Thinkorswim Automated Round Trip Trades

Introduction

Hi, my name is Pete Hahn. Thank you for watching this tutorial video. Be sure to visit www.handtech.com for a full library of video tutorials. I hope this video increases your knowledge and helps you become more efficient with this topic, whether for home or work. Please support this channel by sharing these videos with your friends and colleagues.

Overview

Hi guys, welcome to the video. I'm so excited to bring this video to you today and show you some really awesome things we can do on Thinkorswim. Today we're going to be talking about automated round-trip trades.

A round-trip trade simply means this: you enter a position and exit a position with a single set of orders that you send once. Then you babysit it and watch it unfold. I’ve prepared two examples using simulated trading on Thinkorswim. These were recorded earlier so I could focus on the presentation during the video.

Disclaimer

Before we get started, it's really important to note that I am not a professional trader. I don't trade for a living, and I don't teach people how to trade profitably. I teach people how to get the most from their trading platforms and build tools that reduce the amount of time they need to spend in front of charts. Nothing in this video should be considered an advertisement or a recommendation to buy or sell any financial instrument. Trading involves risk, and you may lose all or more than all of the money you have deposited in your brokerage account.

Important Notes

The techniques I am about to show you can get you into a whole lot of trouble. Take this seriously, go slow, and be careful. Test using a paper money account, and then test some more using a paper money account. You want to build muscle memory; a lot can go wrong, and you need to be able to handle those situations without panicking.

Setting Up Your Thinkorswim Charts

To get started, you need to configure your Thinkorswim charts. I used an 8-period and 13-period exponential moving average for a cross above and below setup. You will need to match these settings exactly as shown in the screenshots to follow appropriately.

Order Entry and Setup

Entering order conditions is crucial. You will need to adjust offsets, lengths, types, and ensure your study matches the time frames. I demonstrate that step-by-step, showing how to set up both buy and sell conditions utilizing market orders.

How Trades Unfold

"How the trades unfold" shows live paper money examples. One example highlights the potential issues that automated trading can encounter, especially when market conditions change or when extended trading hours affect the intended order.

Advanced Topics

Saving Order Templates

Order templates save your configuration so you can reuse them. I show how to create and manage these templates through examples of simple and multi-step orders that can be daisy-chained together.

Custom Scripts

Creating custom scripts using ThinkScript can enhance your strategy but bear in mind the limitations of the Condition Wizard tool. Recursive variables and functions relying on reading all bars on the chart may cause unexpected results. Keep it simple to avoid frustration.

API and Server vs. Client-Side

Using the TD Ameritrade API can offer more flexibility but comes with its complexities and requires a robust knowledge of programming. Furthermore, understanding the server-side (Thinkorswim) versus client-side (Tradestation, etc.) can help you choose the right platform based on your trading needs and whether you need your computer to be connected to the internet for the strategies to run.

Final Advice

Practice diligently with the paper money account and gradually build up to real trading to avoid significant risks. Fully understand what you're implementing, and only commit to live trading when you're entirely confident in your setup and strategy.

Keywords

Thinkorswim
Automated Trading
Round Trip Trades
Condition Wizard
Order Templates
Custom Scripts
TD Ameritrade API
Server-Side vs. Client-Side

FAQ

Q1: What is a round-trip trade?
A: A round-trip trade involves entering and exiting a position with a single set of orders that you set once and then monitor as they unfold.

Q2: Why should I use an offset when setting up orders?
A: The offset ensures that the signal is fully locked in and won’t change, thus preventing orders from triggering prematurely.

Q3: Can I save my settings for future trades?
A: Yes, you can save your settings as order templates, which captures your order configurations for reuse.

Q4: Are there limitations to using custom scripts in Thinkorswim?
A: Yes, recursive variables and functions that require reading all bars on the chart (like highestAll and lowestAll) can produce unexpected results.

Q5: What is the difference between server-side and client-side trading?
A: Server-side trading (Thinkorswim) runs in the cloud and continues even if you log off. Client-side trading (like Tradestation) requires your computer to be connected to the internet for continuous operation.

Q6: Should I start with live trading immediately after setting up automated trades?
A: No, it’s crucial to practice extensively with a paper money account first and only transition to live trading when you feel completely confident.