As traders, we’re all familiar with performing the same repetitive tasks over and over, wishing there was a better way. Sure, the tasks aren’t necessarily difficult. But they can be complex, frustrating, and time-consuming.
Your trade plan may include checking for liquidity, calculating probabilities, and scanning indicators for multiple tickers. These are only a few of the many pre-trade checklist items you may go through (and it doesn’t even include in-trade management: monitoring, hedging, taking profits, watching expiration, canceling orders, and so much more).
The problem is, if you skip even a single item, it could be the difference between a successful trade and a losing trade.
At Option Alpha, we LOVE to trade, but we’re over the processes of manual trading. We've been conditioned to accept the complexity as a way of life, but it doesn't have to be.
Autotrading makes some of the more laborious and mundane parts of trading easier and more efficient, so you can save time and energy by delegating trading tasks to automation.
In today's episode, we’ll highlight a list of 12 tasks you can offload to a trading bot so you can focus on more important activities.
- Filter Trading Opportunities
Most of your time as a manual trader is spent scanning and filtering different trading opportunities. When outsourcing this work to a bot, we save time and drastically reduce the number of mistakes. Plus, you can enter more trades with automation, potentially leading to more profits (like it did for Dan).
These tutorials demonstrate the many ways you can use automation to filter opportunities. - Always Attempt Multiple Prices
We have all missed opportunities because we were forced to submit a single price manually or continually canceled and re-submitted orders chasing price action.
SmartPricing is our proprietary technology that sends rapid-fire orders to your broker. SmartPricing automatically traverses the bid-ask spread to find optimal pricing, allowing the bot to try multiple prices to find the best possible entries and exits for your trades.
With SmartPricing, you can tell the bot the conditions of your submission, and it will automatically find you the best price based on your settings.
How much money could you save with better pricing on hundreds or thousands of trades? - Tag Unique Position Types for Custom Management
You can now use position tags to identify and manage positions a certain way based on their opening conditions.
For example, you can specifically tag iron condors as aggressive when implied volatility is high. The bot can then manage those positions differently based on the tag.
This simple yet powerful feature gives you the flexibility to manage your bot portfolio with precision and dynamic organization. - Intelligently Tag Bots Based on their State
You’re also able to tag entire bots based on their status.
Bot tags can then be used as a reference when opening new positions. For example, in the Genesis bot series, a bot is tagged if it is hedging a position and scanner automations will stop searching for new opportunities until the tag is removed.
There are limitless possibilities and combinations available when using tags for bots. We’re already seeing so many creative use cases in the Community. - Use "Switches" to Turn Entire or Parts of Automations On/Off
We can’t decide what’s more awesome: tags or switches. The new 'switches' feature gives you even more control inside your automation.
You are now able to toggle a switch on or off. You can use switches to essentially turn off an entire automation or just certain parts of an automation.
For example, you could use a switch to tell a monitor automation to take a different path based on the days remaining until expiration if the switch is on. You could also place a switch at the top of a scanner automation if you want to quickly and easily turn off the bot’s ability to look for new trades but still manage open positions. Pretty amazing, right?! - Check Market Volatility Daily to Adjust Bots
You can set up an automation to check volatility levels every morning and tell the bot to avoid new positions if the VIX is too high.
This automation can then inform how you manage your position in response to any level of volatility. - Take Small Profits Before the Close
Have you wished you could automatically exit all your profitable positions at the end of the trading day? Wish no more!
With event automations, you can now run a daily process to check for profits before the bell and instantly exit any position that meets your profit-taking criteria.
This can be automated to run at the same time every day, so bots will take care of your positions if you can’t be at your computer. Now you don’t have to worry about getting in all those orders before the close. - Scan a Custom Watchlist of Tickers
We recently introduced symbol loops (another Community request we were happy to provide).
Loops enable you to enter a list of tickers into an automation, and the bot will loop through all of those tickers, checking the same criteria for each symbol. This means you can run the same strategy on multiple tickers simultaneously. - Take Custom Actions with Bot Buttons
Bot buttons instantly run any automation. You can create buttons for any scanner or monitor automation and add them to the bot dashboard. Bot buttons are especially useful for unique scenarios that do not occur every day.
With bot buttons, you can take custom actions and save so much time because you’ve already set up the automations in advance. All you have to do is click the button!
Check out these unique ways you can use bot buttons. - Immediately Trigger New Trades When Certain Positions are Opened
New trades can be automated to run as soon as new position types are opened. There are limitless combinations of actions you can trigger after a position opens.
For example, if you trade covered calls, you can set up your bot to automatically sell a call option as soon as the bot enters a long equity position. - Monitor Positions for Multiple Exits
Managing a portfolio of positions can be overwhelming. It’s challenging to watch different markets and multiple positions all day, every day. We can take a lot of pressure off of ourselves with monitor automations.
Monitor automations keep an eye on all your open positions, so you don’t have to. You can’t calculate everything that a bot can, with speed and efficiency, for dozens of positions. Automated trading removes the potential to forget or miss important things.
Imagine automating the profit targets and stop-losses for all your positions and never worry about manually tracking all the individual returns. Or using dynamic orders to exit positions differently based on days until expiration and profit.
How much time would that save you? - Calculating Perfect Position Sizing when Entering New Trades
The process of manually calculating position size can be complicated.
Now you can automate the process with fixed contract limits and tell each bot to allocate a specific amount for every position.
You can also filter for optimal rate of return with your bots, so you’re always in control of your risk-reward based on your trade plan.
For more examples of how you can use bots to simplify your trading and automate complex tasks, listen to podcast episode #202: 8 Popular Decision Recipes for Automated Trading.
Click here to see dozens of pre-built templates.
Join a live bot workshop or watch a recorded workshop and follow along as we build a bot.
Trader Q&A:
SURYA: Hey, Kirk. This is Surya from Florida. Thanks for your great website. A lot of information over here. My question today is regarding put credit spreads and what to do when it's challenged. My question comes from three different perspectives. Let's say, if we open a 45 days to expiration put credit spread in an underlying, such as SPY, and if the short strike gets tested, meaning the underlying SPY goes down, when is a good time to manage the position? Do you take care of it at any time before starting to adjust something, like 21 days left to expiration? Or is it not related to time? Or do you just try to roll or open an opposite call credit spread and turn it into an iron condor or an iron butterfly? Which is better in terms of adjustment, whether to open an iron condor, or to roll for a credit? The main question is, what is the minimum time that you take to adjust this position? Do you adjust it, let's say, right after you open it, or when the position gets challenged, or do you wait for a while and allow for the position to come back? I'm a little confused in what to do with respect to the timing perspective and what is a better thing to do, whether rolling, or opening a defensive opposite credit call spread position to create an iron condor or iron butterfly? Thank you.
The put credit spread strategy guide has more details on adjusting challenged positions.
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