When choosing a broker there are lots of options, each offering their own tools and features that will appeal to various types of traders. The following Thinkorswim (TOS) guide will help you decide if Thinkorswim by TD Ameritrade is the right broker for you. It may also provide you with additional information you may not have been aware of if you are already a TOS client.
Thinkorswim is the trading platform of TD Ameritrade, and is offered for free to current clients and even to non-clients in the form of a demo account (Paper Money).
Thinkorswim offers direct market access with a flat fee pricing model; trade unlimited shares and ETFs for $9.99, options for $9.99 plus $0.75 per contract, futures for $2.25 per contract (plus exchange and regulatory fees not set by TD Ameritrade) and for forex transactions over 10,000 units there are no commissions. The flat fee model favors traders taking large positions or those who want the transparency of knowing exactly what they will be paying for each trade.Real-time market quotes are provided free of charge.
You are also able to trade stocks and other assets on North American exchanges, including ETFs, currencies, options, futures and mutual funds. You can download the Thinkorswim platform and trade from your desktop with thinkDesktop, or trade from anywhere by logging into the web based platform.
The platform Help tab allows traders to access loads of free webinars and tutorials, which cover using the platform and trading strategies.
Tools and Features
Upon opening the TOS platform there are several tabs that provide access to the main features of the software.
The “Monitor” tab gives information about current positions and status of the account, including balances, filled orders, pending orders and profit/loss. View account statements and trade histories to stay on top of what is happening in the account.
The “Trade” tab provides different layouts for different types of traders. For example, the “Forex Trader” button brings up charts of multiple forex pairs, along with a trade box that allows traders to quickly buy/sell and change order quantity.
The “Futures Trader” tab provides a similar layout, but lists common futures products instead of forex pairs. You can alter the defaults by typing in another symbol. Your choices will be saved when you log out. Alternatively, you can click the “Setup” button at the top of the screen to save workspaces exactly how you like them.
The “Active Trader” tab brings up a window similar to a Level II (without the depth) and a chart. You can type in different symbols within the dialogue box to see other charts or Level IIs.
On the side of each window there is a small menu that allows you to add or subtract other tools, such as Time and Sales, (actual) Level IIs, charts or a news feed.
The “Pairs Trader” tab allows you to quickly compare two stocks side by side, along with correlation studies and a customized order entry system for making multiple transactions at the same time.
The “Analyze” tab allows you to simulate trades, assess the risk of trades, perform probability analysis, backtest and analyze fundamentals for options trades.
The “Scan” tab provides a Stock Hacker, which is a simple stock screener. Add criteria and alter the values of those criteria to find a list of stocks that meet your requirements [see also Ten Commandments of Futures Trading].
Spread Hacker and Spread Book provide potential option trades that meet certain inputted criteria.
The “Market Watch” tab allows you to create personalized watch lists or set alerts to notify you when assets hit a certain parameter. The Visualize button gives you a Heat Map so you can quickly see which stocks are up or down, and by how much.
The “Rollover Rates” button shows the current credit or debits that apply to holding overnight positions in the forex market. The Calendar button shows scheduled dividend dates, earnings, conference calls, splits and other economic events.
Other tools include CNBC live streaming, a note pad and an interactive platform to shares trades, all accessible through the Tools tab.
Charts, Charts, Charts
There are two main charting platforms within TOS: Charts and Prophet.
The Charts button opens the default charting platform for Thinkorswim. You can quickly change the symbol by typing in an alternative symbol in dialogue box. You can also add indicators/studies via the chart tool bar, along with drawing tools (trendlines, Fibonacci retracements, text notes, etc). Change the timeframe of the chart and chart style via the same menu.
To compare assets click on the Studies button, scroll down to Comparison and click Add Study. Click on the picture of the “gear” to change the asset you want to compare. Alternatively, click on the Flexible Grid button near the top of the screen to bring up multiple charting windows where you can compare various assets side by side.
The Prophet buttons open another type of chart, with different sets of tools. The sidebar on the left hand side allows traders to screen for chart patterns, candlestick patterns and breakouts. The toolbar along the top provides drop down menus for adding drawing tools and indicators to the chart.
Buying and Selling
Under the “Trade” tab, the “Forex,” “Futures,” “Active,” and “Pairs Trader” buttons all have one-click buy and sell features which allow traders to quickly execute market orders at the current price. An Order Entry pop-up windows gives traders the opportunity to confirm (and send) the trade, or to change the details of the order – making it a limit order or changing the quantity, for example.
From within this window, you can change the order from buy or sell, change the quantity, the price of the order (changing it to a limit order), set the Time in Force (TIF) and the Exchange if applicable. Click “Confirm and Send” to submit the order to the market place. Switching screens will minimize this window, but you can also pull it up again by clicking on the two small up arrows at the very bottom left of your screen.
Trade directly from a chart by right clicking and selecting Buy or Sell from the dropdown menu. Once again, a dialogue box will pop up; either confirm and send and trade or delete it. Click “Edit” to change the parameters of the trade in the same way as the figure above.
To immediately apply a stop or trailing stop to a trade, right click on the chart and select Buy/Sell Custom and choose “with Stop.” The Order Entry window pops up again, but this time gives you option to set the type of stop you would like as well.
Thinkorswim is a platform that you won’t likely need to leave during the trading day to find information elsewhere. TD Ameritrade has done a good job of bringing the information to you.
A couple of features that separate the platform from others is the MyTrade feature under the “Tools” tab. Users can set up a profile, if they wish, and see free trade signals and trades of other users who choose to publish. TradeFeeds is another feature under the Tools tab where traders can save their favorite users so they only see the trades or signals of those traders.
Regular trading webinars and extensive video and audio libraries are also a great feature of Thinkorswim, especially for newer traders. Click on the Help tab and click “Launch Learning Center” to be redirected to a list of upcoming webinars and the learning archives.
The platform has loads of tools that will take time explore, and it involves a learning curve. The demo account allows traders to explore the features in a safe and risk-free environment. You’ll find there are multiple ways to do the same thing, and multiple tabs and buttons do essentially the same thing.
Thinkorswim will have a tendency to run slowly on older computers, so to maximize performance traders should use a computer that can handle the demands of the program. As of 2014, Thinkorswim recommends at least 4GB of RAM. For smooth and fast performance, you’ll likely want more than the recommended amount.
The Bottom Line
Thinkorswim offers free professional level trading software to clients, powered by TD Ameritrade. Commissions are a flat fee, so you always know what you are paying, regardless of transaction size. Access multiple North American markets—including stocks, currencies, options, futures and ETFs—and learn new strategies and how to use the software via the Help section.
There is a learning curve to the program due to the number of features, especially if trading multiple assets. Placing basic trades is relatively straightforward though. The program can also be taxing on older computers. A non-expiring demo account provides the ideal way for traders to test out the platform and get used to it before trading with real capital.
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