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Derek A. Barrett
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  • Setting Up Bollinger Band Alerts In Thinkorswim 30 comments
    May 25, 2013 11:14 PM | about stocks: JNJ, IBM

    Thinkorswim is a ridiculously powerful platform. Pretty much any technical indicator or study can be used to implement practically any strategy you can name. However, some investors may find themselves overwhelmed by so many options, and find it hard to figure out where to start.

    Automation is the Key

    One rule of thumb is to automate as much as possible in life. If you find yourself repeating the same task over and over again, chances are there is a way to automate. Let the computers and robots do the heavy lifting for you so you can utilize your most important asset - your brain - to do the qualitative critical thinking that the computers cannot do.

    This further frees you from the computer, and with today's mobile power built into smartphones, lets you trade anywhere your phone will travel with you.

    Bollinger Bands and Options Trading

    In options trading our goal is often to earn the best premiums for selling our contracts. Typically the more volatility a stock is experiencing, the higher premium the stock option is offering.

    Bollinger Bands are a great tool for measuring volatility, and often a lead indicator for initiating a trade.

    As a put seller, I am extremely interested in the lower Bollinger Band. The idea is, when a stock is experiencing a pullback and on the bottom range of its volatility channel, this is an indicator that it may be time to sell a put. I also find the Bollinger Band indicator an extremely easy to read and implement indicator as it is a quick visual guide for sizing up a stock chart over time and possible entry points.

    (click to enlarge)

    Hindsight is 20/20: Johnson and Johnson (NYSE:JNJ) kisses the lower Bollinger Band December 2012, which would have a been a great entry point for put sellers not wanting assignment.

    More Information on Put Selling and Bollinger Band Trading Strategies

    Teddi Knight has many fantastic articles on Put Selling, and Putting Selling strategies utilizing Bollinger Bands.

    Setting Up Alert Preferences

    NOTE: Click on the images to enlarge them if you need to see more detail or to make them more clear

    You can setup alerts to both and email address and SMS text number, like your iPhone, Android, Windows Phone, or Blackberry.

    I choose to receive emails.

    To enable the alerts, you need to tell Thinkorswim that you want the alerts and where to send them.

    1. To do that, Click the "Setup" button in the upper right hand corner. A menu will pop up, so then click on "Application Settings".

    2. This will pop up a box and you will be able to select which options you want. When you choose the email and/or phone number to send alerts to, Thinkorswim will send a confirmation code to the email address and/or device. To enable alerts, you will need to confirm the code before proceeding.

    3. Make sure to select the "Alert is triggered" box on the left to receive alerts, and then under the "Alert Settings" section on the right, check how you want alerts. I make sure to have "Send an e-mail checked so I get email alerts. Users that want SMS notifications to their smartphones will want to check either or both of the "Send SMS…" boxes.

    (click to enlarge)

    Setting Up Bollinger Band Alerts

    1. To get to the Alerts Section, click on the "MarketWatch" Tab in the Thinkorswim interface, and then the "Alerts" button to get to the Alerts section.

    (click to enlarge)

    Close-up of this menu:

    (click to enlarge)

    2. Now enter the ticker of the stock you want alerts on, hit enter

    (click to enlarge)

    3. Then click on the "Study Alert" button on the far right

    4. This will pop open a box where we can enter our alert. Click the "Add Condition" button on the lower left corner.

    (click to enlarge)

    Setting up the Upper Bollinger Band

    We will start with the Upper Bollinger Band, since this alert is pretty straightforward with default settings.

    1. After the "Add Condition" button is clicked, you will get another popup box, where you can choose what type of condition you want to alert on. Bollinger Bands is considered a "Study," so choose the "Study" option from the "Select a Condition" drop down box.

    (click to enlarge)

    2. Now another box will pop up, with the menu "Lookup a study." From here we want to pick the "BollingerBandsCorssover" study, so click on it.

    (click to enlarge)

    3. This will popup a few options. We are taking default options, so we do not need to change anything on the left column. However, in the middle column, we do want to choose the "is true" option since we want to be alerted when the upper Bollinger Band is breached.

    Click the "Save" button to complete this box.

    (click to enlarge)

    4. Now our alert box is populated with our condition. The caveat here though, is that once this alert is triggered, it will expire. So, if you want to reuse the alert in the future without having to type it in again, we need to set it to continue even after the condition is met and triggered. So, click the "Set Alert Rules…" button in the lower left hand corner.

    (click to enlarge)

    5. This will pop up another box. Check the "Recreate alert for reverse crossover" box and then click OK to save this setting.

    (click to enlarge)

    6. Now click the "Create Alert" button in the lower right corner of the screen to save the alert.

    (click to enlarge)

    7. You now have an Alert! In the "Market Watch - Alerts" interface section of Thinkorswim, you will now notice an entry under alerts.

    (click to enlarge)

    Creating the Lower Bollinger Band Alert

    The process of creating a lower Bollinger Band alert is very similar, though we do need to tweak a few settings.

    1. Click on the "Study Alert" button.

    2. We see our condition from the previous alert is still there. Click the "Edit" button on the right side of the screen.

    (click to enlarge)

    3. This will pop up a box that we recognize. However, in the left column, this time we want to change the "band" and "crossing type" to "lower" and "below," respectively. Then click the "Save" button to save the alert condition.

    (click to enlarge)

    4. Remember to click the "Set Alert Rules…" button on the lower left of the screen to set the alert to not expire.

    (click to enlarge)

    5. Again make sure that the "Recreate alert for reverse crossover" box is checked, then click "OK".

    (click to enlarge)

    6. Then click the "Create Alert" button to save the alert.

    (click to enlarge)

    7. Congrats, you now have both the Upper and Lower Bollinger Bands being tracked in Thinkorswim !

    (click to enlarge)

    Adding Additional Stocks to the Alert

    This is the method I use, however, if anyone has a quicker way for creating alerts for say, 20 stocks at a time, please let me know. Ultimately I would like to just enter 20 tickers at once and then have the Alert created for them.

    1. Go back to the ticker box in the "MarketWatch - Alerts" section on Thinkorswim. Enter the next ticker you want to use, (NYSE:IBM) in this example, and hit enter.

    (click to enlarge)

    2. Then click the "Study Alert" button on the upper left corner of the interface.

    3. Notice our last alert condition is still saved for the lower Bollinger Band. You just need to click the "Set Alert Rules…" button to make the alert permanent again.

    (click to enlarge)

    4. Confirm the "Recreate alert for reverse crossover" check box is checked and click the "OK" button.

    (click to enlarge)

    5. Then click the "Create Alert" button.

    (click to enlarge)

    6. Notice in the "ALERT BOOK" section in the "MarketWatch - Alerts" section, you now have your third alert.

    (click to enlarge)

    What I would do in the case of 10 stocks, is to keep entering my stock symbols for all 10 stocks and the Lower Bollinger Band, then go back and do all 10 for the Upper Bollinger Band. This minimizes the amount of clicking that you have to do and speeds up the process.

    Again if anyone has a faster way for doing this please let me know. In the tech world we call what I'm looking for "batch input" where you can input everything at once instead of manually having to enter them one at a time.

    Further Help

    In the upper left hand corner of the Thinkorswim interface, there is a "Support/Chat" button. I have found this button extremely helpful for my alert questions. The support reps are always extremely helpful and have a great demeanor. My experience is that they know the application very well and can find a solution pretty quickly. They are also very honest with what the application can and cannot do.

    There are other options platforms out there that may offer better prices, but the customer support I have gotten from TD Ameritrade/Thinkorswim has been great so far and is a major reason why I continue to trade with them.

    Thinkscripter also has some pretty amazing Thinkscripts out there to extend the platform.

    Best of luck to all you traders out there and I hope you find this of some benefit.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: Tools Stocks: JNJ, IBM
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Comments (30)
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  • Mrnomad
    , contributor
    Comments (355) | Send Message
     
    Right on Derek. My most recent TOS scan looks for stocks ready to rise. It identifies stocks that have just risen above their lower Keltner channel, + the 10 day EMA just crossed over the 30 day SMA, + penny increment, +S&P500, and > $20.

     

    I also composed an exhaustion scan that uses the AROON indicator complemented by a host of others. I edit the actual script so that my version of these indicators contain helpful comments so this old man (me) doesn't forget their message.

     

    The big flaw is that most studies (including the boll band) have limited predictive power so I implemented studies using the historic IV (price movement) and option IV to see what their predictive capabilities are.

     

    Basically, I look for recent unjustified selloffs in S&P100 stocks and ride the "reversion to the mean" in various ways including protective puts.

     

    All of this runs constantly in the Gadgets so I am free to trade and study elsewhere. Thanks to Alerts, my pc emails or sends a text so I know when an event occurs.

     

    The TD spokesman claims this is the future of "investing" for home gamers but as you already know, this has a steep learning curve. Nevertheless, it's a lot easier than using DDE to export data to excel, and writing visual basic macros to do the same thing.

     

    Not having spent any time on other platforms, my guess is that people are spending lots of $$ to get the same features we get for free in TOS. No, I don't work for TOS but I recognize value when I see it.
    26 May 2013, 08:09 AM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Author’s reply » Thanks for the comments Mrnomad, and great job on your scans, those are very impressive. Being a GARP/value guy myself I can appreciate the reversion to the mean scans you are using. I have been selling some puts this year after unjustified selloffs and has been a great year for that.

     

    You're right, I'm surprised how much is given away for free, seems like a great strat for the company as it keeps customers, the tool set is a big differentiator.
    26 May 2013, 03:29 PM Reply Like
  • northstatebiker@yahoo.com
    , contributor
    Comments (6) | Send Message
     
    I use alerts in conjunction with Fib trading, which I learned from an expert, and which, if used as instructed, offer powerful support and resistance levels.

     

    I draw up longer-term Fibs (based upon Daily setups or even monthly setups) and trade SPX strangles, weeklies, using price alerts.

     

    I can walk away and just depend on TOS alerts to send me emails...open up the trader app in my Smart phone and execute a put write or call write and I am off to the races.

     

    My portfolio is up over $50K this year alone and I have not had ONE break of a setup due to the incredible accuracy of Fib trading.

     

    Don
    26 May 2013, 03:48 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Author’s reply » Great job Don on your success ! Seems like you have a great system going. I've been studying up on Fib and Fib retracements this year to learn how they work. What's cool about your system is you can be anywhere and then just enter your order. Very cool.
    26 May 2013, 04:03 PM Reply Like
  • choudary
    , contributor
    Comment (1) | Send Message
     
    I really liked your idea can you please mail me the set up if u dont mind to me at vachoudary@hotmail.com
    30 Apr, 08:18 AM Reply Like
  • merlendale
    , contributor
    Comments (87) | Send Message
     
    Thanks Derek. This was very helpful. I have used price alerts, but this is the first time using a study. I also use the lower BB as a possible trigger for put selling, so this is great. Now my watch list is on alert. Thanks again.
    28 May 2013, 10:09 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Author’s reply » No problem and glad you find it useful !
    29 May 2013, 02:03 AM Reply Like
  • binarysuccessfultrader
    , contributor
    Comments (5) | Send Message
     
    THANKS SO MUCH, really helpful stuff but just one quick question ummm my charts are all 1 hour charts however should I leave the aggregation to "D" or daily?
    Thanks,
    3 Jul 2013, 06:10 PM Reply Like
  • binarysuccessfultrader
    , contributor
    Comments (5) | Send Message
     
    THANKS A LOT MAN this was really helpful however my charts are hourly candlesticks, when creating the alerts should I set the aggregation to "H" (hourly) or "D" (daily) ?
    Thanks,
    3 Jul 2013, 06:10 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Author’s reply » Hi binarysuccesfultrader,

     

    That's a good question as I never really use the hourly charts that much. If you already have your charts setup to the H I'd say create a couple of alerts with that and see how it goes.

     

    Wondering if using the D might not be as helpful for you if you are using a faster time frame.
    6 Jul 2013, 10:11 PM Reply Like
  • binarysuccessfultrader
    , contributor
    Comments (5) | Send Message
     
    Hey Derek,
    I've done this setup but ive noticed that thinkorswim doesnt always alert me when price hits the upper or lower bollinger band and sometimes when it does tell me it tells me a bit late, is there a way to fix this?
    10 Jul 2013, 07:57 AM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Author’s reply » Hi binarysuccessfultrader,

     

    I wonder if that is because the price has to cross all the way over for it to alert. For example if the upper band is 32.5 and the price is 32.5, it may not alert. But if price goes to 32.6, it would alert.

     

    Does that describe the behavior you are experiencing?

     

    I think there is a setting in the alert where you can fine tune it, I can check it out later this week. What I am thinking is, in the above example, if you want to know when it actually hits, you could set it to alert when the price hits the band, instead of crossing above it.

     

    Also, I think there may be another setting for when it's getting "close," you could set the alert when it's within .1 of the upper band, for example it would alert at 32.4.
    10 Jul 2013, 02:03 PM Reply Like
  • binarysuccessfultrader
    , contributor
    Comments (5) | Send Message
     
    Hey Derek,
    Not exactly, even sometimes when it crosses slightly it does not send an alert, umm how do I set the alert to activate when price hits the band instead of crossing it?
    10 Jul 2013, 04:37 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Author’s reply » Sorry binarysuccessfultrader lemme look at this again I remember seeing the option and will check tonight to see if I can find it and screenshot it.
    16 Jul 2013, 10:18 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Author’s reply » Hey binarysuccessfultrader,

     

    When you edit the alert, there is a box that comes up with three columns. The far right column has a text box labeled "within x bars." X is a number and you can change it to make it bigger or even negative.

     

    So I am wondering if you can use this to "dial in" the alert to make it alert more quickly as it gets closer to the band or hits it, instead of having to cross all the way over.

     

    Try that out and see if it does what you're hoping to accomplish. If that doesn't work, hit up the TDAmeritrade support team, they are REALLY good. There is a screenshot at the end of the article that shows where to find them within the application.
    17 Jul 2013, 02:18 AM Reply Like
  • jackm1
    , contributor
    Comments (83) | Send Message
     
    Absolutely love step by step instructions.......Thank you.
    28 Jul 2013, 09:31 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Author’s reply » Thanks jackm1 ! Glad that you found the article useful.
    29 Jul 2013, 02:43 AM Reply Like
  • binarysuccessfultrader
    , contributor
    Comments (5) | Send Message
     
    Hey Derrick,
    Is it possible to make it alert me the moment price touches either bollinger bands?
    Thanks,
    8 Aug 2013, 05:57 PM Reply Like
  • pryan324
    , contributor
    Comment (1) | Send Message
     
    Hey binarysuccessfultrader,

     

    The problem you described where TOS doesn't seem to alert you when price crosses the upper or lower band can be caused by using the BollingerBandsEMA study in your TOS charts, instead of the BollingerBandsSMA study which is used by the BollingerBandsCrossover alert. If you are using the BollingerBandsEMA study, try the BollingerBandsSMA and see if the problem goes away.
    16 Aug 2013, 05:12 AM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Author’s reply » Thanks pyran324 for grabbing that question.
    13 Nov 2013, 02:10 AM Reply Like
  • JohnM.
    , contributor
    Comments (2) | Send Message
     
    There's something that I was shown that'll help you guys a lot;
    On a TOS chart, go to [Studies], [Edit Studies], and click on [New] - lower left hand corner above help. This opens a window where a custom script can be pasted in and tested after hours on your chart. It'll come up as [New Study0] and works best when sent down to the lower area of the window. Using this the script will be superimposed into the lowest point of the chart and an arrow will tell you where the script is supposed to trigger. This helps in combining complex scripts [[[ But it’s very frustrating because they don't always trigger at the right time ]]].
    2 Jan, 01:58 AM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Author’s reply » John that is excellent info, will help to visually map where the alert is actually firing, seems that it would help binary's tuning on his alert a lot. Thanks for posting.
    2 Jan, 02:06 AM Reply Like
  • JohnM.
    , contributor
    Comments (2) | Send Message
     
    "The problem you described where TOS doesn't seem to alert you..." This is the down side of TOS (free vs pay). It's horrible if you trade in a 1 minute time frame like me. Some alerts come in exact, some are :30 seconds late, and some come 5 minutes late and some don't trigger at all. It's totally unpredictable. What I did was write up several alerts that are similar and hope one of them comes in at the right time. Amazingly they always trigger at different times and no one alert can be relied on at all times. I've reported this to 'support' but they never get back to me - "we've never seen this before'. I'm glad to see it's not only happening to me.
    2 Jan, 02:06 AM Reply Like
  • diffengw
    , contributor
    Comment (1) | Send Message
     
    I just started day trading and was noticing the same thing with TOS. In your comment you state "did", what platform do you use now?
    20 Nov, 05:45 PM Reply Like
  • pemachow
    , contributor
    Comment (1) | Send Message
     
    hellooo just wanted ask ...

     

    how to set up alert whenever arrow indicator shows up ???????
    23 Mar, 07:38 AM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Author’s reply » You mean the price of the stock?
    23 Mar, 02:57 PM Reply Like
  • whitedream
    , contributor
    Comment (1) | Send Message
     
    Hello Derek; how can i do alert for high-low points in the days?
    20 Jun, 03:34 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Author’s reply » Hi whitedream,

     

    When you go into create an Alert and "Add Condition", and "Select a Condition", there is an option there to set it to Price.

     

    From there you can choose high, or low, or the open or close, there are quite a few options to pick from.

     

    Hope it helps.
    20 Jun, 04:57 PM Reply Like
  • jackm1
    , contributor
    Comments (83) | Send Message
     
    Guys,

     

    Do any of you know how to setup a scan or get an alert on TTM_squeeze indicators......if you do please post a step by step......I could not find anything on it. TTM_squeeze looks very good on past charts
    22 Jun, 02:17 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Author’s reply » Did you see this page? It shows a scan:

     

    http://bit.ly/1pZ3wtg

     

    Also check out the post by Massive I here and see if it helps:

     

    http://bit.ly/1pZ3GRo

     

    Thanks for the heads up by the way, I'm a huge fan of Bollinger Bands and this looks like a nice indicator to complement it.
    22 Jun, 05:57 PM Reply Like
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