First, open your Thinkorswim platform and navigate to the "Indicators" tab. From there, click on the "Add" button to start setting up your MACD indicators.
To set up a MACD indicator, you'll need to select the "Moving Average Convergence Divergence" option from the drop-down menu. This will bring up a new window where you can customize your indicator settings.
Next, choose the time frame for your MACD indicator, such as 5-minute, 15-minute, or 1-hour. This will determine how frequently the indicator updates.
Setting Up MACD on Thinkorswim
To start setting up MACD on Thinkorswim, navigate to the chart you'd like to add the indicator on and click "Studies" / "Edit Studies".
You'll see all the studies you're currently using, so search for MACD on the left Studies search field.
To add the MACD indicator, move two MACD studies into one of the lower rows.
Leave all "Input and Options" alone for the first (upper) MACD indicator and only edit the Value and Avg.
Do the same for the second (bottom) MACD indicator, leaving all "Input and Options" alone and only editing the Value and Avg.
Introduction
The Moving Average Convergence Divergence (MACD) indicator is one of the most popular technical indicators used.
The famous 12-26 settings can be recognized nearly anywhere. This is the default setting in Thinkorswim, but you can customize the input based on your trading preferences.
To build a more useful MACD indicator in ThinkOrSwim, you'll need to understand how to modify the default settings. The MACD is based on the idea that when the moving averages begin to diverge from each other, it is generally believed that momentum is increasing and a trend may begin.
Traditionally, MACD takes two EMAs — period 12 and 26 — subtracts the shorter one from the longer one and displays it on the chart. You can also customize the input parameters in the MACD Customizing window.
The 9-period average of the MACD itself is plotted, thereby creating a signal line. This signal line can be used to determine trend direction at a glance.
MACD on Thinkorswim
To set up the MACD indicator on Thinkorswim, first go to the chart you'd like to add it to and click "Studies" / "Edit Studies". You'll then see all the studies you're currently using.
Search for MACD on the left Studies search field and move two MACD studies into one of the lower rows. This will help you organize your studies and make it easier to edit the MACD settings.
Leave all "Input and Options" alone for the first (upper) MACD indicator and only edit the Value and Avg. You can refer to the pictures for a visual example of how to edit these settings.
Do the same for the second (bottom) MACD indicator, leaving all "Input and Options" alone and only editing the Value and Avg.
Frequently Asked Questions
How do you create a MACD indicator?
To create a MACD indicator, you calculate the difference between two Exponential Moving Averages (EMAs) with different periods, then smooth the result with another EMA. This simple yet powerful process helps traders identify trends and potential buy/sell signals.
How do I add indicators to Thinkorswim?
To add indicators to Thinkorswim, click "add selected" after selecting the desired indicators, which will then appear on your list of already added indicators. Clicking "apply" will then display the added indicators on your chart.
Does Thinkorswim have an impulse MACD indicator?
Thinkorswim offers a bar coloring system called Impulse, which uses EMA and MACD Histogram indicators with specific input parameters. The Impulse study is based on MACD Histogram with parameters (12, 26, 9).
What are the lines on MACD?
The MACD line is calculated by subtracting a 26-period EMA from a 12-period EMA. The signal line, a 9-period EMA of the MACD line, acts as a trigger for buy or sell signals.
What is the MACD signal line setting?
The MACD signal line setting is 9, which helps to confirm buy and sell signals. This setting is often used in conjunction with the 12 and 26 EMA settings to identify market trends.
Sources
- https://www.tradejournal.co/post/macd-trading-strategy/
- https://easycators.com/thinkscript/multiple-timeframe-macd-indicator/
- https://tosindicators.com/indicators/smarter-macd
- https://usethinkscript.com/threads/macd-and-squeeze-indicator-for-thinkorswim.8706/
- https://thinkorswim-europe.medium.com/three-indicators-for-the-thinkorswim-platform-to-help-you-find-and-track-trends-by-thinkorswim-17bcf45e00cf
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