5 thinkorswim® Trading Tools & Tips for Traders

August 28, 2023 Advanced
Learn more about the tools and features available on the thinkorswim® trading platform that are designed to help traders and investors identify opportunities and trades.

The thinkorswim® platform offers a range of tools designed to help traders and investors identify opportunities and trades. Here are five that might provide traders with additional insights when making trading decisions.

1. Chart Describer

The Chart Describer is found by selecting the Charts tab and then navigating to the box with a superimposed "i" to the right of the Share subtab.

The Chart Describer is a thinkorswim gadget that provides traders with recent technical analysis highlights on a desired symbol. The highlights shown in the Chart Describer include recent values of popular studies or drastic price changes and breakouts. Like all other gadgets, the Chart Describer can be displayed in a box on the left sidebar or as a separate window.

The technical indicators the Chart Describer's analysis reveals can change on a day-to-day basis, depending on what's considered influential in the current action.

Select the superscripted question mark to the right of the bold language in the indicator descriptions section and an explanation callout will appear. To see the indicators plotted on the chart, select Add studies to chart located to the right of the listed technical indicators.

2. Active trader ladders

Active traders often want a customizable trading chart, easy access to trade buttons, and a quick overview of current market action. Active trader ladders offer traders the ability to customize their platform view.

As the market moves directions, so does the ladder. It's possible to see the volumes that are traded at each price. Buttons allowing a trader to buy or sell are visible and can be used to enter or exit a trade. 

Access the ladder on the Active Trader subtab under the Trade tab (see below).

Chart shows the Active Trader ladder setup including a chart and the latest information on volume and price. The chart also demonstrates that a trader can buy or sell from the ladder.

Source: thinkorswim platform

For illustrative purposes only.

3. Conditional orders

Sometimes option traders want to make an options trade contingent on price action in the underlying security, and conditional orders, orders that allow traders to set order triggers for stocks and options based on the price movement of stocks, indexes, or options contracts, are designed to do just that.

For example, a trader might want to buy a call option1 when a stock breaks above a particular resistance2 area. It's possible to set up a trigger using the thinkorswim conditional order "gear" at the far right of the order line, which is located under the Order Entry Tools pane on the Trade tab. The objective with a conditional order is an attempt to catch the breakout momentum of the stock automatically.

4. Creating, monitoring, and adjusting orders from charts

It's possible to place trades directly from price charts, rather than opening the Order Entry Tools pane. For example, if a stock looks like it could bounce off a support3 level, a trader might want to place a buy order. To place a buy order, right-click a price anywhere on the chart and choose to buy, sell, buy custom, or sell custom. It's also possible to select the price listed next to the company name to see a drop-down menu with buy and sell choices. The thinkorswim platform immediately creates an order based on the price and order type. Traders can confirm or edit the order in the Order Confirmation Dialog box. Once the order is placed, the chart can track orders by displaying the number of shares, type of order, and price at which the order was placed (see below).

Chart illustrates how orders placed directly from a chart are displayed.

Source: thinkorswim platform

For illustrative purposes only.

Seeing the order displayed directly on the chart can help traders monitor open positions. For example, if a trader bought shares at a support level, the trader might set the exit point at the next resistance level. To change the exit point for an unfilled order, it's possible to click and drag the trade to another price level. This cancels and replaces the working order.

5. Today's options statistics

Active option traders can gain potential insights from the options data using Today's Options Statistics. This feature is located under the Trade tab, just below the Option Chain (see below).

Image illustrates the options statistics available. These statistics include information like volatility and 52-week highs and lows.

Source: thinkorswim platform

For illustrative purposes only.

Options stats are available for most stocks, ETFs, and futures contracts. Here are some of the statistics available:

  • Implied4 and historical volatility5. Data about how much expected volatility traders are pricing into options and how those current readings compare to historical levels.
  • Trade analysis. This section shares data on put and call options, including the percentage of each traded at the bid or below, the offer or above, or between the bid and ask prices. This can offer a glimpse into how aggressive buyers and sellers have been, which could offer a clue to directional sentiment.
  • Sizzle Index. The right side of the stats page is devoted mostly to Sizzle Index6 data. The Sizzle Index displays unusual options activity using a ratio of a stock's current volume and its average daily volume over the last five trading sessions. A Sizzle Index reading greater than 1.0 implies current volume is greater than it's been over the last five days. Below 1.0 implies the opposite, and the further a measure is from 1.0, the more the day's volume has deviated from its daily average.
  • Put/call ratio. The put/call (P/C) ratio7 expresses the volume totals as one measure. A ratio of 0.5 implies volume is even between puts and calls. A reading below 0.5 means volume has leaned toward calls, while a volume above 0.5 indicates a leaning toward puts.

In addition to these tools, the thinkorswim platform has ample features traders and investors can use for in-depth analysis for more informed decision-making.

1A call option gives the owner the right, but not the obligation, to buy shares of stock or other underlying asset at the options contract's strike price within a specific time period. The seller of the call is obligated to deliver, or sell, the underlying stock at the strike price if the owner of the call exercises the option. In the case of an index option, it's a cash-settled transaction with no underlying index changing hands.

2In technical analysis, resistance is a price level at which upward movement may be restrained by accumulated supply at or around that price level.

3In technical analysis, support is a price level where downward movement may be restrained by accumulated demand at or around that price level.

4The market's perception of the future volatility of the underlying security directly reflected in the options premium. Implied volatility is an annualized number expressed as a percentage (such as 25%), is forward-looking, and can change.

5Also called actual or realized volatility, historical volatility is computed as the annualized standard deviation of prices of a security over a specific period of past trading days, such as 20, 30, or 90 days. Standard deviation is a mathematical measure used to quantify the amount of variation (dispersion) of a set of data values. Historical volatility is based on actual results, whereas implied volatility is an estimate of future price movement.

6The Sizzle Index is a measure of the current options volume versus the past five trading days' volume. It's a ratio of the current volume of all the options for a stock and the average daily volume for all the options over the past five days. It indicates whether a stock's options are more or less active than they have been. If the Sizzle Index is greater than 1.0, the current options volume is greater than the average of the past five days. If it's less than 1.0, it is lower.

7The put/call ratio is a sentiment indicator based on the number of put options traded versus the number of calls. The ratio often rises above 1 during volatile or sharply falling markets as investors increase buying of puts, which can offer a potential limited time hedge when the price of the underlying stock declines.

Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Please read the options disclosure document titled "Characteristics and Risks of Standardized Options" before considering any options transaction. Supporting documentation for any claims or statistical information is available upon request.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

Schwab does not recommend the use of technical analysis as a sole means of investment research.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.