Futures trading can be a highly lucrative endeavor. It allows traders to speculate on futures contract price movements using margin, hedge against market risks, and diversify their investment portfolio in a transparent and exchange-traded pricing environment.
To succeed in futures trading, you must choose a reputable broker and a reliable and advanced trading platform. Thinkorswim (ToS), now part of Charles Schwab, stands out as one of the premier platforms due to its robust features, user-friendly interface, and comprehensive trading tools.
In this article, Benzinga provides an in-depth guide on how to trade futures on Thinkorswim. The guide explores the platform’s features, benefits, and some effective trading techniques and how futures contract trading works on the popular platform.
Quick Look at How to Trade Futures on Thinkorswim:
- 1: Set Up Your Thinkorswim Account
- 2: Access Futures Trader on Thinkorswim
- 3. Customize Your Workspace
- 4. Place a Trade
- 5. Confirm Your Order
- 6. Monitor and Close Your Position
Steps to Trade Futures on Thinkorswim
Trading futures and other derivative contracts on Charles Schwab’s excellent Thinkorswim futures trading platform involves concrete steps to ensure you can effectively execute and manage your trades. The following subsections will explore each of these steps in detail.
Image of Thinkorswim desktop platform. Source: Charles Schwab
1. Set Up Your Thinkorswim Account
Before downloading Thinkorswim, you must visit the Charles Schwab website and click “Open New Account.” Then, you can follow the prompts to complete the registration process, providing all necessary personal and financial information within a secure environment that protects your privacy and personal data security.
Once your account is active, you will need to enable futures trading. You can do this by logging into your Schwab account, navigating to the “Client Services” tab and selecting “My Profile.” Under the “General” section, you will find “Elections & Routing,” so just check the box next to “Futures” to enable futures trading in your account.
After enabling futures trading, you can now download the Thinkorswim platform by visiting this page where you will see various buttons with options to log in to download the desktop version, log in to get the app and log in now to the web version of the platform. Just scroll down to choose the platform access option or options that suit you best from the following screen segment:
If you are new to the Thinkorswim platform and have already opened a trading account, you should now be able to download the platform and start to trade the various types of futures contracts available on Thinkorswim after logging into your Schwab account. Remember that your account at Charles Schwab must be approved for trading through the Thinkorswim platform before it can be downloaded.
After completing your chosen Thinkorswim platform download, follow the installation instructions for your particular computer operating system. For mobile trading, you can download the Thinkorswim mobile app from the Apple App Store or Google Play. Web-based traders are not required to download any software for the Thinkorswim platform.
You can customize your workspace by adjusting the layout and adding desired symbols. When ready to place a futures trade, select an underlying asset, verify the order details and confirm the trade. Finally, you can monitor and close your positions via the Thinkorswim platform.
2. Access Futures Trader on Thinkorswim
With your account set up and the platform installed, the next step is to access the platform’s Futures Trader feature. Launch the Thinkorswim application and log in using your Charles Schwab credentials. Click on the “Trade” tab at the top of the platform.
From the drop-down menu, you must select “Futures Trader.” This will open the Futures Trader interface, where you can begin trading futures.
Thinkorswim futures trader interface. Source: Charles Schwab.
3. Customize Your Workspace
Thinkorswim offers extensive customization options to tailor your trading environment. When you open the Futures Trader interface, you will see a default layout with several panes showing different market data, including a watchlist, chart and order entry panel.
To swap out the pre-populated symbols with your desired futures contracts, such as currency futures, stock index futures, bond futures, interest rate futures or commodity futures, just click on the watchlist panel and type in the symbol of the futures contract you want to monitor. For example, enter the "/ES” symbol for the E-mini S&P 500 futures contract.
You can also modify the arrangement of panes, including the number and size, by clicking on the layout button at the top right corner of each pane. This allows you to resize and move the panes according to your preferences.
To incorporate additional panes, such as news feeds or extra charts, just click on the "+” button at the top of the interface and select the type of pane you want to add.
Customizing the platform by adding a new watchlist to the Thinkorswim futures trading interface. Source: Charles Schwab.
4. Place a Trade
Once your workspace is customized to your liking, you can place a futures trade on the Thinkorswim platform. You can start this process by selecting an asset from the first pane's dashboard. For instance, you might choose the Nasdaq futures contract expiring in March 2025 by entering "/NQH25" in the symbol field.
To initiate a trade, click the “Sell” button to short the futures contract or the “Buy” button to go long. Ensure you have enough funds to use as margin for the futures trade. Also, carefully review your order details, which will appear in red for sell orders and green for buy orders.
Remember to verify the contract, quantity and order type. Once you have confirmed all of your order details, you can just click “Confirm and Send” to execute the trade.
Screenshot for placing a futures trade on the Thinkorswim futures trading interface. Source: Charles Schwab.
5. Confirm Your Order
After placing an order on the Thinkorswim platform, confirming the order is essential. When you do so, you should verify the commission, exchange fee and total cost of executing the trade. Ensure that your account's buying power is sufficient to cover the trade.
Once you are confident that all details are correct, click “Send” to complete the order and finalize the trade. Once the order has been executed, your position will be open, and you can monitor it through the Thinkorswim platform.
Screenshot of order confirmation dialogue box on the Thinkorswim platform. Source: Charles Schwab.
6. Monitor and Close Your Position
Monitoring and managing your open positions is essential for successful futures trading. You can check your open positions by looking at the trade button in the first pane of your Thinkorswim platform’s dashboard which might look like the image below.
Screenshot of the page for monitoring your futures positions on the Thinkorswim platform. Source: Charles Schwab.
To close an open position using the Thinkorswim platform, click on the position at the bottom of your window and create a closing order. Review the details and confirm the order to close out the position. Your order will then be processed and executed.
Benefits of Trading Futures on Thinkorswim
Thinkorswim is highly regarded among online futures and options traders for its powerful trading and market analysis capabilities, offering numerous benefits for futures traders.
The platform provides advanced analysis tools, including charts, indicators and drawing tools, which help traders make better decisions based on market trends and futures price movements. Thinkorswim also allows for various order types, such as market, limit, stop and conditional orders, which lets traders execute their strategies more effectively.
Despite its advanced features, Thinkorswim’s interface is also intuitive and easy to navigate, making it accessible for both novice and experienced traders. The platform also offers extensive customization options, allowing traders to set up their trading environment according to their preferences.
In addition, Thinkorswim provides real-time market data, allowing traders to access the latest pricing information to make timely trading decisions.
Futures Trading Techniques and Best Practices
Successful futures trading generally requires using an effective trading strategy and appropriate market analysis techniques, selecting the best futures contracts to trade and adhering to good trading practices.
One common technique is hedging, where futures contracts offset potential losses in other trades, commercial exposures or investments. For example, an investor holding a large portfolio of stocks with their various stock brokers might use a short stock index futures contract to protect against potential declines in the stock market.
Spread trading is another popular futures trading strategy. It involves taking opposing positions in related futures contracts to profit from anticipated moves in the price differential. For example, a spread trader might buy a futures contract on one commodity while selling a futures contract on another expecting that the spread should narrow over time.
Algorithmic trading involves automated trading systems to execute trades based on predefined criteria. These systems can analyze market data and execute trades faster and with fewer errors than human traders.
Day trading futures contracts are a popular technique where traders buy and sell futures contracts within the same day, aiming to profit from small price movements. This approach often uses leverage and requires a deep understanding of the market, quick decision-making, and the ability to execute trades swiftly.
ThinkorSwim’s advanced features, such as real-time data, customizable charts, and technical analysis tools, are particularly beneficial for day traders. Using these tools, day traders can analyze short-term market trends, identify trading opportunities and execute day trades precisely. Read more from Benzinga about day trading rules here.
Successful day trading also involves implementing strict risk management strategies to protect against significant losses. Continuous learning and staying updated with market news are crucial for day traders to maintain an edge in the fast-paced trading environment. For more insights, you can explore Benzinga’s resources on day trading and effective strategies for managing short-term trades.
Staying informed is another key factor underlying successful futures trading, and you can use Thinkorswim's excellent news and analysis resources to stay updated on market developments. Continuous learning and staying on top of major market trends are essential for successful futures trading.
Remember to avoid common mistakes such as overleveraging, ignoring risk management and trading futures without a clear strategy. Ensure you have written down a well-defined futures trading plan and cultivate the discipline to adhere to it strictly.
By following these steps and best practices, you can more effectively and profitably trade futures on the Thinkorswim platform and take advantage of its excellent features and trading tools. Whether you're planning on trading futures for hedging, speculation or portfolio diversification purposes, the Thinkorswim platform provides the capabilities you need for successful futures trading.
For more detailed information on specific futures trading methods, visit Benzinga’s article on best strategies for futures trading.
Frequently Asked Questions
How much does Thinkorswim charge for futures trading?
The Thinkorswim platform charges a usage fee of $2.25 per futures contract per side, plus mandatory exchange and regulatory fees. You will also pay the same futures trading commission online or via a broker.
How do I see futures on Thinkorswim app?
To see futures contracts on the Thinkorswim mobile app, log in, go to the “Trade” tab and select “Futures Trader” from the drop-down menu.
What are the symbols for futures?
Many futures contract symbols exist. They typically start with a forward slash (“/”) followed by a unique code for each contract and contract month, such as “/ESH5” for the E-mini S&P 500 futures contract expiring in March 2025.
About Jay and Julie Hawk
About Julie:
Julie Hawk earned her honors undergraduate degree from the University of Michigan before pursuing post-graduate scientific research at Cambridge University. She then started work in the private sector as a business systems analyst for a major investment bank, where she qualified as a Series 7 Registered Representative and received comprehensive training in various financial products. Further honing her skills, she attended the prestigious O’Connell and Piper options training course in Chicago, mastering professional option risk management techniques.
Julie then transitioned into the role of a professional Interbank forex trader, currency derivative risk manager and technical analyst, ascending to the position of vice president over a 12-year career in the financial markets. Julie’s illustrious banking career spanned working for major international banks in New York City, London, and San Francisco, where she served as an Interbank dealer, technical analyst, derivative specialist and risk manager. Her responsibilities included educating, devising customized foreign exchange hedging and risk-taking strategies, and overseeing large-scale transactions for esteemed banking clients, including corporations, fund managers and high-net-worth individuals. As part of her responsibilities, Julie managed substantial portfolios of forex options, spot, and futures positions as a currency options risk manager, earning recognition for executing innovative and highly profitable forex derivative transactions. Julie also spearheaded educational conferences on currency derivatives.
During her banking career, Julie attained world-class expertise in technical analysis, including Elliott Wave Theory, and pioneered research into automated trading and trading signal systems. An active member of the San Francisco Writers’ Guild, Julie also authored trade strategies, educational material, market commentary, newsletters, reports, articles, and press releases. She became a sought-after market expert who was frequently interviewed by financial magazines and news wires such as REUTERS.
Following her retirement from the banking sector, she dedicated 15 years to online forex trading, mentoring and freelance writing for TheFXperts, which she co-founded with her husband Jay. Julie is the co-author of “Forex Trading: A Beginner’s Guide” and “Technical Analysis for Financial Markets Traders,” in addition to five other books on financial markets trading and personal finance. She now focuses on writing articles on financial markets for platforms like Benzinga, although she continues to trade forex online and mentor fellow traders as part of TheFXperts’ financial team.
About Jay:
Jay Hawk grew up in Chicago and Mexico City where he became bilingual in English and Spanish. After taking formal training as a classical guitarist at prestigious music conservatories in Europe, Jay then embarked on a remarkable journey into the financial markets, cultivating his notable expertise through hands-on experience that began on the Midwest Stock Exchange.
His financial career progressed as he started actively participating in various exchange floor trading activities in the Chicago futures and options pits, where he worked his way up the ladder, serving as a clerk, trader, broker, investor and fund manager. Jay then ran a retail stock brokerage desk and managed funds for large institutional investors, leveraging his discretionary trading skills to yield profitable results for clients.
This ultimately led to Jay holding exchange seats and operating as a market maker on options exchanges in Chicago and San Francisco, initially on the Chicago Board Options Exchange. Jay also played a significant role in the Chicago Mercantile Exchange’s evolution, where he contributed to launching and actively trading the first listed currency futures options. After transitioning to the West Coast, Jay then held a seat and ventured into trading stock options and their underlying stocks on the Pacific Options Exchange.
Jay’s comprehensive understanding of fundamental economic and corporate analysis continues to inform his trading and investment activities and has led to his subsequent success as an expert financial writer. Together with his wife Julie, he co-authored “Stock Trading: A Beginner’s Guide”, “Commodity Trading: A Beginner’s Guide” and “Fundamental Analysis for Financial Markets Traders,” among their published books focusing on financial markets trading, market analysis, and personal finance.
As an integral member of TheFXperts’ team, Jay now excels in trading forex online for his personal account, mentoring aspiring traders and writing for financial platforms like Benzinga where he specializes in covering topics related to the stock and commodity markets, as well as investing, trading and reviewing online brokers.