Thinking your way through the entire trading process may prove to 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.

The Option Alpha autotrading platform requires you to think through the entire trade process from entry to exit. Now, the process of thinking through a trade from entry to exit is structured in the bot building process. 

Before you begin building your bot, you should think through your trading strategy completely and in a logical manner. Bots use a structured approach, often with if-then statements following a yes/no path. The framework is in place through the autotrading platform, 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, perhaps even writing out the automation editor with if/then scenarios. With a structure in place, it is much easier to transfer the strategy into the automated bot. Scanners and monitors provide a multitude of 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 kind of indicators do you use? 
• When and why do you plan to exit the trade? 

Once you have created a framework for the entire duration of the trade, 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. Bots are automated, but they will not perform any actions until turned on.

First, you must work through the steps of creating a bot:

• Allocate capital. Bot allocation limits are calculated at position entry.
• Set daily and total position limits.
• Build a thorough decision recipe that the bot’s scanners and monitors will work through to open, manage, and close positions

Bots have a built-in checklist with multiple safeguards and limits in place 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.