Best Thinkorswim Indicators

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The Thinkorswim trading platform by TD Ameritrade is known for offering a lot of useful features to investors. One of those features involves being able to access a large array of indicators that aid in the technical analysis of stocks.

Many investors like using indicators because it allows them to analyze whether a given stock might be suitable to purchase.

This guide offers our picks for the best Thinkorswim indicators. All our choices are based on statistical research we've done about which ones might offer the best trading edges according to history.

What Is Thinkorswim?

Thinkorswim is a free trading software available from TD Ameritrade.

You can use it to buy stocks and options in the stock market.

TD Ameritrade customers can download Thinkorswim from here. It's available in different versions: desktop, web, and mobile.

Each version is unique and different from each other. This guide is going to show how to set up the desktop version of Thinkorswim.

Stock Market Guides

Stock Market Guides identifies swing trading opportunities that have a historical track record of profitability in backtests.

Average Annualized Return

This takes the average return in backtests of all the stock picks featured in this service and annualizes it.

79.4%

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What Exactly Is a Thinkorswim Indicator?

An "indicator" in Thinkorswim refers to an analytical tool that can be applied to a chart to assist with stock market analysis. Indicators provide additional information or insights into the price movements and trends of a particular stock.

These studies are used by traders and investors to make informed decisions in the stock market.

How Do You Access Thinkorswim Indicators?

You can access indicators in Thinkorswim by following these steps:

1. Open a Chart (under the Charts tab) and right-click on the chart itself.

2. Select to the "Studies" option, then select the "Add study" option.

3. You will see a list of available indicators. They're organized both alphabetically and also by type of indicator.

4. Once you've added the indicator, it will overlap the price candle section of the chart or be underneath that section at the bottom, depending on the type of indicator.

Our Picks for the Best Thinkorswim Indicators

The following are our favorite indicators in Thinkorswim. The basis for each of these choices is that each of these indicators offers a backtested edge, depending on the settings used for the indicator.

1. Keltner Channels: Keltner Channels are favored because they can be a useful tool for identifying buying opportunities. When the price is consistently above the middle line of the Keltner Channel, and especially above the upper line, it can be considered a sign of a strong trend. Buying pullbacks on upward-moving trends, according to backtests and historical research, could be a trading strategy that can potentially put the odds in your favor of making profits.

2. ATR (Average True Range): ATR is a valuable Thinkorswim indicator because it provides the stock's average range of price movement in the recent past. Traders can use ATR to set stop-loss and profit target levels in a non-arbitrary way, taking into account a stock's recent price volatility. It allows for more meaningful and relevant comparisons of price movement between different stocks.

3. RSI (Relative Strength Index): RSI is another Thinkorswim indicator that we like. Historical research has shown that in certain conditions, trading based on stocks' RSI values can potentially put the odds in your favor of being profitable. RSI can be used to identify oversold conditions in a stock, which can be used for trading decisions.

4. VWAP (Volume Weighted Average Price): VWAP can be an important intraday indicator that you can use in Thinkorswim. It might only be useful for day traders or other short term traders. It can help traders identify potential trading opportunities based on the average price for the day. Backtests suggest that in certain conditions, buying a stock when it is at or near the VWAP value might offer a trading edge.

This video about the best Thinkorswim indicators shows how each of those works:

The Thinkorswim layout we used in that video was a custom one we created here at Stock Market Guides. It's available for free and you can learn how to use it in this guide about setting up Thinkorswim.

Learning More About Thinkorswim Indicators

You can contact us any time if you would like to ask any questions about Thinkorswim indicators, or about anything related to trading in general.