Fx, forex trading, technical analysis, trading trading, trading analysis The ThinkorSwim Platform and Forex

The ThinkorSwim Platform and Forex Trading

ThinkorSwim Trade Platform


Here’s just a brief look at the Thinkorswim trading platform by TD Ameritrade.  While I’m sure there are plenty of traders who use it for Forex, it’s probably not the primary trading platform used by the majority.   I have been using it for a few years before Thinkorswim was acquired by TD Ameritrade, but solely for Options trading.

The strength of the Thinkorswim  trade platform is its charting features( mainly geared for the options trader).  Very much like how we  Forex traders rely on great charting features in  Metatrader 4,  Thinkorswim has very powerful charting features that really make analysis simple, dynamic and practical for analyzing options trades.   As I’ve mentioned in other articles, looking at other markets and  the correlations that exists  can sometimes help give us get a good picture of the Forex landscape.

Here is a chart that would be useful to our Forex trading. I have always wondered why  the US dollar index is not included in many of the Forex trading platforms we use.  Sure,  there are indicators out there  that are substituted and used in place of the US dollar index, but I personally would rather have a real-time chart of the US dollar index just to get a better overall picture of the dollar as it moves with the other  currency pairs. This instrument is traded on an exchange, so  buying and selling  would be easier to monitor again due to the volume of contracts that exchanging hands.

ThinkorSwim and US Dollar Index

A realtime chart of the US Dollar Index on ThinkorSwim


As you can see here, you will find many trading indicators that we see on Metatrader  like our good friend and one of my favorites, MACD and awesome oscillator to name a few.  I really don’t use many indicators, but ThinkorSwim has a ton of them, a dizzying amount.  If youre really the savvy type, you can also program your own custom indicators.

Getting back to the US dollar index chart.    The US dollar index chart gives you a very good overall metric of dollar strength or weakness.  I find it very useful to take a look at this on days when I’m not sure if the trend is strong.   In general, if correlations begin to decouple between various currency pairs that normally correlate,  it will usually be reflected in the US dollar index.   The range of movement,  and the volume will tend to show up on the chart as well.  Sometimes when you just compare 2 currency pairs that are suppose to correlate, they can move in opposite directions. It’s easy to get confused which pair really has the correct overall direction of the dollar.  I’ll favor the pair who’s more in  lockstep with the USD Index.  So that’s where the the USD Index can really come in handy.

And yes, you can trade Forex with ThinkorSwim TD Ameritrade.  You can also trade futures, options, stocks, etc   Since I use Metatrader for some automated trades, and since I use micro accounts.  ThinkorSwim would have to have these features for me to trade Forex solely.   The Options trading tools I absolutely use, so the added features that complement Forex analysis work out nicely.

Also, we know the decentralized structure of the Forex market doesn’t give us an easy way to measure volume like equities and futures traders.   Here with the dollar index and to the right with the FXE, a Eurodollar ETF which moves very closely with the Eurodollar there is at least a volume indicator that I can take a glance at once in a while.   It will not be used solely to make any trade decisions, but if I see spikes in volume and I see prices rising, and lack of volume to support this rise, it’s not a bad indicator to look at from time to time to warn me of possible divergences.  Volume after all is an indicator.

Thinkorswim Forex probability analysis

Analysis and probability charts in Thinkorswim


Many options traders will tell you not to rely on these probability charts.   What I like to do with  this is  just use them as a guide and follow along to see where price levels fall.  If I go out further in months  and I see probabilities headed towards a certain direction, I will look at longer-term Forex charts and make comparisons.   Elliott Wave models are  great guides for longer-term projections.  Like other things I’ve mentioned, and especially with probabilities, I look at the data gathered collectively, and don’t just make decisions solely on 1 part.  Looking at these probabilities for example, I can see that 2 years out, it’s almost a 50/50 split as far as price levels.  At the extreme range though, there’s a slight probabilities  that it will be lower than 126.16 for this Euro ETF or roughly 1.2616 for the spot equivalent.  IF the models I have now see it the same way, then that’s a useful piece of information.  I like to get as much information as I can,  as long as it doesn’t get complicated and confusing.

So that’s how I use ThinkorSwim.  I will take its strongest features and its best nuggets.   I will extract useful pieces of information that can help me  with my Forex trading.  Again, keeping in mind and only taking things with a grain of salt.  The best software package is the one between your ears minus the irrational biases that makes us human.

Thinkorswim Prophte Chart

Thinkorswims Prophet Chart