A mechanical trader follows a pre-determined task applying all their knowledge to build an objective set of rules to control all stages of trading, from choosing stocks to entry and exit. These rules are usually laid down in a computer software application that will help to make the process as automated as possible. Mechanical style traders eliminate the influence of human emotion on their process, thus minimizing human mistakes. As a way to create a mechanical system, all levels of the process need to be thoroughly considered.

First you simply must do a list of all the quantifiable measures that can be used to decide whether a stock would be the best candidate for options trading. They should be quantifiable so that you can chart them using a computer, enabling all qualified stocks to be automatically identified every single day. It will drastically cut down as much time it takes to spot qualifying stocks. Using quantifiable features also prevents you against depending on your own judgment. The sort of requirements you should look at include a final close that is at least 10 dollars, last price rising over the last three days and having a PE that is positive. Using the measures is how you would choose which stocks to observe.

The second stage would be to choose which options will qualify for your trading system. This relies on what you need to base your system on. You could use ITM or OTM options, or base it on bearish or bullish spreads. Whatever you choose is how you will choose the option to purchase for the stock chosen in the first step.

3rd, you need to figure out the situations under which you will actually buy. There are a number of various entry procedures that can be used. You may choose that it is best for you to buy at the opening of the market, or that you need a more complicated procedure which could involve watching the underlying stock movement for a specified period of time before it fits the circumstances for entry. Design a process that meets with your own style of trading. This task is how you will use to determine when to buy.

It will always be best to find out as much as you can before jumping in. Start little while you get the feel of trading. That allows you to reduce losses during the learning curve.
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