thinkorswim is a downloadable program and requires local installation. It is an incredibly useful trading tool, especially if you are a day trader. However, before you are able to use the program, you have to create an account with the broker, TD Ameritrade.
This article will walk you through the basic steps to create an account, and some of the key program features that will help you learn how to use thinkorswim.
Work Station
If you plan to day trade, and use a sophisticated program like thinkorswim, it is critical that you have the proper workstation. For day trading, there are three key components to a successful setup:
- Quiet Workspace: It is very important that your workspace is comfortable and quiet, and away from any distractions, such a children, TVs and pets. With a quiet workspace, you will have a better chance to focus on the day trading tasks at hand.
- Computer: Day trading and day trading platforms like Thinkorswim require large screen. Laptops work ok, but ideally, you will want to have a large monitor and a fast computer. This is important because there are many things happening on the Thinkorswim platform, and a large clear display makes the trading and work experience much better.
- Wifi: Day trading (options trading or stock trading) can be intense, and requires some fast-paced moves in and out of the market. You never want to be in a situation where you either want to make a trade, or get out of the market, only to lose your wifi signal. There are many other risks that you have to manage while day trading, such as market volatility, and losing your wifi signal should never be an issue.
Set Up an Account
In order to use Thinkorswim platform, you first have to set up an account with TD Ameritrade. The account set-up is relatively easy, as you have to provide all your personal information, etc. TD Ameritrade also has a very good customer support staff, who are on hand to help with any questions along the way.
Download the thinkorswim Software
Like any other software, you need to download thinkorswim to your trading computer. For Windows users, you will want to go to the TD Ameritrade website, find and click on “Install thinkorswim.” This will automatically select the installer appropriate for your operating system. After that, you simply click ‘Run.’
Downloading thinkorswim may take anywhere from a couple of minutes to half an hour, depending upon the speed of your Internet connection.
Once the download has been completed, the installation wizard should start automatically. Follow the instructions when prompted. Only advanced users should change any of the options from the defaults selected by the wizard.
After your account is verified and the software is installed, you can log in to thinkorswim with just your username and password.
Fund Your Account
Obviously, you will need initial capital for trading stocks or options on thinkorswim. To fund your trading account, TD Ameritrade offers several methods to add funds. These include electronic transfer, wire transfer, or sending a check by mail.
Plan to Day Trade on the thinkorswim Trading Platform?
A day trade occurs when you buy and sell (or sell and buy) the same security in a margin account on the same day. The rule applies to day trading in any security, including options.
According to day trading rules, you are considered a pattern day trader if you execute four or more trades within 5 business days.
In general, once your account has been classified as a pattern day trader account, a brokerage firm (like TD Ameritrade) will continue to regard you as a pattern day trader even if you do not day trade for a five-day period. Ultimately, if you change your trading strategies and, for example, cease day trading stocks or options, you can contact your firm to discuss the appropriate coding of your account.
Generally, pattern day traders must maintain minimum equity of $25,000 in their margin account on any day that the customer day trades. This required minimum equity, which can be a combination of cash and eligible securities, must be in your account prior to engaging in any day-trading activities.
You can always contact TD Ameritrade for further information concerning your own personal financial situation, and methods to trade within the rules and terms of service.
thinkorswim in General
Now that your account is set up and funded, it is time to learn more about thinkorswim itself and gain knowledge of more experienced traders. The working area of Thinkorswim is divided into two primary components: (1) a sidebar on the left; and (2) the main window in the center of your trading station.
- The SIDEBAR
The sidebar contains subtabs with relevant information. It is customizable and the user can add different gadgets – from account details tabs, message center and calculator, through watchlist and streaming features, to quick charts and quick quotes.
- The main windowThe main window contains the following tabs:
- Monitor: This tracks your trading activity (orders, statements, cash balance, open positions), and is very useful to keep an eye on your TD Ameritrade account;
- Trade: The “trade” tab provides information about the tradable products, offered on the platform (each category is separated in its own interface);
- Analyze: This tab allows you to backtest and analyze real and hypothetical trading scenarios, as well as dive deeper in economic databases, volatility and probability analysis, etc.;
- Scan: Here you can filter through stocks, options, foreign exchange and futures to find out which of the offered instruments fit your criteria;
- MarketWatch: This tab offers you in-depth data on U.S. and global markets (quotes, alerts, rates, calendars and others) and useful tools to help you process it easier;
- Charts: This tap is incredibly important. The Charts tap provides the interface, responsible for the powerful charting features of the thinkorswim platform (you can experiment with real-market data and technical indicators);
- Tools: This tab contains the rest of the features, available on thinkorswim;
- Education: Here you will find everything needed to understand more about the platform’s features, as well as important educational materials regarding financial markets and trading, past performance of the markets, etc.; and,
- Help: Click here to find useful information on how to navigate the platform and find what you are searching for.
Practice With Paper Money on thinkorswim
Practice makes perfect! TD Ameritrade’s paper money feature allows you to practice trading and familiarize yourself with the thinkorswim platform with zero risk.
Paper money comes with a practice account with $100,000. You can see your buying power in your Account Info gadget, located in the upper left-hand corner.
Paper trading on the thinkorswim trading platform allows new and experienced traders the ability to test trading strategies without risk to their finances. Traders can also practice trading in areas they are not familiar with, such as buying and selling options, trading foreign exchange currencies, and forex trading.
It goes without saying that executing trades using real money, with the risk of suffering substantial losses, may turn people away from the concept of day trading. Those substantial losses can bring serious problems to anyone who is not financially independent. That is likely why many people simply do not start trading.
All of these types of trades come with their own unique risk factors and having the ability to conduct paper trading greatly enhances a trader’s skills and confidence.
Simply put, the paper money option not only makes thinkorswim a powerful platform, but it also makes it a great educational platform as well.
Example One: Buying Stock on thinkorswim
There are many ways to conduct trades on thinkorswim, and many products to buy and sell. Below is a simple description of how to purchase stocks on the trading platform.
To buy a stock, pull up the thinkorswim Trade tab. You can type in the symbol on the “All Products” sub-tab and see the name, and last traded price, among other pieces of information.
Back to the purchase process. There are a couple of ways to do this, but one method is to find the Underlying section and click the ask price, labeled Ask X. An order form will then come up at the bottom. Next, enter how many shares you want, the price, what order type you want, and how long you want it to be good for. Then confirm and send. Read it over one more time and submit. It will then show up on your Monitor page.
The trade will take place almost automatically.
Example Two: Buying Options on thinkorswim
To buy options on thinkorswim, again navigate to the Trade tab.
Find the Option Chain section and type in a ticker symbol.
Calls are on the left, puts are on the right. Select an expiration date and click on the ask price (Ask X). Then fill out the order form, entering your desired quantity and order type, locking in the price and time in force, and confirm. Press send. That trade will now appear on your Monitor page.
As a side note, a popular option to trade on Thinkorswim is the S&P 500 ETF Trust, also known as the SPY ETF. The SPY is one of the most popular funds that aims to track the Standard & Poors 500 Index, which comprises 500 large-cap U.S. stocks.
There are many more issues and things to consider when trading options, and many of these other issues involve personal investment decisions about managing risk, while at the same developing a strong and well thought out strategy. Such strategies include learning about advanced charting, developing custom alerts for day trading, reviewing economic data and other technical data.
This type of knowledge requires a lot of practice and good mentoring from other more seasoned traders.
thinkorswim Charting
thinkorswim is world-renowned for its charts.
The charts also offer extensive customization. You can change the chart type, choosing from options like Candle, Bar, Line, Equivolume and others.
The default chart style is a candlestick, with a price column on the right and time along the x-axis. Rectangular bubbles display the lowest and highest prices in the time frame. Icons indicate earnings announcements and stock splits. Here is an example of a chart found on thinkorswim:
The thinkorswim platform allows for many charting options, including the user’s ability to adjust the time frame, colors, and cursor. You can click and drag to section off and zoom in on a specific time frame, set large and small zones as indicators, make notes with drawings, and add studies such as volatility indicators, among many other options.
Wrap It Up!
So, although the thinkorswim platform is a simple trading tool, it comes with many complex and well-thought-out options. Your personal financial situation will be a critical factor in how fast you want to ramp up your day trading activities on thinkorswim, but it really is a powerful resource and one of the best trading platforms available.
Whether you are interested in options trades or regular stock trading, this guide on how to use thinkorswim hopefully has been helpful to you.
Summary: How to Use thinkorswim
So, although the thinkorswim platform is a simple trading tool, it comes with many complex and well thought out options. Your personal financial situation will be a critical factor in how fast you want to ramp up your day trading activities on Thinkorswim, but it really is a powerful resource and one of the best trading platforms available.
In summary, thinkorswim allows the user to day trade on a highly efficient and effective level. The program is known for its charting capacity and well-designed layout. It works best on a very modern computer setup, with a large monitor and fast internet speed. In addition, the user has the extremely helpful and talented support staff on standby to aid with any technical issues.
Whether you are interested in options trades or regular stock trading, this guide on how to use thinkorswim hopefully has been helpful to you.
Learn More
Maurice Kenny has helped over 600 people become financially free through one-on-one coaching, mentorship, and options trading strategy. Many of these new traders are now full-time traders, and they all started by watching his 1-hr webinar.
Feel free to check out other FREE educational resources to help guide you as you begin your new journey to financial freedom.
Also, download a (FREE E-BOOK) by Maurice Kenny, “DAY TRADE LIKE A MILLIONAIRE.”
