SteadyOptions is an options trading forum where you can find solutions from top options traders. TRY IT FREE!

We’ve all been there… researching options strategies and unable to find the answers we’re looking for. SteadyOptions has your solution.

All You Need to Know About Auto-Trading


Auto-trading is basically money management, but vast majority of newsletters are not licensed to manage money. Would you give your hard earned money to amateurs? I assume most people would give a negative answer to that question - yet, by participating in an auto-trading service, this is exactly what they do. Is it stupidity or ignorance? You decide.

What is auto-trading?

 

Auto-trading is when subscribers of trading newsletters prefer that their accounts be traded automatically based on the newsletter's trade alerts. With auto-trading you can allocate a portion or all of your account (percentage, dollar amount, or number of units) per recommended trade and the service provider places the trades for you.

 

Most newsletters send the broker emails including trade alerts and the broker's trade desk places the orders in the client accounts. In some cases (like auto-trading with Interactive Brokers), this is done through third party providers (Global Auto-Trading). Please read SEC Risk Disclosure on Autotrading.

 

What are the risks of auto-trading?

 

Before you enroll in an auto-trading service, those are the questions you need to ask about a newsletter offering auto-trading program:

  1. Is the newsletter a licensed investment adviser? SEC considers newsletters that engage in auto-trading to be investment advisers. If the newsletter is not an investment adviser, by engaging in auto-trading they are breaking the law and are exposed to lawsuits like this one. Since an auto-trading service is basically equivalent to money management, SEC requirement makes perfect sense.
     
  2. Is the newsletter a one man operation? What happens if that man gets hit by a truck or breaks a leg? Does he have a backup to continue trading your money? What if the trade(s) need to be adjusted or closed in a timely matter? Are you at risk of catastrophic losses if this happens?
     
  3. What if the markets start moving fast? Will their broker get the email with trade instructions fast enough? What if the prices are significantly different by the time the broker tries to place an order?
     
  4. Do you understand the rationale behind the trades or you just trust the newsletter blindly to place the trades in your account?


For most newsletters, auto-trading is actually illegal!

 

Those are some of the reasons why I cannot auto-trade SteadyOptions strategies. I'm not a licensed investment adviser, I cannot place the trades in members accounts and I'm just not willing to break the law like most other newsletters do.

 

Some newsletters would consider it a gray area. Let me be very clear: there is nothing gray about it. If autotrading is done by someone who is not an investment adviser, it is illegal. Period. Not a gray area. Black and white.

 

Unfortunately, many people found out the hard way that giving their money to amateurs is usually not a smart move. Many services simply blew out members accounts. Some of them just closed out, others did a "portfolio reset". Unfortunately, in real life people cannot reset their portfolios after losing 80-100% of them.

 

How our service is different from most other services?

 

Unlike SteadyOptions, our other strategies are managed by licensed investments advisers. That means that the trades are placed directly by Lorintine Capital, LP. By doing that, we are eliminating the middle man (the broker's trade desk or GAT). This creates better and more reliable execution, especially in fast moving markets, and reduce costs. Most other competing services cannot do this because they are not licensed investment advisers. In addition, we have backup, so if for any reason, one of our advisers is unable to place the trades, he is backed up by another adviser who has full access to all accounts. In addition, all trades are placed and discussed on the forum, so you can have a full understanding of the rationale behind the trades.

 

This is not auto-trading, rather it is something called a "managed account."  In order to open a managed account with Lorintine Capital, you will have to enter into an independent client agreement with them and go through a "know your client" process wherein a discussion can be had on whether or not such strategies are suitable for you and to review the risk of them on a one on one basis.

 

Of course you can always trade our strategies yourself as well, but we can make no guarantees as to your ability to implement them or obtain the same or similar performance other Steady Options members and contributors obtain.  There is a learning curve to the strategies we discuss and much of it is time sensitive.

 

Which strategies are available in Managed Accounts?

 

Lorintine Capital offers Anchor Trades and LC Diversified Strategy. We will be supplementing this with more strategies in the future as we expand. Contact Chris and Jesse for more details or me through the site if you are interested.

 

We auto-trade the following account sizes:

  • Anchor Trades: $100,000+
  • LC Diversified Strategy: $150,000+
  • Steady Momentum: $100,000+


 

Clients have full access to their accounts through either tdameritrde.com or advisorclient.com. They can view them at any time. They can deposit/withdraw cash as needed by contacting us or doing it themselves online, as long as they stay within the specified range.

 

Which broker we use and how much does it cost?

 

We are using TD Ameritrade Institutional. We will provide you with all necessary paperwork to open a TD Ameritrade Institutional account. Lorintine Capital has negotiated very competitive rates for trading in their managed accounts.

 

Fees to Lorintine Capital vary by account size and typically are in the range of 0.8% (for accounts over $1m) to 1.5% (for accounts under $250,000). 

 

To be eligible for a managed account in these strategies, you also need to maintain an active subscription to the respective service. Lorintine Capital and Steady Options are separate firms and bill separately for their services.  Members can still remain self-managed if they want and continue paying the subscription fee only. We continue posting the trades on the forum.

 

You can have multiple managed accounts under your name or your spouse name. Each account will be charged a separate managed account fee, but you will pay only one service subscription fee to Steady Options.

 

How to start

 

If you don't have an active subscription, subscribe to the appropriate package. After your forum account is activated, please contact us for further instructions:

 

For LC Diversified, PM or email Jesse Blom at jblom@lorintinecapital.com.
For Anchor Trades, PM or email Chris Welsh at cwelsh@lorintinecapital.com.

 

Or you may email me with any general questions at info@steadyoptions.com

 

You are welcome to post your questions/comments.

What Is SteadyOptions?

Full Trading Plan

Complete Portfolio Approach

Diversified Options Strategies

Exclusive Community Forum

Steady And Consistent Gains

High Quality Education

Risk Management, Portfolio Size

Performance based on real fills

Try It Free

Non-directional Options Strategies

10-15 trade Ideas Per Month

Targets 5-7% Monthly Net Return

Visit our Education Center

Recent Articles

Articles

  • Option Order Execution Tips

    As a community of option traders, we all can relate to the occasional challenges of order execution. Best practices for avoiding errors as well as techniques for better potential execution will be the focus of this article.  Like countless others in the Steady Options community, I personally have traded thousands of option contracts over the last decade.

    By Jesse,

    • 7 comments
    • 600 views
  • What Trading Can Offer To A Newcomer

    For any first-time investor, one of the most important questions to ask is “why are you doing this?”. Getting into investment can be thrilling and open up new worlds for you, but it can also be draining both physically and emotionally, with long days and sudden market moves always a genuine risk.

    By Kim,

    • 0 comments
    • 101 views
  • Updated: The Performance Gap Between Large Growth and Small Value Stocks

    Eight months ago on July 21st 2020 I posted an article, The Performance Gap Between Large Growth and Small Value Stocks. Over the long-term small cap value stocks have outperformed large cap growth stocks, although not over more recent history.

    By Jesse,

    • 0 comments
    • 262 views
  • 6 Ways to Invest Your Money That Aren't Cash Savings

    It’s always a good idea to keep some of your money in cash so if there is an emergency and you need money in a hurry, you can access it without having to worry. However, cash savings are not your only option if you have money left over at the end of the month, and there are a lot of other options that could bring greater returns.

    By Kim,

    • 0 comments
    • 318 views
  • Jade Lizard Options

    The jade lizard is one of those bullish spreads with limited maximum profit, and no risk on the upside. It is a combination of a short put with a short call spread . The credit this creates is higher than the span of the spread. To set this up, two actions are required:

    By Michael C. Thomsett,

    • 0 comments
    • 546 views
  • Are Your Emotions Trying To Tell You Something?

    As a trader, you may find yourself frequently trying to ignore or rationalize emotions.  You may have even created your own “solutions” to manage them. You exit early to lock up profit and avoid a potential blow-up if the trade turns against you.

    By Jared Tendler,

    • 0 comments
    • 360 views
  • Stock Trading Basics: 5 Rules for Successful Stock Trading

    You might be a stock trader, or just interested in learning more about how to trade and make the most out of your stock investment. Regardless, successful stock trading is not that easy. You must first have the financial capital to start and a very great endurance for risks.

    By Kim,

    • 2 comments
    • 505 views
  • Hourly Financial Advice for DIY Investors

    A large percentage of the Steady Options community consists of do it yourself (DIY) investors who prefer to manage their own trading and long-term investing accounts. This is a great way to gain firsthand experience about how markets work, but at times it may be beneficial to get professional input on investing and other personal financial planning decisions.

    By Jesse,

    • 0 comments
    • 309 views
  • Seagull Spreads

    Some varieties of call and put spreads are also called seagull spreads. It is so called because it contains a body and two wings. If the body is short, the wings are long, and vice versa. This 3-contract strategy includes two calls and a put, or two pouts and a call.

     

    By Michael C. Thomsett,

    • 0 comments
    • 435 views
  • Are Hedge Funds Good Investment for You?

    Right now, people are feeling at a bit of a loss as to what to do with their money. Those who usually invest are probably well aware that the market is pretty tricky right now. During unprecedented times, there are often unprecedented outcomes when it comes to investments.

    By Kim,

    • 0 comments
    • 436 views

  Report Article

We want to hear from you!


Question: If autotrading is illegal, how all brokers agree to do it?

 

Answer: Brokers are not legally obligated to check if a autotraded newsletter is an investment adviser. Of course they should do it by any ethical standards, but lets not be naive: you cannot seriously expect them to give up one of their biggest cash cows. They do much worse things. For example, TDAmeritrade running RedOption newsletter and TradeMonster running the OptionMonster newsletter. it's a HUGE conflict of interests, but somehow they get away with it.

Share this comment


Link to comment
Share on other sites


Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account. It's easy and free!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now

Options Trading Blogs Expertido