How to Setup Automated Profit Targets and Stop Losses

In this video tutorial I want to show you how to set up automated profit targets and stop losses using your monitor automations.

Now one of the cool things about using automations inside of your bots is you can automate the entire process of checking profit targets and stop losses. Even multiple profit targets or multiple stop losses at different periods. In this video I’ll show you how to set up just some very quick checks for potential profit target or stop loss of a position.

Now because these are going to be used inside of a monitor automation that’s going to be managing and monitoring positions that your bot has, you want to start off your automation with a repeater. This will repeat through any of the positions that the bot has of a certain type and will pull in all of that data and information for the position. For this video we’re going to check and monitor just iron condor position.

So, we’re going to use the repeater specifically for iron condors and this monitor automation would be set up just for iron condors. You can set up one for each of your different strategies and save them all to your library right inside of Option Alpha. The next thing that we can do here is we can add a decision now that we have our repeater. The repeater is going to be pulling in information for any of our iron condor positions and we’ll go down here to this first recipe to check and see if the premium has gone up or down since it was opened.

We can actually use the same recipe in both directions as both of profit target and as a stop loss trigger if we want it to. And we’ll set up those both here inside of this video. The first thing that we have to do is we have to link up each position that the repeater is pulling in. The next thing that we have to do is choose if the premium has gone up or down. Now since we’re using an iron condor position in this case, we’ll first set up our profit target which would be a premium going down by a certain percentage since it was opened. Remember, iron condor positions are net option selling strategy, so as the premium goes down you actually realize a profit on their strategies.

Since the premium has gone down by a certain percentage since it was opened, and we’ll just put it at 50%. So, the first thing that we’re going to check here, in this particular automation is, did the premium decrease by 50% since it was opened. We can save that to our decision tree here and that’s now been added to our automation editor. If the premium has gone down by 50% since it was opened, we can then add another action to just simply close the position. And this is how you typically do it inside of any of your monitor automations.

Now if the premium hasn’t gone down by 50%, you could then use another decision down the no path. If the value of the contracts haven’t gone down by 50% maybe you want to check and see if the premium has gone up by a certain percentage which would represent a potential stop loss. In this case we’ll go over here and again link up the same position from the repeater that’s been pulled in, we’re going to leave the premium going up or increase and we’re going to put the increase at 200%.

So, this would tell us that if the position premium has now gone up by 200% since it was opened, and again, this works for iron condor, so you want to use it and reverse for other strategies if you’re using debit strategies for your buying options. You want to potentially use this profit targets and stop losses in reverse. But in this case, it works well for iron condors that the premium might have gone up by 200% which may be our stop loss for our iron condor position.

Once we’re good to go, and we’ve added that decision to our decision block we can just simply click save and it’s now added to the automation editor. If this is how we want our automation to be set up, so it’s that if we have a 50% profit it closes the position, or if we have a 200% stop loss it would again close the position, we just need to add another close position action down the yes path of that last decision.

Notice that now we have our complete automation built out with fully automated profit targets and stop losses for our particular strategy. Again, you can use modified versions of these or use additional versions of these in any of the automations that you currently run inside of your platform.