A "bot" is an automated trading strategy that runs inside your portfolio. Here is what you should know to get started.
A "bot" is an automated trading strategy that runs inside your portfolio. Bots can automate stock or options trading strategies. You can run multiple bots, each trading different strategies and different securities. Plus, you're always in total control of everything the bot does.
You tell the bot when to turn on, what to look for, when to open positions, when to exit positions, and much more. A bot runs inside your account but does not have to use all of your account’s capital. You set the amount of your account's capital allocated to the bot.
Bot settings
A bot has global settings. The bot's settings dictate how much capital is allocated to the bot, the bot's daily position limits, and the bot's total position limits. Bot allocation limits are calculated at position entry. The bot’s global settings can be adjusted and saved at any time.
Bot automations
A bot has automations. An automation is an instruction manual for the bot that tells the bot what to do and when. Automations tell the bot when to take action, such as opening new positions or closing existing positions. Automations can be simple or incredibly complex.
Automations use recipes to move through a decision tree framework of steps in a logical progression. You can build automations to run continuously, on a defined schedule, or at the push of a button. Automations can be saved and reused in other bots.
Bot dashboard
A bot has a dashboard. The bot dashboard is the information hub of your bot. The bot dashboard displays the relevant information for the bot including the bot's positions, total and daily profit/loss, activity, capital allocation and usage, positions, automations, and log.
Important Bot Terms
Bot: An automated trading strategy you create with automations.
Automation: A set of criteria for entering, exiting, and managing positions.
Settings: Variable bot inputs such as fund allocation and position limits.
Decision: Criteria, or recipes, a bot references to perform specific actions.
Open Position: An action that follows a set of instructions to open a position.
Close Position: An action that follows a set of instructions to close a position.
Repeater: An action that tells the automation to apply subsequent actions to all positions of a certain type.
Criteria: Specific variables that reference or evaluate positions and market conditions.
Template: Templates allow you to reuse the framework of a trading strategy.
Clone: A copy of a bot that can be saved and modified.
Copy: A duplicate of an automation that you can edit without affecting the original automation.
Dashboard: The bot’s homepage that displays activity and performance.
Positions: The position statement displays all of your active, closed, and canceled positions.
Log: The bot log displays a bot's automations, the last run time, and how many actions were performed.
Community: The autotrading platform’s social hub where users can discuss trading ideas, meet one another, share bot templates, and ask questions.
Watchlist: A customizable tool that searches and ranks trade opportunities. You can scan for specific tickers.
Backtester: A tool to test your strategies based on historical data. Backtests can be customized by ticker, duration, trade frequency, capital allocation, and strategy
Stock: An equity stake in a company.
Opportunity: An open position action that will enter a new position if your criteria is met.
Position: An open or closed trade that was entered or exited in the platform.
Indicators: Technical way to measure various aspects of a symbol using data points.
FAQs
Does a bot have to connect directly to a trading account or can I use it for signals only?
A bot can be connected to one or more trading accounts and even connected to accounts at different brokerages. All brokerage accounts must be accessed through a single log-in at that firm.
A bot does not need to be connected to a trading account. Bots can stay in paper mode and still provide notifications and signals when certain conditions are met.
Is a bot an "algorithmic trading strategy?"
Bots are not an algorithmic trading strategy. You must manually input (or clone) a specific set of instructions that the bot will follow and subsequently send an order to your broker for execution.
Bots do not use any form of machine learning or artificial intelligence.
Can a bot have multiple strategies running at the same time?
Yes. A bot can have different trading strategies and position types within the same bot. Different automations can be used to execute different strategies and use different ticker symbols.
Can bots execute trades in my IRA or Margin Account?
Yes. All bots will initially be risk-defined trades and can therefore be traded in an IRA account.
Is there a list of bot templates to help me get started?
Yes, there are a number of templates available to view on the Option Alpha website. You can also access shared templates in the Community. Templates can be cloned and saved to your personal library.
How complex can or should I make my bot?
The best thing about Option Alpha’s autotrading bots is that you can make them as simple or complex as you like. Your bot’s complexity is up to you, but we recommend starting simple and paper trading. As the bot's designer, you have a significant amount of flexibility when creating automations.
When should I use a bot and when should I trade manually?
A bot is designed to perform repetitive tasks, so if you have a routine strategy that follows predefined rules, bots are an efficient way to offload scanning and management responsibilities.
You should trade manually when the functionality of the Bot Platform is not sufficient for properly executing or monitoring your strategy.
You can always manually override a position opened inside a bot to regain management in your brokerage account.
Can bots run paper trading and live trading at the same time?
Yes. You can connect different bots to different trading accounts, or leave them in paper mode at your discretion. Each bot gives you the option of choosing your desired account.
Why haven't I heard of bots before, are they a new thing?
The word "bot" derives from the word "robot", which, traditionally, is a word used to describe a physical machine used to automate repetitive processes in manufacturing.
A "bot" is a digital version of a robot used for web applications, like stock trading. Automating trading strategies is not new, but has historically been limited to programmers with a unique skill set. The Bot Platform brings automation to more people by leveraging an "easy to use" UI so you no longer need to master a unique programming language to automate your trading strategies.
Will my broker allow a bot to have access to my account?
In order for your bots to connect to a given brokerage account, that broker has to offer an API for the Bot Platform. Some brokerages currently have this capability and others do not.
This list of compatible brokerages will be updated as connections are added.
How much control do I have over a bot?
You have complete control over your bot. You input the bot’s settings, create the automations with your desired decision criteria, assign ticker symbols, and tell the bot when to turn on and off.
Do bots follow the instructions and limits I set so it doesn't "over-trade"?
Yes, a bot performs based on your parameters. You input the bot’s allocation and position limits, and can even use decision recipes to monitor your ticker symbols and positions.
Do I need to know any level of programming in order to build and use a bot?
No level of programming skill is required to build a bot. What is required is the ability to logically think through the steps that you would like your bot to follow and to structure those steps in a specific order to achieve your trading objectives.
