One of the autotrading platform’s strengths is taking different paths and making alternative decisions based on one recipe.
When evaluating market conditions, you may want to enter multiple position types contingent on certain indicators. If you have two or more strategies working inside one automation, the automation editor can filter through market data and make decisions based on your specific criteria.
With dynamic orders, you can tell a bot a specific position type to open based on the outcome of decision recipes.
The "Honey Badger" bot uses an automation that scans live market data to determine if SPY is above its 200-day SMA. Based on the outcome, you can add multiple open position actions to enter different strategy types.
For example, if SPY is above the 200-day SMA, the automation proceeds down the “Yes” path and opens a put credit spread. If SPY is below the 200-day SMA, the automation proceeds down the “No” path and opens a call credit spread.
You can set up your automations to be incredibly dynamic and flexible enough to react to different scenarios, which is great because you may want the bot to use different strategies based on the outcome of a recipe.
Bots are smart enough to take the appropriate action based on the outcome and enter your preferred strategy for different market conditions.
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In this video tutorial, I want to show you how to create dynamic option orders inside of your bots.
When I talk about dynamic orders, what I’m saying is that when you use the automation editor to make all of your decisions and filter through market data and criteria before entering a position, you can actually tell the bot which types of trades or which types of strategies you want to trade based on the outcome of those decisions.
In this example, we’ll just use a very simple decision checking to see if the S&P’s price is above its 200-day moving average or not. Again, you can use multiple sets of decisions and at the end of each branch tell the bot to enter multiple types of strategies.
In this video, we’re just going to use this one simple decision to tell the bot to either enter a call spread or a put spread on the S&P.
So now that the bot has gone through and potentially made the decision to check and see if the S&P’s price is above its 200-day moving average. If the answer to that question is yes, then we want to go ahead and open a short put spread.
So, we’ll add an action here to open a new position and we’ll go down to a short put spread. You put in all the criteria that you want for this particular position, the expiration, the strikes and the quantity of the contracts.
Once you have everything set up the way that you want and we’ll just use these defaults here, you simply go ahead and can hit save.
So that adds our new short put spread position and that’s the first of our potential trading opportunities. Notice that those trading opportunities are now listed in the left-hand side of the automation editor.
But if the S&P’s price is not above its 200-day moving average, maybe we want to do something a little bit more dynamic, like sell a call spread on the S&P if the S&P is moving in a down trend. So we go down the no branch and we add an action at the end of the no branch to open a position.
We don’t want to open another short put spread, we want to open a short call spread position. This time we can tell it again to enter it into SPY, we can change up any of the fields or variables here to make it a little bit more specific to how we want to trade.
Maybe when we’re selling call spreads, we want to go 60 days out and we only want to trade the monthly contracts. Whatever it is for you and whatever the settings you put in here, that’s what the bot is going to follow.
Once you have those in place, you simple hit save. Now we have two different strategies that are working inside of this one automation and this is how you can use dynamic orders inside of your bots.
You can tell your bots based on the market data and criteria that you want it to go through and filter through which types of strategies and exactly what type of strategy to enter as it finishes out the automation.
Now, quickly jumping over to another example here just to show you that you can do this at the end of any of the different branches that you have.
This is one of the "Honey Badger" scans that we built out in demos and it goes through a lot of different market criteria and a lot of different filters for liquidity, but notice at the end of the different branches here for this "Honey Badger," we give the bot the ability to open a short call spread position, short put spread position, or all the way down here at the end, an iron condor position.
So this is just another example of how you can use dynamic orders right inside of your bots.