This workshop dives into the RSI technical indicator and explores how to set up an automated strategy that enters credit spreads at overbought and oversold levels and automatically exits positions using a monitor automation.
Plus, we share extensive research based on multiple RSI signals that informed the bot's decisions (you don't want to miss the data!).
The bot template's scanner automation includes a watchlist of tickers that scan the market regularly looking for specific RSI triggers. We also add opportunity filters to only enter positions that meet our criteria. The monitor automation uses two 'awesome' exits to close the position.
Option Alpha members can access Kirk's bot template here.
If you're not a member, you can start a free trial!
Be sure to also check out this RSI swing trading bot blog.
All right, what’s up, everyone? This is Kirk here again at Option Alpha, and welcome back to another bot workshop today. Hopefully, you guys are having a great start to your week. Beginning of the month here on August 4th. We’re gonna have a great workshop today, going through beginner RSI bot. We’re gonna take our time here. Go through as much of this as humanly possible, so we can try to answer a lot of questions. Also so, we can try to give you a really good example. As always, we’ll post a copy of the template that we build here today inside of the community, so you guys have a copy of that. And you can modify it and tweak it, and update it as much as you want.
What I wanna do today is go through a number of different things for the beginner RSI bot. so first thing that we’re gonna start with is just a very quick overview of what our goals are today. Goals today for this session are to do a quick overview of RSI technical indicator. Just broadly what it is and our broad credits spread strategy that we’re gonna deploy on today’s bot workshop.
Number two is we’re gonna review the RSI research data on RSI signal triggers and performance. I think you guys will really enjoy this. This is only a part of the research report that we’ve put together that will be publishing here soon. It’s gonna be completely free to everybody. So you’ll get all that research. Just be on the lookout for it in your inbox or email or on the website. So we’re gonna go through some of that data, so we can try to get some, you know, systematic approach to this. We’re not just guessing at stuff.
Number three, we’re gonna build a fully functional bot template that swing trades credit spreads using RSI. So this is really the key that we’re gonna be focusing most of our time on today, obviously is building out this bot. I’m gonna take my time with it to make sure that this is a really, really good workshop for you and a great recording for anybody who missed it.
Number four, we’re gonna create a watch list of tickers to scan through. We’ll talk about the strategy more. And number five, we’re gonna add dynamic and custom profit taking and automatic exits near expiration. I think you guys will really enjoy this one. RSI is a super, super popular strategy.
So here’s the quick little rundown on RSI, okay? The quick rundown on RSI is that RSI just stands for Relative Strength Index. It’s a very popular technical indicator. Just looking at some calculations of different moving averages and strength of those moving averages and momentum essentially is what it’s trying to judge.
So it’s a good indicator because it’s trying to figure out our things, maybe a little bit short-term overbought, short-term oversold. So you would typically see RSI, and by the way, we’ve got an awesome learn article inside of our handbook on our site. If you want to go check that out, you can, but typically what you would see with RSI you would see like this red area down on the bottom. Not sure if you can see my cursor on the screen, but that red area on the bottom of the chart kinda in middle of the chart. You would see RSI deep below, say some reading level, some indicator level, like 30, and that might say that it’s short-term or medium-term oversold.
So that might be a good potential sell signal or buy signal for you. If markets are a little bit short-term oversold, then you might want to execute some sort of bullish strategy. Now you can go straight to long equity. You can do call spread. You can do long call. You can do a short put spread. You know, combination of different things, right? But the whole idea is that we’re trying to get relative range of where the market is.
When you see RSI levels that are overbought, and on our chart here, it shows as green levels kind of above 70, that doesn’t necessarily mean that the ticker or the underlying is gonna continue or is gonna immediately turn over. It just probably means that the pace, the way I always explain it is, the pace at which the symbol is going up might stall or start to go sideways. So you don’t always see a complete reversal happen. And you’ll see in some of the data that we’ll show you here in a second that that’s the case too, where you don’t always see that complete reversal. But you do see the indicator or this underlying symbol generally start to kind of stall a little bit at those levels.
Our goal for this particular bot template is to build a strategy that basically tries to take advantage of these overbought and oversold levels. Specifically overbought and oversold levels by selling out of the money credit spreads. So we’re gonna be options selling here today. We’re gonna be selling call spreads and we’re gonna be selling put spreads, and we’re gonna be selling them out of the money.
So we’re gonna give ourselves a buffer, a margin for error if you will, so that even if we’re wrong potentially, we still have the opportunity to make some money. Here’s the deal. We went back, and we tested a lot of RSI signals. Hundreds and hundreds and thousands and thousands of RSI signals. So what we ultimately ended up finding for all of these signals is we found some of these data, okay?
So here’s some of the data. Now, this specifically is RSI buy signal data. So this is judging when RSI goes down and crosses different levels. Now, in this case, we have different triggers. So this would be our RSI reading. Notice on the chart before this, we had triggers on the right-hand side. You can see our set just for this chart, where the data lines are set to 30 and 70. But when we tested it in our research, we did all types of triggers. We did 10, 15, 20, 25, 30, 35. We even did 40, 50, 60, and so on, so you’ll get that in the research that we’ll publish that’s coming out. We’re just formatting it and putting it all together, but it’s coming out for free for you guys.
All right, so here’s what we did. These are the triggers on the left-hand side. You can see we tested different triggers. We did 30, 25, 20, 10, etc., etc., and we tested different periods or days. So what this basically means on this second column here, the five, seven, ten, 14. By the way, those are all dates that you have inside of your platform for auto trading, is they basically mean the look-back period. So how far back RSI is looking to then calculate? The longer the period, the slower the signal is, the less signals you’re gonna get. The shorter the period, the more signals you’re potentially gonna get, but potentially maybe the less reliable because they’re just gonna be bouncing all over the place back and forth.
So very common look-back period for RSI is a 14-day look-back period and then using a 30 bicycle. So when RSI goes below 30, that would then trigger you to have a buy signal. Now you can see in this case that that buy signal generated wind rates that were 55% after the first day. So that’s pretty cool. So what that’s basically telling us is that of all the ETFs that we tracked, and this is specifically looking at the basket of ETFs, right? So we did one for stocks. We did one for ETFs, and this is specifically looking at ETFs.
Of all the ETFs that we tracked in our massive basket going back as far as we can pull data for it. We generally see that when RSI are using a 14-day look back hit a 30 that the next day it was winning. Meaning the stock reversed 55.26% at the time, okay? Does that make sense? So this win rate is the day, one day after the signal or three days after the signal, five days, seven, ten, 15, 20, 25, 30, etc., and the whole idea with trying to judge how far after the signal the win rate is, is to give us an idea of potentially how long we have to hold on the positions. Right?
It's not enough just to say, oh, what was the best signal? Well, the best signal five days after a signal is generated may not be the best after 25 days, and so on and so on. You can see over here at 20 days that what happened is is that you had a 45% win rate after 20 days. So it still stayed around the same 50, 55, 54% win rate. Pretty much from, you know, 5, 7, 10, 15, 20 days onward.
Here's the thing for this one. You have to kind of take these numbers here, these really high ones, right? These 55, 60, 66%, whatever. You have to take them with a little bit of grain of salt because they didn't have a lot of observations. So I would say the ones that have more observations which were basically the ones around 30, 35, they had way more observations. Meaning that they had a lot of like occurrences to make it more reliable. Those are probably the ones that you'd want to generally use a little bit more.
These ones up here, although they look good, I don't think I would really use them as much because they didn't have a lot of observations. Maybe a couple hundred, whereas these were thousands upon thousands, okay? So I think that what you could do for RSI is you could stay in this ballpark right down here in the bottom right-hand corner of the screen.
So I would stay down in this range over here, which is where my cursor is, okay? I would stay down this range. This range here at around a 35 signal and somewhere between a 14, 10, 5, 7, whatever, really didn't matter, generated really good win rates. Meaning that you got it right, but you just had to hold on to it for probably 15 to 20 days, which is not bad at all. That's not bad because generally, I don't like to do a lot of like very quick day trading or short-duration trading. I generally more of a position trader. But you be you. You can do whatever you want, okay?
Now that's buy signals. I'm gonna flip over to sell signals now. Now when it comes to sell signals. Again, this isn't the opposite direction now. Now we're judging, and we did research on, okay, well, let's track the performance of different cell signals because we might get a different signal. That's a sell signal. Then we got, that's a buy signal, right? So when it came to win rates, that were sell signals where RSI was crossing above 65 or above 70 or above 75, 85, 90, etc., etc., right? This is what we saw.
Now again, take it with a little bit of grain of salt, right? That sometimes, these really long duration ones like this one here which was a 40-day lookback period, probably didn't have a lot of observations. Okay? Probably didn't have a lot of observations. Maybe a couple hundred observations. So you want to generally use the ones that are probably in the 7, 10, 14 range, which got a lot of observations. And then you can be more comfortable with those numbers.
What I think is pretty interesting here was actually using a 14-day RSI at about 80. This one actually had a lot of observations. So it definitely wasn't the low observations of the 40 had, 40 lookback period had. And it had a lot of observations, and it generally held pretty stable. Now here's a thing, you could build your bot two different ways. Today we're gonna build it one way, but somewhere between 7 and 20 days, you generally had a trade that moved against you.
So if you're holding a position and you're selling, like using this as a sell signal to go short or to sell a call spread or something like that. What you would see is you would probably see that you are more profitable inside five days. Maybe the stock had a quick turnaround, but then maybe did a retracement or kept going up for a little bit, right? And then it finally did succumb and turn back around. Okay? It finally did turn back around. More often than not, after about 20, 25 days. Does that make sense?
Pretty cool research that you can see in here. And you can see broadly just looking at the colors here that this 7 – 15 days window for the sell signal just wasn't as predictable as even just like the one to five-day window. I think this is so fascinating because if you're a short-duration trader, I mean, you're really gonna focus on these positions, and maybe you get out of trades at seven days or ten days, right? Because it's not as reliable that far out. It's more reliable the further you go. You gotta kinda cross this bridge over here.
So here's what we're gonna do. Just for now, and you guys can do whatever you want. I'm gonna do this for today's bot template. Today's bot template, I'm gonna use a 14 RSI at a 35 reading that's gonna be my buy signal, had a lot of occurrences, get some pretty good win rates. So I like that. Okay? And then my sell signal is gonna be a 14-day RSI, so that makes it super easy. And the sell signal is gonna be an 80, so not a traditional 70. We're gonna do a 35 80.
So what we're gonna do now is we're gonna build this entire thing out from scratch. So I'm gonna go up here to the new button up here. I'm gonna click the new button to build a new bot, okay? And I'm gonna call this our RSI beginner. Let's call this RSI research bot because we did some research on.
So next thing that we have to do is we have to set the account that it's trading in. you can connect it to any of your brokerage accounts, or you can just choose to trade in your Option Alpha paper trading account, which makes it super easy. Next thing that we're gonna do is we're gonna set the allocation. This is where you tell the bot how much capital it has to trade, okay? This is where you tell the bot how much capital it has to trade.
In this case, you can say a thousand bucks. You can say two thousand. You can say three thousand. We'll just give it a little bit more capital because we're gonna do a nice little portfolio of ticker symbols for our RSI bot here. So we'll give it, say, 5000. This is not your position size. This is like the alamo of your position of your bot. so it tells you how much the bot can trade before it stops trading and doesn't do enter any more positions again. It's total risk, okay?
Down here, we're gonna set position limits. So position limits are really cool because they allow you to automatically turn off the bot if it's entering one position a day or two positions. You can kind of set these controls. It's a really good risk protection for you, for your bots, and your trading. So we're gonna set the position limit here to five positions open in one day. Now again, we can close positions at any point. There's no limits on that. There's just to tell the bot look. You can open five positions today. If it opens one today, it could open five tomorrow. But the max right now is five positions per day. And then what we're gonna do is we're gonna set our total number of positions to five as well.
So the goal here is that we're gonna allow the bot, if it gets signal across the board, to get into everything at one time. Now we could get into two today and two tomorrow, right? Or it could get into two today, two tomorrow, and one the next day. It can get into all five at the same time, but that's how position limit works. You have your daily limits, and then you also have your total limits as well. Okay?
So what we're gonna do is we're gonna go ahead and create a bot. Now, in this case, I decided to create a bot from scratch. You can create it using the wizard as well if you know all of your stuff in advance, but we're gonna talk through a lot if here so we can create it from scratch. It works either way. You can do it from the wizard, or you can do it from scratch. You can do it both ways, okay? It makes it super easy.
Okay, so this is my brand new bot. It's completely empty. Notice everything is turned off. There's no automation turned on. I have no positions, right? My log, which tells me everything the bot's doing, is completely empty. So what I need to do is I need to go to the automations tab here, and I need to start adding automations.
Now, remember what automations are are just simply instructions you give the bots to make, okay? The bot is going to go through that set of instructions every single time that it runs. And so there's two main ones that we can add, and we're gonna do this in today's workshop. We're gonna add scanner automation which will run to find new positions. So you think about your scanner automation as all the steps that you would tell your bot to go through to find new positions, right?
The other one that we're gonna add today is our monitor automation. So our monitor automation sounds exactly like what it's gonna do. It's gonna monitor the existing trades that the bot is entering. So I always think about trading as two broad hemispheres. You have everything you do to enter a position and then everything you do to exit a position.
Now we already know what we're gonna be looking for in the scanner. Do you guys know what we're gonna be looking for in the scanner? What do we want the bot to look for in the scanner? We want the bot to look for those RSI signals, right? That's the goal. We wanted to see if a ticker is overbought or oversold, okay? So that's kind of the big goal that we want to get accomplished in this scanner.
We're gonna go ahead and hit this button here to add a brand new scanner. Now again, I'm doing this all from scratch, so you can see how it works, okay? I'm gonna hit the plus icon to add a new scanner. I'm gonna hit the drop-down menu because you can choose a scanner that you've already built. You can reuse automations over and over and over again inside of your accounts. Really cool thing that you can do, but we're not going to do it today. Even though it's so cool, we're not gonna do it. We're gonna build a brand-new automation from scratch, okay?
Now we're gonna call this one our RSI scanner for credit spreads (research based). You can call it whatever you want. What I like to do with my automations is I like to name them very specific titles. That way, I know exactly what the heck they're doing, right? If you just name it scanner like you don't know what it's doing, right? So just like good best practice, name your scanners exactly what they're gonna do or your automations exactly what you're gonna do so you can keep them.
Next thing we can do is we can save it into a library inside of our accounts. So notice up here a little folder icon here. You can save this into your library. That way, you always have it. You can reuse it on other bots if you want to. So we're gonna save it into Kirk's scanners, okay?
Now the first thing I'm gonna do is I'm gonna hit this plus icon because this is our scanner. It's telling us exactly what the bot is doing when it starts to run. I'm gonna hit this plus icon here, and I'm gonna add an action. Now the first action that I want the bot to do is I want the bot to actually loop through a list of symbols. Remember I said earlier when we started that the goal of this bot is to loop through a little watch list or portfolio of tickers, okay? And when I loop through that tickers, I want the bot to basically check all these tickers that I'm telling you to check.
So I'm gonna hit this symbol loop here, and then I'm just gonna add my particular tickers. Now I can add my tickers in here like this. I can just click and add any tickers that I want into the symbol loop or if I wanted to make this more flexible for the future and maybe I wanna run lots and lots of bots, what I can do with any field inside of the automation is I can create a custom input.
A custom input is nothing more than just a variable field. You're just gonna say, look, I'm gonna set the tickers later. I'm gonna set the tickers later so that that way, one bot I run, I could use a certain set of tickers. Another bot that I run, I could use another set of tickers. Notice that when we did the research and we showed you that that research was based on ETFs. Guess what? We have research on stocks, so you might wanna run the same bot setup but with a different set of tickers, right? Some could be ETFs. Some could be stocks. Do you guys agree?
So instead of setting the tickers here, which you can do. You can set the tickers here, but anytime you gotta make a change, you got to come all the way back in here, right? And make a change to that. So instead of doing that, I’m gonna click this little blue icon to the right, and I’m going to create a custom input, and I’m gonna call this my tickers. Okay, I’m not gonna call it Kirk’s because you guys are gonna clone this template.
And then, I can set some default values. So here, I can then choose some defaults. These defaults will be used unless you change them. So just another way to do it. So I’ll do IWM, let’s do GLD, we’ll do emerging markets bonds. Let’s do XOP, let’s do XLP, we’ll do XLF also. We can set ten tickers, so you can just add a bunch of tickers in here. In this case, we’ll do all – let’s do, what’s another one? Give me another one, XRT. That’s another good one. Okay, good.
So we’ll set 10 tickers here. These are all ETFs because our research was based on ETFs. Once I’m done, I hit the done button, and then I go ahead and save this. Now you can see that it changes color, right? Now it’s a blue input. So now you know that these inputs are right here. So I’m gonna go ahead and hit save, and then that loop action is now added to my bot, okay?
Now I’m gonna get out of here just for a second, just to show you where those inputs now are so you can change them if you want to. You don’t have to dig down into your automations. So I’m just gonna go ahead and save this. And then you can see inside of my scanner. Here is my list of tickers. These are the ones that I set, right? Because now I have an input. It’s now showing the input here. So if I save this scanner and I’ve only done just adding the list of tickers, I can come here anytime I want and swap the tickers. I can take this one out, and I can put in, I don’t know, EWZ or something like that, right?
You can just swap the tickers right here, and then off you go. Notice how fast that was? I can just swap them right here inside of my custom inputs. Okay? And so we’re gonna add more custom inputs here. So you can make a really cool little dashboard of things that you can just swap and change vs. having to change them throughout the automation. Okay? Does that make sense? So I’m just gonna go ahead and save that and then get back into the automation editor. I’m just gonna click on the automation itself.
Now that I have my ticker loop in place, basically what that’s telling the bot to do is it’s telling the bot to loop through every single ticker and check the same amount of information, okay? So, in this case, I’m looping through the tickers that I put in my list, and I want the bot now to make the same decision on those tickers over and over and over again, one by one, okay? So I’m gonna add another action here, and the first decision I want the bot to make is I want to check and see if RSI is oversold. You guys remember the signal that we were using for RSI? Do you remember what the settings were for that signal?
So I’m just gonna add a decision which is just basically a way for the bot to make a decision and check some market information for us. I don’t wanna close a position. I don’t wanna open a position. I don’t need to send myself a notification. Those are all irrelevant right now because I just want the bot to make a decision first. Okay? I want the bot to make a decision first on RSI. So I’m gonna go here, and I’m gonna say yes, I wanna add a new decision.
Now, this is really cool because all of these decision recipes are just natural language recipes that you add to your bot, like adding a decision to say, is the symbols IV rank above or below some value? Does the symbol report earnings and more less than a certain number of days? Is the symbol a stock? Is it an ETF? Notice that all of these recipes here you can use inside of your automation to make wildly custom decision if you wanted to.
So the first thing I want is I want the bot to check an RSI signal. Now, in this case, we’re gonna use this recipe right here, which is a very, very custom recipe, right? For our technical indicators. And you can see how the recipe is set up. Now, these are just the defaults. We can change any of these fields or variables. You notice you can use a lot of different technical indicators here, right? But look how the recipe reads for a second. Symbol 14-day RSI. The intraday reading, so like today’s reading, not yesterday’s reading, is above or below some value.
Now let’s just quickly flip back to the slides. See RSI here? Remember, we wanted to use an RSI that was on a 14-day period with a trigger or a reading, value, whatever you wanna call it, of 30. So we were looking our buy signal is RSI on a 14-day period is below 30. Does that make sense how we got to that? We’re just looking at the period days here, and then we’re going over to the trigger that we want to use in this exact instance, okay?
So if I switch back here, now what I’m gonna do is I’m going to set these. Okay, well, here’s the 14 day. Notice you can set any of the other days. So I’m gonna set a 14 day. I’m gonna set RSI. I’ll leave it as intraday, meaning I want the actual RSI value right now. Now you can do like look back analysis, and you can say I want RSIs value from five days ago or whatever, but most of the time you’re gonna use intraday.
And in this case, I wanted to be below because it’s a buy signal, so I want to check when RSI is below some value. And in this case, we’re gonna use 35, right? That’s what we were using. I think I said on the slides I was pointing at 30, but we’re gonna use 35, okay? Does that make sense?
So here it is, right here. Actually, let me slide it over so you can see. Maybe you can see all of these at one time. Try to get really, really fancy, okay? Do you see where we’re getting the numbers? 35, 14. Here’s your 14 day. Here’s your 35 trigger, which is RSI is below 35. Okay? That’s your trigger. This is gonna be essentially your buy signal for RSI.
You could do it at the end of the day using an event run. So if you wanted to, you can trigger it at the end of the day using an event automation and just run it at the end of the day before the close or something like that. So now what we’re gonna do here is we just have to connect the symbol.
Now watch this, right? I can choose the symbol. I can just if you guys just go ahead and click this button. You can choose a symbol. You can choose SLV, for example. But what it’s gonna do is it’s always going to check SLV. You don’t wanna do that, right? What do we want to do? We want the bot to check all the symbols that we were looping through.
So what we can do here is we can just connect this symbol field to the inputs, the tickers that we had made previously, okay? So watch this. I’m gonna click this blue icon here, and I’m gonna connect that field to my existing ticker loop. So whatever symbol it’s looking at at the time, it’s going to evaluate that symbol’s RSI reading one by one by one. So by connecting it to that symbol loop, which I’m gonna do it again, okay?
Instead of choosing it, I’m gonna click this button here, and I’m gonna connect it to the symbol loop. That means I don’t have to keep updating the symbols on every decision that I make. I can use one input and use it throughout the automation, okay? Use it throughout the automation. So now I just have my total buy signal set up. I’m gonna go ahead and hit all the next arrows, right? And I’m gonna save it. This is my only one, right? Okay, this is my only one symbol 14 day RSI. Intraday is above 35. That’s the buy signal I’m using in this example, and I’m gonna hit save.
And here’s what it’s gonna do. Remember, if we have, let’s say, SPY. So SPY might be in our symbol loop, and when the bot runs, it’s gonna evaluate SPY, and the bot is gonna ask itself, is SPY’s 14-day RSI below 35? If the answer is yes, then that ticker continues down the yes path.
If it’s evaluating some other symbol like TLT, okay? And TLT also encounters the same decision. If the answer for TLT is no, then the bot sends TLT down that path and doesn’t do anything in TLT and can continue making decisions if we want to for SPY or however you set it up. So the loop is making the same decision on each symbol one by one by one. Okay? Making this decision on those symbols one by one.
So now let’s set up our other signal, okay? Now we know for sure down this left-hand path here, we know that we’re gonna start building out our buy signal, right? Our bullish strategy, our put spread. We can build that out in a second. But if we don’t have a buy signal, which is this one, I’ll change the caption here. We can edit the caption, and we can just call this like our buy signal, okay? So you know what it is. You just modify the caption. If we don’t get a buy signal, then we want to check and see if we have a sell signal, right? That’s what we wanna check and see. Do we have a sell signal? So what do we do? We add another action down the no path.
No is not bad, by the way. So a lot of people, I’ve seen emails and messages where people are like, hey, is no bad? I’m like, no. No is just a decision. You’re just asking the bot to make a decision, okay? So here we’re gonna add another decision. We’re gonna use the exact same recipe, just in the opposite direction.
This is our indicator recipe. We’re gonna connect it to our symbol loop, right? And now, what are we going to do for our sell signal? Remember our sell signal here? This is our sell signal. We’re gonna use 80 as the trigger. A 14-day look-back period. That’s our sell signal. 80 is the trigger 14-day look-back period, so we’re gonna change keep this at 14 days. Keep this as RSI. Keep the default settings.
And then what do we do for our value here? We’re gonna say RSI is above. What? 80. So you see how we got there? We’re just using a research. Just use whatever you got. What we’re gonna give you. Take your screenshots now, choose what you want. We’re gonna use an 80 trigger and a 14-day look-back period. That’s how we get our set up here. That’s our sell signal, okay? That’s our sell signal. We would want to go short. We want to go neutral to short. However, you work it for you, okay?
So now we’re gonna go ahead and say, yes, I want to save this. I want to add it to my automation editor. Now I have my sell signal in place. You wanna change the caption and give yourself some more, right? You wanna give yourself some more info. Just go ahead and change the caption. So now we have our buy signal, and now we have our sell signal.
Now, if we don’t get a buy signal because RSI can’t be in two places at once, we might get a sell signal, and that’s okay. So now the bot is going to check both of those for us moving forward. So here’s the deal. If we have our bots set up right now. I want you to really think strategically about this. So inside of our bot, we’ve told it that it can loop through all of these tickers, right? And it’s gonna do it every 15 minutes, and it’s gonna potentially find a potential trade. And we’ve told the bot in our settings that you can get five positions in one day.
Now right now, is it possible to get five positions in the same ticker symbol back to back to back to back? Yes, right now, it’s possible. Exactly the way that we have it set up, and here’s why. I want you to think about this for a second. Right now, when we run this, every 15 minutes, it’s gonna loop through and go through this, and it could find a sell signal or a buy signal. And the next time it runs, the bot doesn’t know that it should stop entering position. You told it, hey; you can get into five positions per day. You didn’t say how many positions in each ticker symbol, right? So it can keep entering five positions in the same ticker symbol over and over and over again until it reaches its limit.
Now I don’t know about you guys, but I don’t want to do that. So I’m going to explicitly tell the bot that it is only allowed to continue analyzing if it doesn’t have a position in that particular symbol. For me, I want one position per ticker symbol. That’s it. Okay? So if I have a position in EEM or whatever the case is, I want one position in EEM. I do not want two positions in EEM. You can set up the bot so it can do that. But for this particular bot template, we’re only gonna set up so it can do one position per symbol.
So it’s looking through a list of ten, it can grab five, but I only want it to do one in each symbol. So
what we’re gonna do here is we’re gonna precede all of this, okay? We set it up like this, and I’m doing this deliberately because I want to talk through this with you, so you understand how the logic is because this is a different transition as you go to bots, right?
So I want to precede all of these decisions with some additional decisions. I want the bot to start making some other decisions for me first. So the first decision I want it to make first and quite possibly the easiest decision that it can make. I can go down to my bot-level decisions. See? There’s like categorized as bot. I can go down to one of these, and I can say the bot has exactly a certain number of positions with that symbol.
This is a really easy way to check and make sure that the bot doesn’t have a position before it tries to enter a position. Does that make sense? So I’m gonna use this recipe here, and I’m gonna check and see if the bot has exactly zero positions with whatever symbol it’s currently looping through. So again, I can type in this symbol here, but because I’m using a position loop, I can go ahead and connect this symbol to whatever symbols I’m looking at.
So what the bots gonna do is it’s gonna loop through every symbol, and it’s gonna check do I have zero positions in this symbol? Yes. Great, go ahead and continue moving forward, Mr. bot, right? If I don’t have zero positions, meaning I have a position, don’t try to get into another position in that symbol. Okay? So I’m gonna go ahead and hit save, so I have my new recipe here. The bot has exactly zero positions with this symbol. And when I hit save, it’s gonna ask me what path it wants to precede? And I wanna precede the yes path in this case.
So notice what it's doing. It's gonna loop through every symbol and then what it's gonna say is it's gonna say, okay, like for SPY, so if I loop through SPY and let's say I have a position in SPY. The bot is gonna ask itself. Does the bot have exactly zero positions with SPY? No, I have a position. Great, don't do anything else. Just end for SPY. But for something else, maybe like TLT, maybe I don't have a position in TLT right now, so the bot's gonna say, hey do I have a position in TLT? Or I have exactly zero positions in TLT. Yes, okay, great. Go ahead and start looking for a potential signal.
These are really good ones that you can add that give you a lot of customization on how you want your bot to enter positions. So you add that one ahead of everything, and the reason that you add that one ahead of everything is because you want the bot to check positions before it starts checking all of your indicators and all that other stuff. And by the way, position is a trade that you fill. If you fill a trade that's ten contracts, it doesn't matter if it's expiration month or different expiration. It's a position that you fill. If you fill a position and order gets sent and that's filled, that counts as a position. So you can do position sizing, and I'll show you all that here in a little bit.
So that's a really easy one that you can do. So let's start working down our path of entering positions so if we get a buy signal, which is really a bullish signal. So let me just modify this really quick and say like bullish, bullish signal. Okay? Then what we wanna do here is we want to go ahead and sell and out of the money put spread. Okay?
Now we know we've got good signals. We know we've got good data behind this. So now, if it goes down the yes path, we're gonna go ahead and try to open a position to sell a credit put spread. So instead of making another decision, we've already made all the decisions we want, or you add whatever ones you want. And now what we're gonna do is we're gonna add an action to open a position. I'm gonna turn on my highlighter, okay?
So we're gonna open a position. What type of position? We wanna open a short put spread, okay? We've got links and research and training videos all throughout the website on short put spreads. Now what we have to do is we have to set up our trade like what trade do you wanna trade, right? That's not going to just magically pick something out of thin air, right? So what do you wanna trade?
So we can choose the symbol or what can we do? Hopefully, I'm like beating a dead horse here with this, but do you see how powerful the custom inputs are? Because one custom input that you make can be used throughout the automation. So here we're just gonna connect the symbol to whatever symbol it's currently looping through. It doesn't matter if it's SPY, great. If it's TLT, great. If it's another one, great. Right? That's how we do it.
Next thing that we're gonna do is we're gonna choose our expiration. So, in this case, we're going to choose expirations that are far enough out for us to be confident that the signals have enough time to play out. Did you notice for the buy signal? So let's go back to the buy signal, right? The range that we're looking in here, which is the 35. The best performance win rate wise was after 20 days, okay? After 20 days.
So we ideally are gonna try to enter a position that is longer than these periods so that the market has enough time to play out. So the first thing I'm gonna do is I'm gonna set my expiration date. Now when I click the expiration, I can choose how I wanna do it. I can set it in between some days. I can set it after a certain number of days, or I can use this recipe here that said at least a certain number of days out in the future.
So I'm gonna say, okay, I want at least 30 days, and I want only monthly contracts. You can choose any series which would be weekly contracts if you wanted to, right? But this is how you can start to set all of the different expirations that you wanna choose. If you want to choose a range, you can say, hey, I want expiration between X and X days that are only monthlys, right? If nothing's available, then you won't have a position, right? So I'm gonna set this one here to at least 30 days and only monthly contracts.
Now, I'm gonna set my short puts and long puts. Now I won't go through each and every choice that you have here, but notice that when you select the leg, you can choose a number of different ways to set your leg. You can do it based on percentages above and below. Deltas are proxy for probability, so that's an easy one, right? You can do a dollar amount. You can do a standard deviation which, again it's another proxy for probabilities, you could say, right? You could do matching. You could do basing it off of other legs. You can do anything you want here for setting your strength. You can set an exact strike if you want to, like if you always wanted to trade the 100 strike, okay?
So here, what I'll do is I'll just simply keep the 30 delta or closest to a 30 delta, okay? That's far enough out. That should give us around a 70% probability of success, okay? That should give us around of 70% probability of success, give or take, okay? Now for my long put, I can set something different. In this case, I can base it off of my other leg. So what I could do here is I could say I want to trade something that's a $2 wide spread, which is great for beginners, by the way. So small position great for beginners, control risks really easy, right? And I can say I want my long strike to be $2 below my short call leg. Notice I can just toggle any of these and just simply switch them over, okay? So $2 below my short put leg or closest to it, so if there's one three, great. If there's one 2.50, great. Something that's close to $2 below.
So notice how I can set up a very, very custom strategy that I want to trade. And I can do the same thing with the amount of contracts that I wanna do. I can set a specific amount like I want to trade five contracts, or I can set up to a certain dollar amount of risk, which is always fun for me. You know, you can do something like up to $500 of risk. So it'll sell as many contracts as you need to get up to $500 of risk without going over, or you can set it as a percentage of the bot's allocation.
You can say, you know what? I want to do 10% of the bot's allocation. So it will start to adjust and move based on the allocation or the available capital or the liquidity, right? You can do all of that. For this one, just to make it really easy, we're gonna do one contract. That's it. Just one contract. The last thing that you're gonna set is smart pricing. You're gonna set your smart pricing level. If you wanna use normal, patient, speedy. If you want to turn it off and just send limit orders. And then you'll set how far you want to go off the bid/ask spread, okay?
So you wanna set how far you wanna go off the bid/ask spread. Now again, we're just setting up the order right now of the actual position. We can work backwards into filters here in a second. You set up the order exactly how you want it. Come in here later, and you can set this up if you want to. Then what we're gonna do is we're gonna go ahead and save. Okay?
Now at this point, what the bot is doing? And again, I’m deliberately going through this in a very, very deliberate fashion because I want you to understand what the bot is doing and why we’re gonna add steps in between. At this point, the bot is making all the decisions to see if it has zero positions, so it can enter a new position. And it gets a buy signal. Great. Now you’re just gonna immediately send trades over to the market.
Now, look, some people might want to do that. That’s fine. You can do whatever you want. I am certainly not gonna tell you, and we are not gonna tell you. You have to do it one way. But, because you have the power of automations and technology now in your pocket for trading, why not have the bot do some extra filters and check for you? Does that sound good?
So instead of just saying I got a signal, boom, make a trade. Well, what else would you check? Maybe you wanna check open interest. Maybe you wanna check the bid/ask spread. Maybe you wanna check your rate of return, like am I collecting enough money? You can check your probability of success, your probability of losing. There’s a lot of things that you can check, but what I want you to do is to think about how to use technology for efficiency and having the bot prefilter these trades for you. Instead of just letting the bot go ahead and make a trade, what we’re gonna do is we’re gonna, again, precede this decision with some additional steps.
I’m showing you this so you can see, you can add steps all over the place inside of your automation. Okay? But I’m gonna precede this with some additional decisions. I want the bot to do some quick little opportunity filtering before it continues to send orders over to my broker. So what I mean is I want the bot to check a couple things before it starts sending orders to the broker, like, good, we got the signal, that’s great. That’s one side down for our trading strategy. But I want the bot to check a couple things first. I don’t wanna just to blindly send trades over just for the signal, okay? We can do that.
So what I’m gonna do is I’m gonna add a recipe, and I’m gonna go down here to opportunity-based recipes, which is all the way down here, okay? Opportunity-based recipes, as we say here, are checking metrics of a potential position before it is opened. How cool is that? Now how many of you do this now manually? You might check open interest. You may check the bid/ask spread, or you may check the premium or the probability of profit or whatever. But now, you can do that inside of your bots with opportunity recipes.
Why do we call them opportunity recipes? Because that’s what they are. It’s a potential trading opportunity, right? You haven’t made a trade yet. You’re asking your bot to evaluate a potential opportunity for you, and then, and only if it passes all your criteria, send it over to your broker.
So first thing that we can check is we can check is there even something available. Like I told the bot, hey, bot, I want you to trade these 30-day contracts. Well, before it starts sending orders, which would just fail anyway, I can check and just see is there an opportunity available. Is my target opportunity available? Later as you get more advanced with your trading, you can check multiple opportunities. You can say like is this available? Nope. Okay, then, let me check this. Right? Like is this available? No. Is that available? No. Is that available? Okay, great. Grab that.
So that’s the reason these recipes are here. You can say what opportunity? Well, you can rebuild your potential trading opportunity, or because the bots are smart and the automations are smart that we built in, you can see here that it already pulls in the recent opportunity you were looking at. Right? So you can just have the bot, and this is why I built this first, by the way. Do you see why I build this first?
I build this potential opportunity first so that I can reuse that opportunity in the bot easier and easier. Okay? I can just reuse it easier and easier. Doesn’t matter how you do it. You do it the other way, too. It works. But build out what you want. Your target, right? That’s my target. This is what I’m after, and then let the bot evaluate that target, right? That’s all I kind of think about that in my mind. So I’m just gonna select it.
Yes, this is the opportunity, right? 30 days, only monthly. 30 delta, $2 below. Look familiar, right? I’m gonna say yes, go ahead. Okay, great. That’s one check that it’s gonna do. Just check and see if there’s something available. What else could I do? Well, I’m not limited here, so I can check a ton of stuff. So let me go down here to more opportunity recipes, and let me add this one. Arguably the easiest, most dead simple, no-brainer, slam dunk, lay-up opportunity recipe you can add to your bot ever. So here, I’m gonna say I wanna check the opportunity bid/ask spread and make sure that the spreads are super tight for me to enter a position. I cannot stress enough how easy this is to add to your bots and how dead simple it becomes for the bot to check for liquidity for you. Okay? For you.
So I’m gonna say, yes, I want you, bot, to evaluate this opportunity. The same one I’ve been looking at and check and see if the bid/ask spread, right? Is less than some value I put in here. Let’s put in here 15 cents, okay? It doesn’t have to be one penny. It doesn’t have to be certainly probably shouldn’t be $1, right? But somewhere, wherever you think is comfortable for you. Okay? And you can evaluate this.
So now you’re having the bot check the bid/ask spread for you. Super easy to do. That’s not it. Let’s keep going here. We can check other things. Let’s say that we wanna check the position return. So we wanna make sure that we’re capturing enough – oops, I think I did the position one, not the opportunity. We scroll back here. There we go, opportunity rate of return. So we’re gonna check the opportunities rate of return, like how much capital it’s taking in vs. how much risk, and see if the rate of return is greater than. What do you guys want to be like? 30%, right? It’s gotta be greater than 30% in order for me to be willing to take a trade. Okay? So I save that.
Now, look at what I’m doing here. So what the bot is doing is that when the bot gets a signal, I want to inject right here some opportunity filters. And these are my opportunity filters right here. I want the bot to evaluate these things first before sending an order to my broker. So I want the bot to say yes, there’s an opportunity available. Check. Yes, the bid/ask spread is low. Check. Yes, the rate of return is great. Awesome, send a position orders to my broker. Start making trades.
Now, if any of this fail, right? If any of these fail, let’s say that this first one passes and this one passes, but then the last one fails. Wrong, like, you know, the rate of return is not 30%. Yes, it’s got low spreads. Yes, there’s something available, but you’re not collecting nearly enough money to be comfortable making this trade. Whatever limit here is for you, then guess what? It goes down the no path. It’ll stop, and it won’t start sending orders to your broker. Like how freaking cool is this? And use opportunity filters.
Easy, easy, no-brainer, slam dunk stuff that you can do. So let the bot do all of that filtering for you, okay? Now I’m gonna stop there at the filters. You can certainly add more than this. In fact, we did a huge workshop on just opportunity filters. That’s all recorded for you in the website. So once I’m good to go, I add all the ones I want. I simply hit save. And where do I want to precede this? Down the yes path.
So now look at my decisions now. Now when the bot starts running, if a symbol has a buy signal before I start sending orders to my broker, I’m gonna have the bot evaluate all of my criteria first. And then I’m gonna start throwing it down. I’m gonna do the same thing here for our credit call spread. So when we get that RSI sell signal, which is the other one. We want to sell an out of the money call spread, right? We want to sell out of the money call spread when we get these signals right here. What we wanna do is we wanna sell call spreads out of the money so that when the stock turns over, we can take advantage of that, okay? When the stock turns over, we can take advantage of that.
Okay, so now what I wanna do is I wanna do the sell signal side. So what I’m gonna do? I’m gonna add the open position action first. That’s the easiest way to do it. Set up my position, and then I can backfill in my opportunity filters if I want to. Okay? I’m gonna add the open position action, and I’m gonna go here to sell a brand new short call spread. Okay? Sell a brand new short call spread. What symbol do I want it to trade on? I want to trade on whatever symbol. Got that generated symbol.
So I’m gonna leave these all as defaults, and then I’m gonna keep going. So I’m gonna save that. Now I’m gonna backfill these with opportunity recipes. How do I do that? I can just click the gear icon right here, and then I’m gonna go down to precede with. Precede with. Now just basically injects some decisions. I’m gonna add some additional opportunity recipes. Additional opportunity recipes.
First one, I’m gonna add very easy one, super simple. You should always add it in there is, is the opportunity available? If it’s not available, just let the bot end with a no if you don’t do this, which is okay. If it gets to the point of trying to enter a position, you’re just gonna get an error from your broker. So you’re gonna get an error back that says, hey, that position’s not available. Those contracts are not found. There’s an invalid expiration, like you’re just trying to enter something that doesn’t exist, right? Bots like they freak out on that stuff because I don’t know what, you know, you just get there.
So just help them out. Say, hey, look, is there an opportunity available? Okay, what opportunity? The short call spread that I was after. Great, awesome. Yes, I will check that for you. Now I’m gonna add another opportunity-based recipe. Let’s add the same ones, just in the opposite direction, so we’re gonna check the bid/ask spread. So we’re gonna add the opportunity. We’re gonna check that same short call spread. We’re gonna check and see if the bid/ask spread is less than 15 cents. Same thing, right?
So we’re gonna check the opportunity rate of return. So I’m gonna add these opportunity recipes. Now again, look at what these ones are doing. These ones are different. They’re working down the call side now for sell signals. So it’s all short call spread. Short call spread, short call spread, right? That’s what it’s looking at. It’s evaluating the short call spread this time. What’s cool is that you can have the bot evaluate these different trades.
So for one of your tickers, one ticker might go down this path right here, right? One ticker goes that way. Another ticker starts going this way. And that’s great. That’s what you want it to do. Once we’re good to go here, we simply hit save. We say, yes, we want to go down the yes path. And now boom, we’re build out. I can zoom out here, and you can see kinda the whole tree that we’re starting to build out.
But that’s kinda like the basics of getting this tree in place for the entry. Remember, at this point, once we get to open position actions, we’re done with the scanner. We told the scanner what we wanted to do. We wanted to open positions. Now a really cool thing that you can do inside of your automations, and I highly encourage you to do that, is go up here to this button. It says run test. This is so fun because guess what? You can test your logic with market data right meow. Right now.
You can test your logic. So go ahead and hit run test. What bot you want to run the test on? This one. You wanna use the tickers you were using? Yes. Great. Okay, hit my run a test. This is just a test. Thank you, everyone. This is just a test, right? It's not real. It's not placing trades. Even if you test this in your live bot that's connected to your live account, it is not going to place trade. It is just a test.
And it's a test so you can see how the bot is making its decisions and what information it's using. In this case, it's looping through tickers. Notice the first tickers that it's selected was IWM. That's the first one I put in there. Does the bot have exactly zero positions with this ticker? Yes, and even if I want more information, I can just click here. And you can see the information that the bot is using. I try to tell people this all the time like we went out of our way building this platform so you can see the logic that the bots are using, and there was nothing behind the black box.
We publish everything. How you calculate indicators, how it's using it, all the research on it, and every decision your bot makes, you can see. Every single one. So, okay, we know that. Now, look at this. This one is a fun one. Check this out. Watch, everyone.
I was checking for a buy signal in IWM, so if I click this, I can see IWM's RSI reading right meow. Right now. Right now, 14-day RSI on IWM is 69.94, and lots and lots periods because the bots love crunching data. So is that below 35? No. So now it went down the no path, right? And now you can see it was checking the sell signal. Is it above 80? No it was 67.94 and blah blah blah blah blah. Okay, great.
So the bot simply ended for IWM. It took no action, and that's great. That's what we wanted it to do. Don't do anything. I'm only looking for the buy and sell signals. Otherwise, just keep checking it for us over and over and over again. Okay, now I can toggle over to the next tickers. See, I just did that right here with these little toggles. And I can check data on the next ticker in my test, which is GLD.
Notice GLD ended noes across the board, but if I want to, I can see what the reading was on RSI. Like, oh, why did it have a no? okay, great. Let's see if anything has any yeses. Notice I can just toggle through the entire list. Okay, nothing would've traded today, and that's okay. Okay? You see that? Nothing would've traded today, and that's okay. That's frankly what the bot is supposed to be doing. Keep you systematic and only get into trades when there is a signal.
Notice you can just test this logic across the board. If I want to, I can just switch this up really quick so you can see the test, right? I'm gonna put the buy signal at 50 just for testing purposes. Please do not use this, okay? But I'm just gonna switch this up here, and you can see I gotta change my little caption here because I created custom one. But I'm just gonna check 50 real quick. I'm gonna start a new test, and now you can start to see we'll probably get maybe some yeses. Oh, there we go. We got one. See how you can get one just like toggling through? Okay, great. Yes, if we use 50 as an indicator just for a second, right? Is it below 50? Yes, just barely for XOP. Okay, great.
Now, look at this. The bot was gonna not send orders over. It was gonna evaluate our opportunity. Check this out. This is the coolest part right here. Was there an opportunity available? Yes, great. Awesome opportunity right in our target window. Was the bid/ask spread less than 15 cents? No, it was not. The bid/ask spread right now on XOP is greater than 15 cents, which means it's not liquid enough for you to trade right now. And guess what? You don't have to make those decisions anymore. Just let the bot make that decision for you.
Just add that recipe. Clone the template. Use it in all your bots and let the bot evaluate the spread for you, right? Great. It avoided an illiquid entry. Now let's keep going here. Do we get any more yeses? No, that was just the only one that was below 50. So everything super, super overbought. But you see how you can test in there? Super easy to test. So we're good to go here. We're gonna save our scanner automation, and now we have our scanner automation right here. Perfectly built for the way that we trade based on RSI. We want to change our tickers. We just go in here and swap tickers, and we're off and running.
Now we're gonna build out our monitor automation. It's a very powerful, even at its most simplistic. So we're gonna click the button here. Let me turn on my little highlighter, so you can see where I'm doing this. See down here. I'm gonna add a new monitor automation. I don't wanna recreate any automations because I want to build it from scratch, and I'm gonna hit the button for new automation. I'm gonna call this our RSI beginner monitor automation standard exits. Not standard, awesome. Awesome exits because there's nothing standard about a bot, frankly, right? Nothing standard.
Okay, so this is our RSI beginner monitor automation with awesome exits. Now first thing I'm gonna do here I'm gonna add a plus icon to add my steps. First step that I'm gonna do is a position loop, just like adding a symbol loop that loops through symbols looking for a trade. You add in your monitor automations a position loop. And what a position loop does is a position loop loops through all of your positions and checks them one by one by one by one. Right? Checks them one by one by one by one.
So I’m gonna add a position loop. I’m gonna say, bot, check any position that I have. You could do it for call spreads or put spreads or whatever, but we’re gonna do all positions go through this loop, and then we can monitor them or split them up if we want to later. Okay?
So I’m gonna add my position loop that says, hey, bot, repeat through every position and make the same decisions, okay? Make the same decisions. So now what I want to do is I want to add another decision. Now what I want to do is I want to start adding decisions like I would manage my trades. Now how do you guys do this, right? Do you guys check and see how far it is from expiration? Do you check and see if you have profit? Do you check and see if you have stop loss, right? You probably check a bunch of different things.
So let’s add some of those in here so that the bot can monitor those positions. So first one that I’m gonna add here is a profit-taking decision. It’s a really easy one to add, and it’s inside the position section of the decisions. Notice this is now checking stats and metrics of a position after it’s opened. We are no longer checking possible opportunities, right? Now we have a position. So we wanna check the stats of the exact position that we have.
So here I can check the position return, and I can say, okay, I wanna check and see if the position. What position? Well, whatever position I’m looping through right now. If the position return or any of these other metrics that you wanna check is greater than, I don’t know, let’s say 10%, whatever that is, okay? Can be 20%, 50%, whatever you want it to be. We set it low, so that just take some quick profits off the table if it has it, right?
We know we could hold the position for a long time before it turns over, right? Because we have the slides here that show us that we have to potentially hold positions for 20-25 days, 30 days, maybe, right? To see the indicator really work. But if we get a quick 10% profit, maybe we take that 10% profit off the table. Okay? So I’m gonna go ahead and hit save, and then I’m gonna add this to my automation.
Now think about this. What’s the automation doing? The bot is repeating through every position you have and then asking itself do I have a 10% profit on this position? Yes, continue down the yes path. No, continue down the no path for that position, and you can make other decisions, which we will do. So let’s make those other decisions.
First, if you don’t have a 10% profit, what might you wanna check? You might wanna add another decision to see if the position is nearing expiration. Just gonna do a really simple set of decisions here so that you guys can modify this as you want inside of your template. But I can check like is my position nearing expiration. What position? Well, whatever it’s looping through. Does the position expire in less than two market days? Okay, great.
Now what I’ve done here is I’ve basically added some additional logic here. So let’s say I have SPY. I have a position in SPY that I’ve been holding for a couple days. Okay? Holding for a couple days. So if it’s running SPY, does it have a return greater than 10%? If it does, it will continue down the yes path, and what would I wanna put on the yes path? I wanna start putting my closing logic because if I have a 10% return, I’d wanna be like, okay, well, let’s start closing this bad boy out. Close that SPY position.
Now, if I have another position in TLT, right? Maybe I’ve had this position for a long time. So when it gets to this decision, every time, it’s like no, you do not have a profit in this. Okay, great. Continue down this path. Now, what if I’m inside ten days to expiration? What if TLT expires this Friday? It would go down the yes path, and maybe you would want to close the position. Maybe you would wanna close the position at that point. Maybe it’s too close. It’s clearly does have a profit, but now it’s running out of time, so take your licks, get the position off, keep systematically trading.
So you can add all the different sets of decisions and logic. Is it inside two days? Somebody said, is the position return between 20 and 30? Well, you could do that. You could just say, hey, is the position return greater than 20, right? And is the position return because you can just group these decisions together? Is the position return less than 30%? I think somebody said something like that, right? So find that return that’s greater than 20 less than 30. You can do whatever you want inside of here. You can even delete these and remove them if you want to.
Now we’re gonna start adding our closing position actions to the bot. We’re gonna start adding closing position actions. Now I can add just like I added open position actions. If I get a 20% return, I can add an action to close my position. Close my position. What position do I wanna close? This position. Great, add the close position action. Awesome.
If I’m inside two days to expiration, I can also choose an action that says close my position. If I leave this blank, that’s what I wanna do in this case because if I don’t have a return of 20% and if I’m not close to expiration, I just leave that position to end on a no branch so that it keeps working. So that the bot just keeps monitoring it for either of these two conditions to close. Right?
Now is that the only thing I wanna do? Well, of course not. I can add additional logic, and I can backfill this. Yes, I have a great return but is now a good time to close the position? Return is only one component, right? Maybe there’s other things that I wanna do. So I precede this closing decision, maybe with some additional decisions to check the position bid/ask spread. Just like we checked the bid/ask spread on the opening, I can also check the position’s bid/ask spread and make sure that at the time I am closing the position that there’s a good liquid market for me to close the position.
So check the position, not opportunity, the position bid/ask spread to make sure it’s less than 15 cents, and if it is less than 15 cents, yes, go ahead and close the position. This is again; I can’t stress this enough. This is such a no-brainer, easy way to let technology be your friend. Like, let technology not let you have slippage when you’re rushing and trying to get a trade-in, and you’re off to work or whatever. The kids are home, like don’t let that create slippage for you. Have the bot check, and if now is not a good time and you have a profit, great, wait till it’s a better liquidity environment. Maybe you get a better profit or a better pricing on it, right?
So do you guys see how I did that? And I can do the same thing here too. I can precede this with another decision. Maybe when it’s closer to expiration because it is closer to expiration, I’m willing to check a different bid/ask spread level. So I want the bid/ask spread less than 25 cents. Like, I know it’s getting close to expiration. I know it’s getting close to expiration, so I’m willing to let it check for a little bit wider spread. Not super wide, but a little bit wider because it’s closer to expiration.
So notice that the same recipe can be used with just different values. And once you’re good to go here with your monitor automation, simply go up here and just hit save. And that’s it. And then you hit save again, and then you add it to your list of automations. What’s gonna happen is it’s gonna start running scanners when I turn this on, looking for possible entries. Any positions that get into a scanner then get dumped down into the monitor, and the monitors starts monitoring those positions, and this is what’s gonna take all your profits and close the trades for you and all that stuff, right?
And then your scanners, they’re just gonna keep going back and forth. Open some, close some. Check out some. Do I have it or not like do all the things? It’s doing all this logic that we already built out. So here’s the deal. What I’m gonna do is I’m gonna save this as a template. You can save any bot that you create as a template, and I’m gonna share to the community right after we’re done here. And then you can have this as your own version of it.
Now what’s cool about templates is that you can then click and clone any template that’s in the community or templates that people have shared, right? And you can create your own versions of these right here. So like, this one is one that I built. These are sample bots. This one’s called the monthly iron condors. It’s in your template library in the section called sample bots. These are functional bots that show you how automation should be put together and show you examples, and they’re all different kinds of case studies on how you could do it, like a high IVR ranking iron condor bot, okay?
These are just examples. We have another swing trading one with credit spreads, right? Another example just built one out today, but that one’s a little bit different. But if you want to create this one or clone this one, you can click here, and you can hit the clone button, right? And just create your own copy of this. So notice it clones all the settings. You choose what account, confirm it, and then you hit clone, and you can go and view that bot. that bot is now yours as all the automations automatically built out for you.
This one has three different exits. Notice some additional logic that I put into this one, like the position expires and the positions challenged, right? Or it’s reached my profit target or whatever. Or it’s nearing expiration, and it’s challenged. I mean, there’s tons of different logic you can build out here. This one, I think, has IVR that’s in there as well, but notice I have liquidity filters in here as well. So I’m doing that.
But that’s what you do. You just go in there, find some templates that you like, right? Find some templates that you like and then clone them. So some people think build a bot then backtest it. Really what you should be doing is doing all your research like what we did today together, where we looked at research on RSI then built a bot. You can go in here, and you can say like let me look at one of my backtests that I ran, right? Like this IWM iron condor, and if I like this version of IWM iron condor, right? Whatever version I like and I tested different allocations, then what you can do because our developers are the best in the world is they put a little button in here that builds the entire bot for you.
So you go in here, you backtest whatever you want, then you hit this button right here that says create bot. it says which allocation do you want to use. Let’s use 5%, okay? You name it, my sweet bot, and it basically builds the entire bot for you with all of the criteria in there. And then you just hit create bot, and guess what? When you go and view the bot, the bot has the automations prebuilt for you. That’s using the wizard.
Now today, we built it from scratch, but there’s a lot of ways you can build bots like what we just showed you using the bot wizard. Super cool, right? So go in and backtest your ideas. You can even go into the backtesting database, and you can filter through all of the backtesting data that we have of trades that people have run or backtest that people have run. So you can say, look, I wanna see everything on IWM specifically. Great, it just filtered everything by the most winning trades on IWM. Awesome. Click on a backtest. You like this backtest? You’re like, oh, that’s pretty cool. I wanna run that strategy. Great, hit the create bot button, and now create your bot right there. And it adds all the different exit criteria, which is the exact exit criteria that was tested.
I hope it was an awesome process for you. I hope you got a lot out of it. I hope that the main thing that you took out of this was to use a lot of your time now as a trader, as an investor, doing your research, working on your strategy, working on your trading plan. My goal with this platform has always been to give you back more time to do that stuff because I think traders don’t think about that enough. I think that traders need to think about what signals they’re using, what indicators they’re using, setting up trades, position sizing, all that stuff.
And so automation is a way to, in some cases, force you to do that because you have to that. You have to tell the bot what to do and when, what to when make decisions, and what indicators to use. You can’t just shoot by the hip anymore, right? And that’s okay. It’s gonna make you a better trader.
Hopefully, you guys enjoyed today’s workshop, and it was a longer one. Thank you so much. Hopefully, you enjoyed the good news. Tell your friends and family, please, that’s how we grow is through word of mouth, through referrals from you all. We’re working super, super hard to get you guys the best platform, the best deals, help you out in every avenue that we could possibly help you out on. So we’ll talk to you guys soon. Until next time, happy trading!