Bots

New to bots and autotrading? This is the best place to get started.

Together we'll walk through the basics of bots so you'll have the confidence to automate all your trading activities, saving you hours of time, adding control and precision to your strategies, and giving you the power to finally scale your portfolio.

You deserve a better way to trade. Let's show you how to make it happen...

What Is a Bot?

A bot - short for “robot” - is simply a tool that executes and manages a trading strategy inside a portfolio.

When trading, I tend to repeat activities. First, I start scanning, looking for trading opportunities. When I find a potential trade, I analyze data, make a series of decisions, and start opening new positions. Next, I start monitoring my positions, checking for profit and loss targets, watching for changes in indicators, trends, or momentum, and dozens of other things as I manage my trades.

These are activities traders do over and over.

Option Alpha’s bots follow my instructions using recipes, do exactly what I tell them to do, automate all the decisions, and take the necessary actions of my trading plan that I would otherwise have to perform manually.

This means instead of being forced to remember (and have the time to make) all the decisions, bots can run entire trading strategies for me, from start to finish, with consistency, speed, and efficiency.

How Bots Work

So you’re interested in bots, and they sound pretty cool? Seeing is believing, so let’s walk through how they work. As we mentioned above, bots are an automated version of what you do now, just better.

Let’s assume you want to use a simple trend indicator to automate a trend following strategy.

Say you want to sell a put credit spread when the market is in an uptrend and avoid selling them when the market is in a downtrend. You can easily automate this strategy with bots.

Is this all you can do with bots? No way! We’re just starting with a simple example to show you how it works. We’ll show you a lot more examples later to get your creative juices flowing!

Setting Up Your Bot

To create a new bot, select “Create Bot” from the Bots homepage. Then, define the bot’s settings and safeguards.

• Bot Name and Icon - The name and custom icon you give it (have fun).

• Choose an account - Your paper trading account uses live market data so you can run your bots risk free. When you're ready, connect a brokerage account to send your orders to your broker for execution.

• Allocation - Tells the bot how much of your trading capital it can use to open positions.

• Position Limits - The maximum number of positions a bot can open in a day and in total.

Defining capital and position limits lets you safely allocate capital between different trading strategies.

Adding Automations

Trading involves countless repetitive tasks done over and over. Automations efficiently execute those activities for me.

Automations are the instruction manual for a bot that tell it what to do and when. Bot automations move through a framework of decision criteria in a logical progression. You can build automations to run continuously, on a defined schedule, or at the push of a button. There are two automation types:

• Scanners - scan for new opportunities

• Monitors - manage existing positions

Automations include decision recipes. Decision recipes are the set of instructions a bot follows to determine yes and no answers. For example, the bot can check if a ticker symbol is above or below a moving average, what the IV rank is, when expiration is, and much more. There are dozens of recipes to choose from.

Automations can be as simple or complex as you like. They can be saved and organized with folders in your Automation Library. You can reuse an automation in as many bots as you want. Reusing an automation saves you the time of recreating the entire strategy.

You can edit automations at any time. Changing an automation applies the changes to every bot using the automation. You can copy an automation if you want to make changes but preserve the original. Copies let you modify the automation’s actions without affecting the original automation.

Reusing automations is a timesaver that significantly increases the scalability of autotrading. Many traders use different tickers with different criteria. No problem. Enter custom inputs.

Custom inputs are dynamic tools used in decision recipes across different bots and automations to give you added flexibility. Custom inputs allow you to manually input variable fields, such as the ticker symbol or numerical values, and link fields together within an automation.

Scanning for Trades

My trading used to involve scanning watchlists for opportunities, analyzing data, making decisions, and then opening new positions. Now, I use scanner automations to offload those tasks so that I can focus on strategic thinking.

Scanner automations run on defined time intervals and look for opportunities to enter new positions based on the decision recipes I choose. For example, if a bot’s objective is to sell a put credit spread when a security is above a long-term moving average, a scanner can do just that. Scanners look for opportunities as long as there is room within the bot’s allocation and position limits.

Select the “Settings” tab in your bot's dashboard and choose the “+ Add Automation” to create a new automation and access the automation editor. To start adding instructions to our automation, we’ll select the “+” icon at the top of the editor.

The automation editor is where you tell the bot what decision to make and/or what actions to take. It follows “Yes” and “No” paths in a step-by-step format as it moves through your bot’s decisions or takes actions. To start adding instructions to the automation, select the “+” icon.

• Create a New Scanner Automation - Name the automation, and save it to the library.

• Use a symbol loop to create your custom watchlist.

• Add Decisions - There are dozens of different decision actions available with limitless customization options. Decisions are often used at the beginning of a scanner automation so the bot can filter through specific market data before entering a position. You can add as many decisions as you like down both the “Yes” and “No” paths of the automation editor.

• Add an Open Position Action - Select a position type, customize the position to fit the strategy, define your position sizing, and set the SmartPricing criteria.

Customize SmartPricing

Option Alpha’s proprietary SmartPricing technology places timed limit orders in a sequence, starting near the mid-price, and traverses the bid-ask spread until you reach your final price. You can even customize how far you'll let SmartPricing work beyond the mid-price to avoid costly slippage.

Simply said: it finds the best possible price for your order so you don't have to cancel and replace orders manually. SmartPricing orders automatically cancel after two minutes if not filled.

By default, order pricing is set to Normal SmartPricing and 100% of the bid/ask spread. There are four different SmartPricing settings that you can customize:

• Normal - Works through up to 4 prices, 10 seconds each.‍

• Fast - Works through up to 3 prices, 5 seconds each.‍

• Patient - Works through up to 5 prices, 20 seconds each.‍

• Off - You can always turn off SmartPricing and a limit order will be sent to your broker at 100% of the bid/ask spread or a final price you set. ‍

• Market - Send a market order for immediate execution. Be aware that market orders can fill at a price well beyond the listed bid-ask spread.

Remember, you are in complete control of your bots. You tell the bot when to turn on, what to look for, when to open positions, when to exit positions, and much more. Next, we’ll tell the bot how to exit positions.

Monitoring Positions

Once you've opened a new position, you have to manage it!

Different traders manage positions using different management styles. Sometimes even the same trader manages different types of strategies with different management styles.

Before autotrading, I would set profit and loss targets or create alerts to help manage positions. Or, sometimes, I would sit in front of the screens watching the price action and looking for the right time to get out of the position.

With bots, the process is much simpler. Monitor automations manage positions. An army of bots could watch 200 different positions (or more!) with ease. Monitors continuously watch open positions and look to exit or adjust them based on my decision criteria. Like scanner automations, monitors run on defined time intervals.

To create a new monitor automation, select “+ Add Automation” in the bot's Settings.

• Create a New Monitor Automation - Name the automation, and save it to the library.

• Add a Position Loop - These tell the monitor to loop through the same actions for all positions of a certain type. Loops make it incredibly efficient to manage multiple positions.

• Add Decisions - Remember, there are dozens of different decisions available, so the sky is the limit for what you can create! SmartStops is just one example of a decision you can use in a Monitor Automation. SmartStops trail a position once a profit target is hit, and could help you get more out of your positions.

• Add a Close Position Action - Set your SmartPricing criteria and exit the trade.

Monitors only run if there’s an open position. Monitor automations can be as simple or complex as you like and designed to monitor different position types, multiple underlying securities, or all positions within a bot.

Exit Options

With Exit Options, you can pre-set your exit parameters and automate position management every minute of the trading day. Exit Options monitor your positions every minute and will automatically close the position when your criteria are met.

Plus, you can use 1-minute trailing stops for ultimate control (including custom safeguards to combat price fluctuations and protect against slippage).

We know it's overwhelming to manage all your positions, tracking returns, expiration, earnings, and manually inputting orders over and over.

You can customize each position's Exit Options management with five triggers:

• Profit Taking

• Trailing Stop

• Stop Loss

• Before Expiration

• Before Earnings

Event-based Automations

Events convert scheduled, predetermined tasks I already do manually into automated actions. Whether it is dollar-cost averaging, laddering entries, or opening and closing positions at specific times each week, I repeat a lot of activities on a regular basis. Event automations take those repetitive actions and systemically implement them for me.

Unlike scanner and monitor automations, which continuously manage positions at defined intervals, you can trigger events for specific dates and times, run as a contingency when another position is opened or closed, or run immediately at the click of a button.

There are multiple triggers you can use to schedule automations:

• On a Specific Date - You can run an event on a specific date or time in the future. For example, if you wanted to enter a position on the first trading day of every month, you could schedule it with an event automation.

• On a Repeating Schedule - You can run an automation on a repeating schedule. For example, you can schedule an automation to run every Monday and Friday at 3:00 p.m.

• Open New Position and Close Position - An automation is triggered to run one time if a new position is opened or an existing position is closed.

• At Market Open or Market Close - Automatically run an automation 10 minutes after the market opens or 10 minute before the market closes. Perfect for checking market conditions, re-setting bot tags, or checking for profits at the end of the day.

• Buttons - Buttons are events that run an automation at the click of a button. Any time the button is clicked, it will immediately run the automation. Customized buttons can be created for any scanner or monitor automation and added to the bot dashboard.

Event automations add flexibility to a bot. The list of potential use cases is long! Traders can check for profits, automatically open positions, and more.

Trade Ideas & Manual Trading

You can always trade manually with Option Alpha. We LOVE automation, but also know you want to have the control to open (or close) your trades exactly when and how you want.

The best part is, when you open a position manually, you can still leverage powerful automated tools such as SmartPricing and Exit Options.

With Trade Ideas, you can remove the hard work of searching for trading opportunities. Trade Ideas automatically ranks millions of potential positions using multiple filters to sort trades by their ticker, expiration, directional bias, reward to risk, and probabilities. Once you find your trade, the position details are set for you automatically. You can always modify any of the settings before sending your order. It’s never been easier to find and place options trades!