Imagine a chart with multiple indicators plastered everywhere on the screen. Maybe your strategy requires you to reference many different market criteria before executing a trade. It can be difficult and overwhelming to check the properties of numerous indicators for one security, let alone an entire portfolio, before submitting an order.
We’ve all been there.
Automated trading makes it easier to combine decisions into a single action.
You can group multiple criteria together so the bot can do all of the work for you inside a single decision action. The additional criteria can use an and/or decision process, meaning both conditions must be met, or at least one condition must be met.
For example, you can reference a security’s moving average and its price. You may want to check that SPY is above its 200-day SMA and trading above $450. Both criteria must be true for the automation to proceed down the “Yes” path.
Sub-groups extend the functionality one step further. Sub-groups are effective when you want to make subjective “Or” decisions.
For example, if you’re filtering for an overbought stock, the first recipe could reference an RSI value. The initial decision could be followed by a sub-group where one of two (or more) criteria must also be true, such as a specific IV rank or CCI reading.
You don’t have to group decisions together. You may want the automation to check decision recipes in a specific order.
However, if you use more than one criteria to make a decision inside an automation, it may be efficient to group those recipes inside one decision action.
Using criteria groups and sub-groups for targeted decisions is a unique function that allows the bot to evaluate multiple criteria before moving through the automation.
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In this video tutorial I want to show you how to create criteria groups and sub-groups for targeted decision making.
Now, it’s important to remember that you don’t have to set up your decisions this way. This is just one example showing you the flexibility of the decision action inside of the automation editor.
You can, of course, split your decisions or group them together into groups and sub-groups. And so we’ll go through some of these examples here in this video.
Let’s say that we start off our automation with a very simple decision that we’re going to check a moving average of a particular symbol.
In this case we’ll just use SPY as our proxy for the whole video. We want to check and see if SPY is currently trading above its 200-day moving average. Very simple way that you can use a decision recipe.
If you use just that one decision recipe and then save, it gets added right to your automation editor. And then obviously the branches split in the automation editor down the yes and no path.
But let’s say that you want to start to make grouped decisions. Let’s say that you want to make two decisions inside of the same decision action and you want to use some different criteria for those decisions.
Well, one way that you could do this is to add another decision. You could add another decision like the S&P’s price is currently trading above $450 or whatever value you want to put in here.
Anytime that you add another decision, it automatically gives you the ability to start using and/or statements in your decision block. If we leave it at the and, which is the default, then in order to follow down the yes path, both of these statements would have to be true.
The S&P price would have to be above its 200-day moving average, and the S&P’s price is trading about $450. If both of those statements are true, then it would continue down the "Yes" path. If you want to use this one then you just go ahead and save.
If we go back in here to the editor and we want to make some changes, we could just simply open it up and change this to an "Or" statement. This means that either of these statements have to be true in order for us to continue down the yes path.
In this case the S&P’s price is above the 200-day moving average or the S&P’s price is above $450. Now let’s just leave it at this one for now and just go over and create another decision. So, let’s go down the "Yes" path and let’s assume that one of those statements was true and now we want to make another decision.
Well, we can now split up our decisions and make different decisions only if one of those statement is true. Maybe we want to check and see where S&P’s IV rank is. So we go over to SPY, we put in some variables here and say that we want to check and see if the S&P’s rank is above 70.
So now we’ve added another decision and again you can just save this right to your automation editor. It now continues to split the automation editor down some additional yes and no branches.
But let’s get a little bit more creative here and start grouping decisions.
Now we go in here and we create another decision. Not only do we want to check and see if the S&P’s IV rank is above 70, but we also want to check and see if the S&P is overbought.
Maybe we want to use a very simple indicator like RSI and check and see if the RSI reading is also above 70 for the S&P. And so we’ll add another decision here.
That will add another group of decisions and check to see that the S&P’s IV rank is above 70 and that the S&P’s 14-day RSI reading is above 70.
But what if we want to keep going even further, and now we want to start creating sub-groups of decisions? What if instead of just the 14-day RSI above 70, what if we want to check one other potential technical indicator?
We can add another sub-group of decisions in here and then add another technical indicator to our list. We can go in here and we can check something like CCI. We can check the 14-day CCI reading on the S&P and see if the 14-day CCI reading is above 150.
So now we have now a sub-group of decisions within its own group of decisions, all inside of the same main decision block here inside of your automation editor. Now you can split up these decisions using and/or statements inside of each of these groups or even sub-groups.
In this case, we can make something like this: The S&P’s IV rank is above 70 and one of these technical indicators is showing that the S&P is overbought.
Notice that we’re using an "And" statement right before this next sub-group of decisions, but we’re using an "Or" statement for the actual sub-group. So, in order for us to continue down the yes path, the S&P’s IV rank has to be above 70 and either the S&P’s 14-day RSI is above 70 or the S&P’s 14-day CCI reading is above 150.
You could use "And" statements to make this very specific that all of these have to be true, but as you start to use sub-groups within here, it’s probably because you want to start making subjective decisions based on one or set of criteria being met.
Now you can see that all of these are now wrapped up in this one decision action. And when we save this, this is now one major decision block.
So, you could’ve split this up and you could’ve put each one down the "Yes" or "No" path and made very specific decisions, but this is a really creative way that you can use groups and sub-groups inside of your automations.