Hidden Data and Lost Profits
Informed trades are successful and profitable, whereas uninformed trades often lead to failure and losses. Key data points, such as option Greeks, historical implied volatility, and average stock price movements, are pivotal in executing informed trades. If you're unfamiliar with implied volatility or option Greeks, consult the free eBook at the end of this article.
However, accessing and tracking this data can be challenging through most brokerages. Both Robinhood and TD Ameritrade let you see current option Greeks, but they don't offer the ability to track how the Greeks change over time. Additionally, there's no feature that allows you to visualize the net value of the Greeks in your option spread or monitor its fluctuations. This lack of tools significantly hampers traders in their quest for profitability. For example, in a calendar spread, if traders observe a shift from positive to negative Delta, it's a signal that they might consider exiting the trade. If the underlying continues to rise, the spread might result in losses instead of profits.
Even with robust strategies, skilled traders often don't have access to the comprehensive information they need for success. Specifically, historical stock option data isn't readily available. Moreover, the data that is accessible isn't always presented in an easily digestible format. This might not be entirely the broker's fault, but could also be attributed to the limitations of human perception. However, we're not bound by these limitations. Algorithmic trading offers a fresh perspective on data analysis during training and ensures emotion-free, logically sound strategy execution.
Algorithmic trading also empowers traders to compile a personal database of pertinent information, potentially drawing from a wide array of historical sources. This method paves the way for more informed trading, while uninformed trading typically results in losses.
In conclusion, algorithmic trading presents a far more effective avenue towards trading success. It not only facilitates the integration of a broader range of data for informed decision-making but also enables the deployment of strategies in ways that would otherwise be unattainable. In essence, algorithmic trading is a win-win solution. To begin your foray into creating your own algorithmic trading bot, click the link below and enroll in our invaluable Algo Bull course. This course will equip you with the foundational knowledge to start designing your bot and making informed trades as soon as you finish. Don't delay; embark on your journey to informed trading now!