Grab Your Coffee: Election Night, thinkorswim, and You

Market participants sweated through a host of volatile events the last decade, including COVID-19, Brexit, the 2023 regional banking crisis, and the war in Ukraine. None, however, packed the sudden wallop seen in overnight trading the night of the 2016 U.S. presidential election when Donald Trump surprised many with his victory over Hillary Clinton.

If you traded actively, then it's a night you remember because of something besides politics.

S&P 500 futures fell 5%, or "limit down" at one point, meaning the losses were large enough to trigger trading curbs, while the benchmark U.S. 10-year Treasury note (TNX) yield ticked a massive 15 basis points lower as investors piled into the perceived safe haven of fixed income. Asian stocks didn't escape the explosive move, with Japan's Nikkei down 1,000 points and Chinese stocks dropping 3%. 

Then everything reversed as participants became more comfortable with the election outcome. By daybreak, when regular U.S. trading hours opened, stock indexes rose. None of the deep dive made it into that session.

This type of turbulence may not be where beginning traders should venture, but if you're experienced and relish volatility, you might've been disappointed not to participate. That said, it depends on your risk appetite. Big swings in the market on election night can easily cause you to lose money. 

With another closely fought U.S. election straight ahead, perhaps some traders predict that these kinds of moves can be possible again. The 2020 presidential election brought its own tension when it took four days to deliver a result, and the market remained on edge throughout. If you're planning another late night or early morning sweating the results at on your laptop or phone, Schwab offers you the tools to stay on top of all the futures market action. 

One difference if you're a Schwab trader today versus in 2016 is right at your fingertips with the award-winning thinkorswim^® platform. It's a robust trusty tool with powerful features and real-time insights that designed to let you dive deeper into the market so you can follow and trade the minute-by-minute reaction on election night. Everyone with a Schwab account can access thinkorswim, either by desktop or phone.

Futures trading on thinkorswim (for those clients with open futures accounts) can offer the opportunity to trade when U.S. equity trading is closed, which it will be on election night during those long hours of vote counting. That said, not everyone is qualified to trade futures, so tread carefully and consider watching from the sidelines if you're not an expert.

First things first: If you're unfamiliar with thinkorswim, this introductory tutorial explains everything from how to log in to how to place your first trade.

To get more comfortable, you might want to practice using the platform, perhaps with the paperMoney^® feature, before election night. Using the paperMoney feature allows you to practice trading without risking your pocketbook.

Why the thinkorswim platform? After all, any serious trading platform will tell you what's happening in the major futures market that night.

"The thinkorswim platform was built by traders for traders," said Kevin Hinks, host of Fast Market on the Schwab Network.* "The input, how it's laid out, and all the key metrics are what traders use on a daily basis. It also gives you the ability to customize—like using watchlists, changing charts to look at them by the minute, and all the mountains of data you can retrieve."

Once you're comfortable on the thinkorswim platform, here are four tips on how to make the most of it.

You can find Trade Flash on the left sidebar of the platform.

During the day, Trade Flash streams all kinds of information about what large traders are doing—those whose volume can sometimes move markets. The Block Trades Indicator displays large quantity trades, which can affect market volatility.

Trade Flash can show you where large block orders are filling. Larger orders from pension and hedge funds often have a big impact on market direction.

While Trade Flash is likely to be thinner than normal in overnight hours simply because trading can be lighter at night, it doesn't mean it can't provide additional value. 

And if the election outcome gets delayed by several days, as it did in 2020, Trade Flash can deliver even more information during the daytime sessions.

"Some states might not be done counting votes by the next morning, results could still be in question, and there will be uncertainty and higher levels of implied volatility," said Alex Coffey, senior trading strategist at Schwab.

In the case of a delayed election result that lasts into the next day's session, Trade Flash might highlight different combinations of price, volume, volatility, and liquidity—anything that might help you uncover what could be potential opportunities worthy of a second glance. It also provides updates on trading floor events and trade imbalances. 

The customizable thinkorswim Trade Flash sidebar is designed to allow you to monitor the latest action in the stocks you follow and track helpful market stats in real time (see chart below). These include third-party analyst upgrades or downgrades, block trades, trade imbalances, trading floor events, and more. Add Trade Flash to your sidebar by selecting the plus sign (red square) at the bottom left of thinkorswim, and then selecting Trade Flash. Finally, enter the stock symbols you want to follow.

The thinkorswim platform is known for is its powerful charting tools. It has hundreds of studies, tons of drawing tools, and endless ways to customize.

As election day nears, make sure you've prepared thinkorswim charts of all major stocks, commodities, and indexes you watch, keeping overnight futures action in mind. Set up the charts with 50-, 100-, and 200-day moving averages so you can quickly see if a major level gets broken in any wild trading late that night. Remember, the charts are designed to update in real time, providing up-to-date information.

If you're planning to trade on election night or any time on the thinkorswim platform, also consider the Active Trader tab, an interface designed especially for futures traders who want to use its handy bid/ask price ladder, one-click order entering, and high level of customization. This interface can be accessed by selecting Active Trader on the Trade tab.

Active Trader allows easy access to tick charts that look at five- or 15-minute intervals to see how things are moving within shorter time intervals. Users can consider adding pivot points to these charts to identify where potential support and resistance levels may arise.

During the overnight session, consider monitoring for technical setups like an index bouncing off a longer-term moving average or a key support level or breaking above resistance with conviction, which means heavy volume. Any or all these things are easy to track on the thinkorswim platform, though it's advisable to get some practice ahead of time during a normal overnight session if you plan to on election night or in the days that follow (if there are any delays in the vote count).

If you haven't watched it already, Schwab has a handy thinkorswim video tutorial to help you get your watchlists in order before election night. After building a watchlist, follow any news related to your stocks or indexes on the thinkorswim news feed. It will automatically deliver the latest news from multiple sources affecting any of those stocks or indexes, including overnight futures trading reflecting the latest election returns on the big night.

"The four major indexes investors might want to monitor, along with other metrics, are the CME E-mini S&P 500 futures (/ES), E-mini Nasdaq 100 futures (/NQ), E-mini Dow Jones Industrial Average futures (/YM), and E-mini Russell 2000 futures (/RTY). 

You don't have to stop there, however.

"Every watchlist I make starts with U.S. equity futures at the top. After that, I have Cboe^® Volatility Index (VIX) futures, U.S. Treasury note futures (TNX:CGI), WTI Crude Oil futures (/CL), Gold futures (/GC), and the U.S. Dollar Index ($DXY)," Coffey said. "I like to organize my watchlist by product type, but that is a personal preference (for instance, futures first, then individual equities). I include some of the most widely traded stocks next, such as the Magnificent Seven names. After determining what's on the move, I check the calendar to confirm what economic data and earnings are scheduled to come out."

Setting up your thinkorswim watchlist with those futures indexes and keeping an eye on the associated newsfeeds only takes a few minutes and can help keep you on top of development as election results roll in from various states overnight and conceivably during the following day's regular session, if delays occur as they did in 2020.

A support feature at the right corner lets you tap into Schwab expertise when you need it. Let's say you need help with an order. By choosing create support request on the live support tab, you can send a text message straight to Schwab's trade desk, and a Schwab representative will receive it and start speaking to you over chat. They can check your screen and answer any questions you have regarding the platform. 

As an FYI, the support chat feature is not offered overnight. However, it could be useful if election volatility leaks into regular trading hours the following day. 

There is also a 24-hour phone number for thinkorswim support at 800-435-9050. Representatives supporting this line can support futures-related questions.