How to Set Up Your First Autotrading System
When I first heard about autotrading systems I was intrigued. The idea of having a system that could execute trades on my behalf sounded too good to be true, especially as someone who spent hours analyzing charts and making decisions. It wasn’t long before I realized just how popular these systems had become in the industry, particularly among traders looking to save time and reduce the emotional strain that comes with manual trading.
My curiosity led me to explore how autotrading could work for me. At first, I felt overwhelmed—there were so many tools, platforms, and strategies to choose from. But with some research and trial and error, I managed to set up my first autotrading system for options trading. It was a game-changer. Automated trading not only helped me execute multiple strategies seamlessly, but it also allowed me to step away from my screen and focus woking on other things.
This article is for anyone who’s just starting out and feels the same mix of curiosity and hesitation I did. Setting up an autotrading system isn’t just about saving time—it’s about building a more disciplined, efficient trading process. For beginner options traders, especially in the US, these systems offer a unique advantage. Options trading provides flexibility and better risk management compared to other markets like futures or forex, which is why so many professional traders stick to options.
In this guide, I’ll walk you through the process step by step, sharing my experiences and lessons learned along the way. By the end, you’ll have a solid understanding of how to set up your own system and make it work for you.
What Is an Autotrading System and Why Start One?
Autotrading systems or automated trading, at their core, are platforms that automatically execute trades based on pre-set rules and trading signals.
Once the rules are set, the system does the heavy lifting, allowing you to step back and let the trades happen seamlessly.
For me, the biggest draw was the ability to eliminate constant monitoring. Before using an autotrading system, I spent countless hours in front of screens, worrying about whether I’d miss the perfect trade opportunity. With automation, that stress disappeared. Trades were executed even when I wasn’t actively watching the market, like during meetings or when spending time with family.
Another significant advantage is the emotional discipline it enforces. Manual trading often involves split-second decisions, and emotions like fear or greed can easily cloud judgment. Autotrading removes that variable entirely, sticking strictly to the rules you’ve defined.
In the US market, this is particularly valuable given the wide array of options strategies available. With autotrading, I’ve been able to diversify my approach, executing multiple strategies without juggling them manually. Whether it’s a credit spread, iron condor, or long straddle, the system ensures each strategy is implemented flawlessly. You can check here some pros and cons of autotrading bots.
Essential Tools and Software for Setting Up Your Autotrading System
To set up an autotrading system, you’ll need a few essential tools. Here’s what worked for me:
A Reliable Brokerage Account: I chose Interactive Brokers for its competitive fees and strong reputation. For accounts under $100,000, platforms like Tradier might be better suited due to their low-cost structure. For international clients, AutoShares is another option worth considering.
Autotrading Software: This is the backbone of your system. I went with Global AutoTrading, a platform that has been around since 2007. Its longevity and user-friendly interface made it a trusted choice for me.
A Signal Provider: This is where your system gets its trade ideas. I subscribed to Advanced AutoTrades, a provider with a more than 10-year track record. Their low-risk-per-trade strategies and beginner-friendly Monthly Trend strategy gave me confidence in their service.
When choosing these tools, it’s crucial to ensure compatibility. For example, your brokerage should seamlessly integrate with your autotrading platform. Also, verify the credibility of your signal provider—look for transparency and backtest the results.
A great place to start learning about backtesting is my article “Backtesting Autotrading Strategies: A Complete Guide.”
Step-by-Step Guide to Configuring Your First Autotrading System
Here’s how I set up my autotrading system, step by step:
Open a Brokerage Account: Start by selecting a brokerage that fits your needs. For me, Interactive Brokers was ideal because it offered low fees for accounts above $100k. If your account size is smaller, consider Tradier for its lower fee structure.
Subscribe to Autotrading Software: I signed up for Global AutoTrading and linked it to my brokerage account. The process was straightforward, with clear instructions provided by the platform.
Choose a Signal Provider: The Monthly Trend service from Advanced AutoTrades is the perfect strategy for beginners with only one trade per month. The monthly subscription plan and free trial made it easy to test the service without a long-term commitment.
Set Initial Allocation: I started small, allocating just one contract per trade. This approach allowed me to test the system without taking on too much risk.
Test the Setup: I monitored the system’s performance closely for three months, comparing results to the signal provider’s published data to ensure accuracy.
Scale Up Gradually: Once I gained confidence in the system, I slowly increased my allocation. This cautious approach helped me manage risk effectively.
Set Up Alerts: I configured email notifications to stay informed about trade executions and any potential issues.
Common Challenges Beginners Face and How to Overcome Them
Setting up an autotrading system isn’t without its challenges. Here are a few I faced and how I overcame them:
Technical Setup Issues: At first, linking all the tools felt overwhelming. Reading detailed guides and reaching out to customer support made a huge difference. Don’t hesitate to ask for help—most platforms have robust support teams.
Risk Management Pitfalls: Early on, some can allocate too much to a strategy, leading to volatile results. To fix this, I recommend choosing a low-risk-per-trade strategy, keeping allocations small until you are more experienced.
Configuration Errors: Missing or incorrect settings caused me to miss trades initially. Double-checking all configurations and starting with low allocations helped me avoid costly mistakes.
Overconfidence in Strategies: After a streak of successful trades, I became overly optimistic, expecting the system to perform flawlessly. I learned to calculate worst-case scenarios, factoring in fees and slippage, to maintain realistic expectations.
Tips for Managing and Optimizing Your Autotrading System Over Time
Here is what I do to have my autotrading system running smoothly:
Monthly Performance Reviews: Every month, I analyze trade reports to identify trends and ensure the system is executing trades correctly.
Ongoing Backtesting: Using tools like Thinkorswim’s on-demand feature, I test strategies against historical data to see how they perform in different market conditions. Here is a complete guide on backtesting strategies.
Focus on Risk-to-Reward Balance: Rather than chasing big wins, I prioritize steady, realistic growth. Consistency is key to long-term success.
Stay Proactive: I set up email notifications for trade execution issues or problems with my brokerage account. Staying informed helps me address issues before they escalate.
Conclusion
Setting up an autotrading system is a journey of learning and growth. It can save time, reduced stress, and allowed me to trade more efficiently. For beginner options traders, these systems offer a way to replicate the success of experienced traders without the steep learning curve.
If you’re considering autotrading, start small, test thoroughly, and stay engaged. Automation doesn’t replace diligence but complements it, giving you the tools to trade smarter, not harder.