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Understanding AlgoTest's Strategy Builder

Introduction to Strategy Builder​

Understanding the Option Chain​

Strategy Builder Interface​

Benefits of Strategy Builder​

Setting up the Strategy Builder​

Creating and Managing Strategies​

Basic Strategy Creation​

Pre-Built Strategies​

Advanced Strategy Options​

Analysing Strategies​

Playground​

Paper Trading and Analysis​

Live Execution and Trade Management​

Additional Features​

AlgoTest's Strategy Builder - Quick Guide​

AlgoTest's Strategy Builder is a tool to help you create, test, and execute trading plans (strategies) for options trading. Here's how it works in simple steps:

Getting Started​

  1. Visit the AlgoTest website, sign up for free, and log in.

  2. Click on "Strategy Builder" in the menu bar at the top.

Building Your Strategy​

  1. Think about what options you want to trade (Strike price, Expiry, etc.) and how you want to manage risk.

  2. Use the Strategy Builder to add these options to your strategy (like building an Iron Fly Strategy).

Testing Your Strategy​

AlgoTest lets you see how your strategy might perform in different market situations.

  • Payoff Graph: This shows how much money you could make or lose based on price movements.

  • Greeks: This gives you advanced info about how options can react to market changes.

  • Monte Carlo Analysis: This is an advanced way to see how your strategy might perform across 10000 different price paths that the underlying could take until expiry.

Trading Your Strategy​

  1. If you're happy with your strategy, you can try it out with virtual money (paper trade).

  2. You'll need to connect your AlgoTest account to your broker to trade for real.

  3. Once connected, you can choose to place your trades or manage existing ones.

AlgoTest Strategy Builder: How does it work?​

Creating and Setting up your strategy​

  1. Go to the AlgotΠ΅st website, sign up for a free account, and log in to your account.

  1. Now click on "Strategy Builder" as shown in the image below :

  1. You will get an interface as shown in the image below.

  1. Now add the legs from the option chain according to the strategy that you want to build. Let's assume we want to build an :iron fly we will sell ATM CE and ATM PE and buy OTM CE and OTM PE from the option chain as shown in the image below :

  1. You can analyse your strategy using the different tools provided by AlgoTest.

Analysing your strategy​

In the Analysis section​

Strategy Builder provides you tools like Payoff graph, Maximum Profit, Maximum Loss, Risk Reward, Breakeven Point, etc to analyse your strategy. A payoff graph is a very useful tool that helps you to determine how your position is going to end till expiry concerning the underlying move.

In the Greeks section​

Strategy Builder provides you with information about Option Greeks like :Delta, :Theta, :Gamma, :IV, :Vega, etc. for your positions as shown in the image below.

In the Monte Carlo Analysis Section​

Your PnL will depend highly on the underlying index's path. Monte Carlo Analysis is an advanced method to see how your strategy will perform on average across 10000 different price paths that the underlying could take until expiry. You can access this feature by clicking on "Monte Carlo Analysis" as shown in the image below.

Executing your strategy​

  • Now Assuming that we want to execute our Iron Fly then we have two options if we want to paper trade our strategy or want to execute on broker. To execute your strategy for live trade your broker should have logged into your AlgoTest account. To learn how to set up a broker :Click Here.

  • To Execute your strategy for live trading, click on the "Live Trade with" button as shown in the image below. Learn more about live trading here.

  • It will ask to select Broker. Select broker and save the strategy with a random name.

  • Now click on "Place All Orders" to execute our strategy. We also have the option to choose if we want to set the order type as limit or market.

  • You can manage your position on the "positions" tab. Here you get options to add another trade or squareoff existing positions as shown in the image below.

  • You can check the status of orders in the order window as shown in the image below :

  • You can track your positions by various information provided in the analysis tab as shown in the image below :

Tips for Success​

  • Know what you want to achieve before building your strategy.

  • Use the tools to test your strategy in different scenarios and improve it.

  • Stay updated on market conditions to adapt your strategies.

  • Regularly review and update your strategies as markets change.

Disclaimer​

This guide is a simplified explanation and only for demonstration purposes. Exploring the AlgoTest Platform and resources is always a good idea to learn more.