Most option traders use single-legged strategies to execute their trade. But did you know that you can improve your chances of profit by building a multi-legged strategy using an option strategy builder free?
Constructing a multi-layered strategy may be complex for newcomers. Most reputed trading platforms like Options Trader by Dhan offer a variety of readymade option strategies to help you leverage the same and trade efficiently. Keep reading if you want to learn how to create custom options strategies for free.
How to Create Custom Option Strategies?
A trader needs to have an in-depth idea about the market movement and his trading goals before creating a custom strategy. With that in mind, here are the steps to create and execute a custom option strategy.
- Choose a Broker
Not all web trading platforms offer the feature of option strategy builder free. Thus, make sure you choose a provider that lets you build, analyze and execute option trading strategies for free. Once you have chosen one, register and verify your trading account.
- Pick an Instrument
The main goal of an options trading strategy is to earn profits. Thus, choose an options trade that you expect to go in your favor. For this, pick an underlying asset that suits you and you are familiar with. You can even use a combination of futures and options contracts if necessary.
- Create Your Option Strategy
Decide whether you want to go long, short, or both. Depending on your goal, select the number of legs to create a 2-legged, 3-legged, or 4-legged strategy using the option strategy builder free. This should activate an order form.
You can create strategies depending on your preference and customize them at every step of your trade. Now, define the ratio with which you want to trade the legs.
Once you have filled in the ratio fields, the strategy builder will calculate the order lots as per your inputs. The strategy will be executed when the spread matches your customization.
- Evaluate the Strategy
Once you have created a strategy, it is essential to evaluate it before execution. Make use of line, candlestick, and Heikin-Ashi charts before going forward with the strategy. Another aspect you want to see is the subsequent payoff. Once you are satisfied with all the aspects, you can move ahead.
The problem with most web trading platforms is that they don’t allow strategy building and execution in one place. However, leading trading platforms like Dhan offer the ability to execute a strategy in a few clicks once it is built. You no longer need to switch multiple screens and lose out on trading opportunities.
Voila! You have successfully created and executed a custom option strategy. If you are a seasoned option trader, you can easily create custom strategies. For new traders, it is highly recommended to use readymade option strategies. Once you have become accustomed to how exactly option trading strategies work, you can go forward to create a suitable strategy.
Options trading can become more efficient with trading strategies. You must have clearly defined trading goals and market outlook to make the best of your trades. You can further improve your trading potential with multi-layered strategies using option strategy builder free. Dhan allows traders to create their own strategy or execute readymade option strategies on the platform in just a few simple steps.