Conditional Orders and How to Flatten Position on Thinkorswim
We will take a look at two issues that crop up for users and they are conditional orders and how to flatten position on thinkorswim.
To flatten a position means to close out all current contracts and offsetting buy or sell orders in the market. This is generally done to take profits, or to cut losses in a losing trade. When you flatten your position, you will no longer have any open contracts whatsoever and so your account will be settled to cash.
On Thinkorswim, to flatten a position essentially means to execute a market order.
How to Flatten a Position on Thinkorswim?
- Login to your account and go to the Charts tab.
- Then, find the symbol for the stock, ETF, or other asset you wish to flatten.
- Right-click on the chart and select "Flatten Position."
- You'll see a window pop up asking you to confirm your flatten position order. Make sure the details are correct, then click "Submit."
- Your position will now be flatten. You can monitor it by going to the Positions tab and looking under the "Flattened Positions" section.
- There are a few things to keep in mind when flattening your position on Thinkorswim.
- First, flattening is only available for certain assets, so you need to check.
- Second, your position will be flatten at the current market price, which means you may not get the exact price you wanted.
- Finally, there may be fees associated with it.
Thinkorswim users suggest that flattening your position is a bad strategy to use when you are trading options because the ask volume is lower. TOS will submit a market order which means that if you have a lot of contracts then as your contracts are sold, the asking price will continue to drop as your orders are filled.
You can try and change the options to ‘sell at ask’ or ‘sell at bid’, which may be better for you, but the orders won’t fill as quickly.
However users have reported that using sell at bid can take 10 seconds to fill sometimes and because the price is moving against you those 10 seconds can prove to be extremely costly so that is why they use flatten or market order, but this also can be costly.
Thinkorswim Conditional Orders
Thinkorswim conditional orders can be used to help take the guesswork out of your trading strategy. By setting up conditions that must be met in order for your trade to execute, you will know that your trade will only happen when you want it to. This makes it different from durational orders which must take place within a certain time frame.
We'll show you how to set up a Thinkorswim conditional order and give you some examples of when you might want to use one.
Example of Thinkorswim Conditional Order
For example, you might place a buy order for shares of stock XYZ, but only if the price of XYZ falls below $10 per share. If the price of XYZ never falls below $10 per share, your order will never execute. This can help you take advantage of market conditions that you might otherwise miss.
There are many different conditions that you can set for a Thinkorswim conditional order, including price, time, and volume. You can even set multiple conditions, such as price and time together. For example, you might place a buy order for shares of stock XYZ, but only if the price of XYZ falls below $10 per share and it is after 2:00pm.
The most common reason for a Thinkorswim conditional order is to limit your risk by only placing your trade if certain conditions are met. This means that hopefully you are not overpaying for a stock or selling too early.
How to Set Up a Thinkorswim Conditional Order
- Setting one up is easy, but it's important to know what you're doing before you get started.
- The first thing you need to do is log in to your Thinkorswim account.
- Once you're logged in, click on the "Trade" tab and then select "All Products."
- Next, find the stock or other asset that you want to trade and click on it.
- In the "Order Type" drop-down menu, select "Conditional."
- Now, you'll need to enter your trade details, including the price at which you want to buy or sell and the conditions that must be met in order for your trade to execute.
- Once you're done, click "Preview Order" to review your trade.
- If everything looks good, click "Place Order" to submit your trade.
- Your order will now be live, but it will only execute if the conditions you've set are met.
Advanced thinkorswim Conditional Orders
On the surface conditional orders have quite limited functionality, however with some knowledge of the Thinkorswim platform and some code you can set up extra conditions which get quite close to automated trading or algo trading.
- Go to "Order Rules" window and then to the "Conditions Box".
- Go to “Method drop down”
- Then at the bottom is "Study."
- The last choice under study is "EDIT" which opens the Condition Wizard / ThinkScript Editor.
- You can now add code as part of your Conditional Order Processing.
Essential Conditional Orders on Thinkorswim
Some of the essential conditional orders, order types and other related terms you should know are:
Time in force is a setting that tells Thinkorswim how long an order will remain open before it expires. The most common time in force settings are DAY, GTC, and IOC.
DAY means the order will be canceled at the end of the trading day if it is not filled. It will not be held over to the next trading session.
IOC is immediate or canceled, the order is executed immediately and is filled as much as possible at that moment. The parts not filled immediately are canceled.
A Good 'Til Canceled (GTC) order is an order that will remain active until it is either filled or canceled. Orders that haven't been filled by the end of the day are usually canceled once the market closes. But if you want to keep a buy order or sell order in place until it's filled, or however long your broker will allow you to keep it active (typically no more than 90 days), this is when you might want to use a GTC order.
An OCO, or a one-cancels-other order is a conditional order in which two orders are placed and one is canceled when the other is filled.
A trailing stop order is an order that automatically adjusts the stop price as the market moves in your favor. The trailing stop order is designed to protect your profits and limit your losses. Let’s say the price is rising, which is in your favor, it means your stop loss does not remain static at your original stop price, but it rises as the stock price rises locking in profits.
A bracket order is an order that immediately places an OCO "take profit" and a stop order once a position is opened. If you enter a long position, a bracket order will immediately place an OCO sell limit (take profit) and sell stop. If you enter a short position, a bracket order will place an OCO buy limit (take profit) and buy stop.
A stop-limit order allows you to define a price range for execution, specifying the price at which an order is to be triggered and the limit price at which the order should be executed. It essentially says: "I want to buy (sell) at price X but not any higher (lower) than price Y."