Typically, monitor automations end with a close position action. But maybe you don’t want to stop there. Maybe you want to open a new position as soon as the other position closes.
You can stack open and close position actions inside a monitor automation to automatically open a new position when another position closes.
This feature is somewhat advanced and should be used appropriately, but it is a great way to automate a strategy that continually opens new positions.
For example, you can add an open position action directly after a close position action. The bot will move to the next decision in the automation and instantly open a new position.
With this technique, the bot does not check if the position has closed before sending an order to your broker, so there is a chance the original position has not yet closed. You can adjust the SmartPricing settings to ensure the order is filled as quickly as possible.
You can also use a close position event automation to trigger an automation as soon as a position closes and achieve a similar result.
In this video, I want to show you how to stack open and close position actions inside monitor automations. Now, this is definitely more of an advanced technique and strategy that you can use and you want to make sure that you use these appropriately inside of your bots and automations.
Remember that open and close position actions do not check and see if the position actually was closed or opened but rather just submit orders to your brokerage platform. So again, you want to make sure that if you're stacking open and close positions actions, use any pricing settings or smart pricing levels, that might ensure that the trade gets filled or set up the highest probability that the trade is actually filled when submitting the order to the broker.
I want to go through just one example here, but of course you can use this for a thousand different use cases inside of your bots and automations. Let's say that we have this demo monitor automation that's going through and repeating through each position that the bot is currently trading.
First, we're going to then check and see if the position expires in less than 5 days. When we get inside 5 days to expiration, we might be willing to open and close positions that are different inside of the bot. We could also then check if we're not inside 5 days to check and see if the underlying price is below or above one of our strikes. This video tutorial will assume that we're trading put credit spreads.
Therefore, we might want to check and see if the position underlying price is below our short put strike, signifying that we're now getting challenged on our short put spread position that we're trading. If the position expires in 5 days, we might want to take an action to simply close the existing position. This is an easy action to add inside of your automation editor. You simply link the position to the same one that the repeater is referencing, and then you set up your pricing levels for smart pricing.
In this case, because we're going to be closing a position, maybe we want to use speedy smart pricing and we're willing to go up to 100% of the bid-ask spread. We know that we're trading things that are traditionally very liquid, and we can also add some other decisions before this to check liquidity if we want to. Again, for the simplicity of this video, we'll assume that you've done all of that inside of your automation.
And you're ready to go here with smart pricing. Once you add this close position action, the bot will then first go down the yes path and start entering orders to close the position in the account. But you don't have to stop there. You can actually stack another position on top of it. So, whenever you enter orders to close one position, you can then enter more orders to open a new position maybe in a further out expiration.
So, we'll go here to open a new position, open a new short put spread, and we can, again, link this to the same symbol for each position. That way it references and opens the exact same position or similar position in the same underlying symbol that's currently being closed. You set up all of your different criteria for your new position, choose your expiration, your legs of your position, set the quantities and the price, and once you're good to go you simply hit save.
Now we can see that we've stacked both an open and close position inside of our monitor automation. Now, anytime that the monitor automation runs, it will check each position and see if each position expires in less than 5 days. If it does, it will close that position and then try to open a new position in a further out expiration. In this case, we're opening positions 30 days from expiration, so it will essentially roll those contracts to the next expiration period.