Thinkorswim Free Charting, Level 1 & Level 2 Market Data

I wrote a blog post 3 years ago about “Thinkorswim Level 2 for Penny Stocks.”

That was a long time ago and, even though it was a very popular post, it’s time to update you on Thinkorswim and the amazing versatility it has with its free charting and market data.

This is a blog post of personal experience as I use their charting and it’s market data everyday. The best part is that it is 100% free. Why is free important here? Well, here are the facts: 95% of traders fail and 80% of day traders won’t be trading in 2 years. That means you need to be smart about the tools you spend money on and the tools you can get for free. Thinkorswim is amazing, free and I love it. And I have have never funded my Thinkorswim account. This is a case of free means absolutely free.

What is Thinkorswim?

Thinkorswim is an all-inclusive trading and analytical platform which is offered by TD Ameritrade. The platform allows retail investors and traders (such as you and me) to find their trading opportunities based on their preferred strategy. It also allows them to analyze those market opportunities in several key forms which can assist them in making trades based on the information that is assessed.

Thinkorswim Charting

As I mentioned before Thinkorswim is 100% free and their charting software is the best part about their platform in my opinion. It is versatile, comprehensive and easy to use. Over the years I have found that pretty much any stock on the NYSE, Nasdaq and OTCBB can be charted on Thinkorswim which can be adjusted to the 1 minute, 5 minute, 10 minute, 30 minute, 1 hour, daily, weekly, monthly and yearly time frames.

Thinkorswim charting beyond debt

AAPL on the 1 minute chart courtesy of Thinkorswim (Click image to enlarge it)

In addition to time frames, you can add multiple key indicators such as moving averages and VWAP (volume weighted average price) which are present on my charts at all times. Thinkorswim’s charting is very versatile and a great work of art for those thinking about day trading, swing trader or long term investing.

Thinkorswim Level 1 Market Data

Level 1 market data is a service for trading that displays real-time bid/ask quotes and the latest sales for a security trading on a stock exchange.  The basic data for the stock market is known as level 1.

Level 1 market data includes the following information:

  • Bid price: This is the highest price that a trader is willing to buy a stock at.
  • Bid size: The number of shares that are readily available at the bid price.
  • Ask price: The lowest price that a trader is willing to sell a stock at.
  • Ask size: The number of shares that are readily available at the ask price.
  • Last price: The stock price at which the most recent trade was accepted & completed.
  • Last size: The number of shares, that were traded in the latest trade.

Level 1 market data is extremely important for day traders (and other traders as well) because it provides key information needed to make a trading decision.

Thinkorswim level 1 market data beyond debt

(Click the image to enlage)

Thinkorswim Level 2 Market Data

If you are thinking seriously about day trading you need level 2 market data. Most new traders want to know about Thinkorswim Level 2 for Penny Stocks but its level 2 market data is pretty good. It’s not great but it does its job and will get you familiar with level 2 as you are learning the day trading ropes. It’s the only level 2 market data I use because I am not a heavy hitting trader.

Personally, I have found that Thinkorswim Level 2 for Penny Stocks is a bit glitchy at times and if you are trading fast moving stocks for a scalp then it might not be your best solution. In that case you will need to look into DAS Trader and their platform which has a great level 2 feed. However, don’t get me wrong Thinkorswim is perfect for learning and trading slower moving stocks so don’t turn a blind eye to it. It is still a great piece of software.

Anyway the additional market data that you need is also known as level 2 market data, the order book, or the depth of market.

Level 2 market data includes the following information:

  • Highest Bid Prices: The level 2 market data shows several highest prices depending upon the market and the volume of each stock. So you will see the highest price and then the 2nd, 3rd, etc highest prices from various market makers on the level 2.
  • Bid sizes: The number of shares that are readily available to trade at each of the bid prices.
  • Lowest ask prices: The level 2 market data shows several lowest prices depending upon the market and the volume of each stock. So you will see the lowest price and then the 2nd, 3rd, etc lowest prices from various market makers on the level 2.
  • Ask sizes: The number of shares that are readily available to trade at each of the ask prices.

In actively traded stocks or stocks with a lot of volume, there will usually be bid/ask spreads of .01. If there is no volume in the stock the spreads can be quick large or illiquid.

*Note – In late 2016 small cap stocks began trading in five-cent increments instead of one-cent increments. This new tick rule will be in affect for 2 years. Most stocks won’t be affected but if you are trading 1000 shares of a small cap stock with a 5 cent spread you will be looking at a $50 dollar loss right out of the trade.

Click here to read about the new tick rule.

Thinkorswim level 2 market data for beyond debt

(Click image to enlarge it)

Video Clip of My Screen Showing Charting, Level 1 & Level 2 Courtesy of Thinkorswim

Final Thoughts

If you are just starting out on day trading then open up a ThinkorSwim account. The level 1 and level 2 market data is free and the charting is excellent. The best part is the data is real time so you can practice day trading without the extra expense.

Are their drawbacks to using Thinkorswim for level 2? Yes. Sometimes Thinkorswim can be a little glitchy and it’s not a perfect solution if you are trading 100 times a day but if you are just starting out or smart with your money (and trading) like me it is the best solution.

Here is how you should think of Thinkorswim’s platform and market data. Thinkorswim is like a Honda Accord. A Honda Accord is a good car that will get you to your destination safely. It’s not luxurious. So, if you are going on a hot date you probably won’t be advertising you will be picking up your companion in a Honda Accord.

Thinkorswim is a Honda Accord and not a BMW.

Anyway, I use ThinkorSwim everyday I trade and I love it. I do not trade on TOS but they are my main charting platform with market data and I won’t be spending money on another platform anytime soon.

As you might have figured out from my FAQ I get a lot of questions. I don’t mind answering them so if you have any of your own please reach out to me here.




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Important Resources

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  • Do your best to avoid day trading distractions. Especially the 10 I list here.