Wish sentiment was displayed on your stock watchlist? Learn how to use the High/Low Graph function in the thinkorswim® platform from TD Ameritrade.
If you’ve ever created a watchlist to track multiple securities, you probably know how helpful it can be to have so much information in one place. But one thing a watchlist generally can’t tell you is the sentiment behind the securities. Now, the High/Low Graph—a new feature available on the thinkorswim platform—can help fill in that missing element.
Tracking multiple securities can be a challenge. That’s one reason many investors lump groups of securities into watchlists. Watchlists can provide at-a-glance, real-time data such as current price, net change, highs and lows, volume, and more to offer a quick update on how a set of securities is performing.
But another essential bit of info that investors often seek is whether a security looks bullish or bearish. Most of the information on a watchlist, such as current price and net change, might not provide that picture. What may be missing is a snapshot of the buying and selling pressure driving a particular security’s price—both of which may be taken as one important proxy for bullish or bearish sentiment.
And unless you take the time to look at each security’s individual chart—a potentially time-consuming task if you’re following more than a few securities—you may not be able to make a reliable assessment of the sentiment dynamic. Is there a more rapid way to gauge the buying and selling pressure behind a security’s price movements within a watchlist? Now, the answer is yes. This is where the High/Low Graph comes in.
The High/Low Graph measures the quality of a security’s current price relative to the buying/selling activity taking place within its entire trading range in a given time period.
The High/Low Graph represents this “qualitative” state as a number between +100% (highest) to -100% (lowest). As a representation of the buying and selling pressure behind a security’s price movements, the High-Low Graph can also potentially indicate a security’s bullishness or bearishness.
Let’s take a simple hypothetical example, using two stocks with identical gains but contrasting High/Low Graph profiles. We’ll call the first stock JKT, and the second stock XYZ.
If both stocks gained exactly 50 cents, can we say that both stocks were identically bullish? Not so fast. According to the High/Low Graph, stock JKT had a potentially bullish reading of 100%, while stock XYZ had a potentially bearish reading of -50%. But if both stocks gained 50 cents, why are their High/Low Graph readings so different?
Here’s what happened behind the typical watchlist scenes:
The takeaway: while stock JKT’s closing price was driven mostly by buyers (pushing the price up), stock XYZ’s closing price was driven mostly by sellers (pushing the price down). So despite equal gains in both stocks, the High/Low Graph differentiated the two stocks by sentiment, designating ABC with a positive number and XYZ with a negative number.
Perhaps the best way to see how the High/Low Graph works is to see it in action, comparing a stock’s net change with the graph’s negative or positive measures. So here’s how to set it up on thinkorswim.
Step 1: Pull up a Quotes watchlist
Step 2: Pull up the Customize Quotes window
FIGURE 2: ADJUSTING THE TIME FRAME. Image source: the TD Ameritrade thinkorswim platform. For illustrative purposes only. Past performance does not guarantee future results.
As with any indicator, the High/Low Graph provides you with only a partial composite of a much larger picture. So if you decide to use this technical analysis indicator to help assess a security’s performance, be sure to consider other technical or fundamental factors to get a clearer and more well-rounded perspective.
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