Think or Swim Tutorial - Add Studies to your Charts - A little Technical Analysis

This tutorial shows how to set up advanced studies in the ThinkorSwim Trading Platform. By the end of this article, you will be able to set up specific studies to your charts and fit them to your trading style. If you find this tutorial interesting, read also ThinkorSwim Tutorial - Add Styles and Studies to your Charts.

How to place the most rewarding options strategies from scratch? Visit my website at www.FromZeroToOptions.com to get tutorials, instructions, articles and much more stocks and options related.

--------------------------------------------------------------------------------------------------------

In this Tutorial, I am going to guide you through important technical indicators in order to get you started your technical analysis in the ThinkorSwim Trading Platform. I recommend following carefully this guide and, in the meantime, practising on ThinkorSwim all the features described.

In ThinkorSwim, you can add as many studies as you want to your charts, save these studies and load them when you need the information they provide.

There are two indicators any options trader should have for any chart configuration: the ImpVolatility and the Momentum.

On the Charts Tab, click on Studies, and then Add Studies. Find the Volatility Studies in alphabetical order and select ImpVolatility.

This technical indicator is fundamental to analyse the market expectations about the particular underlying you are checking.

As a rule of thumb, Low IV suggests to buy Options to pay a low premium (with Low IV, Options are supposed to be cheaper), while High IV suggests to sell Options to receive a higher premium (with High IV, Options are supposed to be more expensive).

Free Tutorials - Stocks, Options and ThinkorSwim. Click Here.

On the Charts Tab, click on Studies, and then Add Studies. Find the Momentum Studies in alphabetical order and select any Momentum study you like.

This technical indicator tells you whether the particular underlying you are interested in is overbought or oversold.

I personally use the William Percent R, but you can use the one you feel more comfortable with (the StochasticFast and the StochasticSlow may be good options). To add the William Percent R follows this path: Studies, Add Studies, Momentum Studies, R-W and WilliamPercentR.

At this point, you can add more indicators depending on the information you need. I personally use Bollinger Bands, Moving Averages, And Historical Volatility.

Now, I am going to show you different configurations you can use to set your studies. Before I start, I want to warn you that these are the ones I like trading with. Yet there are countless studies you can use and you should definitely pick the ones you feel more comfortable trading with.

--------------------------------------------------------------------------------------------------------

Do not forget to visit my website at www.FromZeroToOptions.com to get tutorials, instructions, articles and much more stocks and options related.

--------------------------------------------------------------------------------------------------------

Setting up Studies - Configuration 1

ImpVolatility, WilliamPercentR, Bollinger Bands SMA, Simple Moving Average (CLOSE, 200, 0).

A) Bollinger Bands SMA

To add the Bollinger Bands SMA to your set of studies, you need to click on the “Charts” Tab in ThinkorSwim and then follows these steps:

Studies, Quick Studies, All Studies, B-C, BollingerBandsSMA.

Now go straight to the Edit Studies section and set it this way (CLOSE, 0, 20, -2.0, 2.0).

B) Simple Moving Averages (SMA)

To add the Simple Moving Average to your set of studies, you need to click on the “Charts” Tab in ThinkorSwim and then follows these steps:

Studies, Add Studies, Moving Averages, SimpleMovingAvg.

Now go straight to the Edit Studies section and set it this way (CLOSE, 200, 0).

After having set this first configuration, you may wish to save it. Click again on Studies, then Save Studies Set. Give a name you like to your studies and here you go.

Note: This particular configuration includes also a Fast and Slow Moving Averages as follows:

• Slow Moving Average (CLOSE, 200, 0),
• Fast Moving Average (CLOSE, 20, 0).

The Slow MA is included in the BollingerBandsSMA indicator. Please, have a look at configuration 3 for further information about Moving Averages.

Setting up Studies - Configuration 2

ImpVolatility, WilliamPercentR, Historical Volatility.

Historical Volatility (HV)

To add the Historical Volatility to your set of studies, you need to click on the “Charts” Tab in ThinkorSwim and then follows these steps:

Click Studies, Add Studies, Volatility Studies and then ImpVolatility.

Here, your main purpose is to compare IV and HV in the same chart. You can do it in the best way by moving them on the upper subgraph.

Click on Studies, and then Edit Studies. Go in the box Added Studies and Strategies in the top right. One left click on ImpVolatility and click on Move Up on the right. One left click on HistoricalVolatility and Move Up again. Click apply and Ok and go back to the chart.

At this point, you should be able to compare IV and HV in the same period’s time and make better investing decisions. You should:

• Sell Options when IV>HV, Options are relatively expensive.
• Buy Options when IV<HV, Options are relatively cheap.
• Either buy or sell Options when IV=HV, Options are not too expensive, not too cheap and you can either buy or sell.

Name and save this strategy as you like (e.g. Comparison IV – HV).

Free Tutorials - Stocks, Options and ThinkorSwim. Click Here.

In the next GroWithYou Trading Tutorial:

• How to Add Styles to your Charts.
• How to Add Studies to your Charts.
• Configuration 3 - Adding Fast and Slow Simple Moving Averages (SMA).

Keep learning about ThinkorSwim and Stock Options by going to: ThinkorSwim Tutorial - Add Styles and Studies to your Charts.

If you have found this article helpful remember to:

- Rate it up

- Share it

- Leave a comment or question

- Add you as my follower to get my next Hubs

Not yet a HubPages Member, sign up from here: