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 starts to move fast? Will his 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+


 

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

  • Diversified Leveraged Anchor Performance

    In our continued efforts to improve the Anchor strategy, in April of this year we began tracking a Diversified Leveraged Anchor strategy, under the theory that, over time, a diversified portfolio performs better than an undiversified portfolio in numerous metrics.  Not only does overall performance tend to increase, but volatility and drawdowns tend to decrease:

    By cwelsh,

    • 1 comment
    • 169 views
  • The Best Chart I’ve Seen in 2020

    The best visual aids for learning are often very simple. The chart in this article was created by Paul Merriman, using data from Dimensional Fund Advisors. I primarily use Dimensional Funds in building portfolios for my clients. There are many takeaways from this chart, and I’d like to share a few thoughts that stick out most to me.

    By Jesse,

    • 0 comments
    • 182 views
  • Traditional or Roth Retirement Account?

    When US investors save for retirement, there are many important decisions that have to be made including which investments to use as well as which type of accounts to fund. Tax favored retirement accounts such as 401(k)’s and IRA’s should be utilized to the maximum extent possible because of the opportunity for tax advantaged growth.

    By Jesse,

    • 0 comments
    • 263 views
  • My Favorite Investing Books, Blogs, Papers, and Podcasts

    There are so many excellent sources of investment education available today that I thought a short post about some of my personal favorites could be beneficial. Below are different forms of content that have been particularly impactful to my investment philosophy, and they are not in any specific order.

    By Jesse,

    • 0 comments
    • 518 views
  • Go For Gold! The Business Behind The Dazzle

    The price of gold is often in the news—sometimes it's rising, and other times it's dropping but for the most part, it has been on a steady increase for many years. It is certainly worth more now than it did twenty years ago. When its price is on the rise, we may have thought about the benefits of selling our gold for profit and making some passive income from it.

    By Kim,

    • 0 comments
    • 304 views
  • Using Bullish Calendar Spreads to Profit on MSFT Stock

    A calendar spread is an income trade where the trader sells a near term option and buys a longer-dated option with the same strike price. Usually this is done with monthly options, but it can also be done with weeklies. They are long volatility trades so can be a nice addition to a portfolio as a way to offset some short vega.

    By GavinMcMaster,

    • 0 comments
    • 594 views
  • 3 Principles to a Successful Investment Experience

    Although not an exhaustive list, what I’ll present in this article are three core principles that overwhelmingly stack the odds of a successful long-term investment experience in your favor. These three principles are asset allocation, diversification, and rebalancing.

    By Jesse,

    • 0 comments
    • 422 views
  • Important Tips For First Time Currency Traders

    Diversifying your portfolio is important for all investors, and currency investments are a great way to do that. However, there are a lot of misconceptions and common mistakes that first time currency investors make, and this leads to big losses.

    By Kim,

    • 0 comments
    • 443 views
  • Iron Condors or Short Strangles?

    In my early option trading days, I favored selling iron condors over selling strangles. I thought that selling a strangle was too risky because the potential loss was “undefined”. I thought this made sense because this is what I’d hear from other people that were more experienced than I was.

    By Jesse,

    • 0 comments
    • 1,944 views
  • How To Be A Successful Day Trader From Home

    The good news is that if trading is your passion, then it’s possible to become a successful day trader and work from home. However, it’s not as easy as setting up shop and jumping online. There are specific steps and processes you need to have in place if you’re going to be able to make a living for yourself and have a bright career and future.

    By Kim,

    • 0 comments
    • 579 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

We might at some point. But this strategy is much less active than SO and requires much less maintenance and monitoring. We want it to be as boring as possible.

Share this comment


Link to comment
Share on other sites


Your content will need to be approved by a moderator

Guest
You are commenting as a guest. If you have an account, please sign in.
Add a comment...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

Options Trading Blogs Expertido