain they match your expectations.

How can my position size or allocation impact my overall trade results?

Position size can have a profound impact on a bot’s performance. We recommend using the backtester feature to test different capital allocations to see the different results.

Is it best to lump all my decisions and actions inside a few automations or build out multiple smaller automations to keep everything separate?

The platform offers flexibility when choosing how to automate a strategy. You can use the platform as a “categorical variable tree” and move through the tree as the bot checks if singular criteria are met. 

You can also add “and”/”or” logic to a decision action and have the bot reference multiple criteria in a single block. 

Keep in mind that if you want to know what specific criteria are triggering a no response, you should plan to keep those as separate variables so that you can see the precise decision that triggered a no.

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Kirk Du Plessis
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