How to Use Thinkorswim

ThinkorSwim is an ideal trading platform for those who want to trade from home. It provides access to thousands of stocks, futures, and forex markets as well as market research resources. This program offers real-time streaming data and charting, risk management tools, as well an education center to help users who want to make money in the market. 

ThinkorSwim was originally created by trader Tom Sosnoff around early 2000 then was purchased by TD Ameritrade in 2009, which means this platform is only about 10 years old. Nevertheless, it offers some of the highest levels of data, and state-of-art trading options available on the market today. If you finally took the decision to enter into the world of trading, or are just looking for a new platform, this article will teach you how to successfully use ThinkorSwim. Stay tuned!

ThinkorSwim Account 

One of the first things you need to understand before opening an account with ThinkorSwim is that this trading platform has one of the most sophisticated margin systems, which means large positions could easily become unmanageable for new traders. Thus, ThinkorSwim enforces a margin requirement system for each trader’s account based on its total equity. ThinkorSwim keeps your trading safe from borrowing more money than you can afford to pay back in case your trades turn into losers.

Now that you know this, to start ThinkorSwim requires all of its users to register with an account, this way you can have access to the ThinkorSwim trading platform. The good news is that opening an account is free, but you can also fund your ThinkorSwim trading account by bank wire deposit at no cost, or as well through the ThinkOrSwim Debit Mastercard┬«. 

Once you open an account, the platform will ask you two things: which type of account you will be using and to make additional deposits in order to fund your trading activity. However, and remember that ThinkorSwim does not charge any fees for funding the new account!

ThinkorSwim Account Types

ThinkorSwim offers three different account types from which you can choose:

  • ThinkorSwim Basic
  • ThinkorSwim Express
  • ThinkorSwim Trader
How to Use Thinkorswim

Basically, ThinkorSwim Basic is the account type for all new traders who are just starting to learn how to trade. This account type is for you if you want to keep fees at their lowest possible levels which will cost $4.95 per trade in case you don’t use ThinkorSwim professional trading software.

And if ThinkorSwim doesn’t have a specific symbol – then what? The good news is that Thinkorswim Basic plan only requires $2000 as a minimum deposit, but it also has an equity requirement of $25,000.

On the other hand, choosing a ThinkorSwim Express account will cost you $4.95 per trade, but your equity requirement is only $10,000 which is the lowest amount required for any ThinkorSwim account type. 

This platform tries to offer more options for everybody, so lastly it created ThinkorSwim Trader which requires a minimum deposit of $30,000 or as well by opening two ThinkorSwim accounts with at least one of them having at least $100,000 in its balance. This account type provides larger credit lines and can handle larger positions as this type of account is not margin-based.

ThinkorSwim Margin Requirement

The next thing to be aware of with Thinkorswim is that this platform offers four unique margin types including: cash, hard, firm, and overnight. All ThinkorSwim margin requirements are based on equity levels which means they are always changing as positions change in value – thus creating more risk for the trader. Here is a breakdown of each type of margin requirement. 

  • Cash Margin is simply the sum required by ThinkorSwim to maintain open positions. 
  • Hard Margin is the ThinkorSwim minimum equity required to open new positions. 
  • Firm Margin is an additional ThinkorSwim requirement used as a safeguard against large price swings, and it represents the ThinkorSwim account’s total credit exposure. This margin type becomes active when you buy on margin using ThinkorSwim, and it allows ThinkorSwim to sell your securities if their value declines below a specific threshold – this will force you to cover any deficit within your account.
  • Overnight Margin is a ThinkorSwim deposit that must be made by 5:00 p.m Eastern Time in order to avoid liquidation of any open positions or orders at market prices before the bell the next trading day – the ThinkorSwim overnight margin requirement is based on a percentage of thinkorSwim’s account value.

ThinkorSwim Margin Calculator

Confused about the margin you need? In Thinkorswim, the margin calculator helps you determine how much capital you need to open new positions, and what your ThinkorSwim daily margin requirements will be if you already hold existing positions with ThinkorSwim. The best way to use thinkorSwim’s margin calculator is by entering all ThinkorSwim required information into its fields; this information includes: 

  • Account Margin Balance (The amount in your account after applying any deposits and withdrawals) 
  • Quantity (Number of shares or contracts involved in the trade) 
  • Market Price (The current market price of the security)

Practical Usage – How To Use ThinkorSwim For Trading

Now that we know the basic information about account types and margin requirements, let’s discover how to use ThinkorSwim for trading! 

To do so, go to the Dashboard section on the ThinkorSwim home screen and click Account Management. Here you will see several options such as: Open an Account, Deposit Funds, Wire Transfer, Add a Margin Broker, Check Balance, Activate ThinkID (2-Step Verification). Click on Open An Account or Deposit Funds to continue. 

Once you complete this process successfully, you will be able to upload funds into ThinkorSwim or trade with ThinkorSwim. When your account is ready, simply login by entering your ThinkorSwim user name and password and click on Deposit Funds button which is located under the Account Management tab at the top of ThinkorSwim’s home screen. After, ThinkorSwim has processed your deposit or credit card, you can instantly begin placing trades without waiting on thinkorswim’s verification process!

Final Recommendations for using ThinkOrSwim:

It’s important for you to know that opening an account and starting trading can take about one business day after submitting all information required by ThinkorSwims, but it can take up to two business days. However, once the account activation process is complete then you are free to start placing trades!

  • You should be prepared to spend a significant amount of time learning how to trade and how to use the smart trading platform so take this into consideration before signing up for your trading account with them.
  • Subscribe to a charting service if you want to be able to trade beyond just day trading.
  • ThinkorSwim website offers a number of free courses which explain how to use the trading platform and you should have completed them before going live with your first trades.
  • It is also a good idea to join one of their paid communities as they have many experienced traders who are willing to share ideas and help each other out on a daily basis.