In Options Auto Trader, the Minimum Credit and Minimum Profit settings are key tools under the advanced entry rules that help you ensure your trades only execute under profitable conditions. These settings prevent your trades from being placed if they do not meet your desired credit or profit thresholds. This article will explain how each of these settings works and how to use them effectively.
Step 1: Understanding Minimum Credit
The Minimum Credit rule prevents a trade from executing unless it can collect at least the minimum amount of credit that you specify. This is particularly important for options sellers who rely on collecting premium income, as it ensures you won’t enter trades that collect too little premium, which could lead to poor risk-to-reward outcomes.
Example:
You are selling a credit spread and want to ensure you collect at least $1.00 per contract. By setting the Minimum Credit to $1.00, the auto trader will only execute the trade if it can collect a premium of $1.00 or more. If the trade would generate less than $1.00 in premium, it will not be placed.
Benefits:
Ensures your trades are profitable from the start by collecting a minimum premium.
Prevents entering trades with too little credit, which can expose you to higher risk relative to the reward.
Step 2: Understanding Minimum Profit
The Minimum Profit rule ensures that your trade will only execute if it meets a specified profit target. This rule applies more broadly to both debit and credit trades, allowing you to define how much profit you want the trade to generate before it is executed.
Example:
You set the Minimum Profit to $150, meaning the trade will only be executed if it can generate a profit of at least $150. If the expected profit is less than this amount, the trade will not be placed.
Benefits:
Ensures you meet a desired profit threshold before committing to a trade.
Prevents small or insignificant trades that might not be worth the risk.
Step 3: Setting Up Minimum Credit and Minimum Profit
To set up Minimum Credit and Minimum Profit for your auto trader:
Log into your Options Auto Trader account.
Navigate to the Auto Trader page and select the bot you want to configure.
Click the gear icon to open the Advanced Entry Rules section.
In the Minimum Credit field, input the minimum amount of credit you wish to collect for each trade (e.g., $1.00).
In the Minimum Profit field, input the minimum amount of profit you want the trade to generate (e.g., $150).
Save your settings.
Once these settings are in place, the auto trader will evaluate potential trades and only execute them if they meet both the minimum credit and minimum profit thresholds you’ve set.
Step 4: Monitor and Adjust Settings
After setting up the minimum credit and profit rules, you can monitor how these thresholds impact your trade execution:
If trades are not being placed as frequently as expected, you may need to adjust the minimum credit or profit values to be more flexible.
Review your trade performance regularly to ensure these rules are aligned with your trading goals and market conditions.
Conclusion
The Minimum Credit and Minimum Profit settings in Options Auto Trader provide valuable safeguards to ensure your trades meet specific profitability requirements before they are executed. These advanced entry rules help you avoid trades that do not meet your desired risk-reward ratios, making your trading strategy more efficient and effective.
If you have any questions about setting up or adjusting these rules, feel free to reach out to our support team for assistance.
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