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Thinkorswim vs TradeStation

Thinkorswim and TradeStation are two of the best trading platforms on the market today. While I prefer Thinkorswim, TradeStation does have some notable advantages over Thinkorswim. The reason I opened a TradeStation account in the first place is because I believe TradeStation is a much more powerful platform when it comes to backtesting and automated trading. Backtesting is extremely important to me, and I was disappointed with what Thinkorswim had to offer.

Statistics provided by Thinkorswim strategy backtest
Thinkorswim Strategy Performance Report

For example, here are the statistics provided by a backtest in Thinkorswim. It gives you the total profit or loss, the max profit from a single trade, and the total number of orders. It also gives you a list of trades that can be exported to excel.

In comparison, below is a strategy performance report provided by TradeStation. Not only does it break the statistics down by long vs short trades, but it also provides many more statistics, such as profit factor, percent profitable, maximum consecutive winning and losing trades, average number of bars in trades, and the maximum drawdown.

Statistics provided by TradeStation strategy backtest
TradeStation Strategy Performance Report

In addition, TradeStation allows you to take commissions and slippage into account, which makes the backtest far more realistic. To do this in Thinkorswim requires some clever coding. TradeStation also lets you run an optimization to find the best combination of input settings, while in Thinkorswim this process is more guess and check. These features make TradeStation much more useful for backtesting than Thinkorswim.

Another advantage of TradeStation is that it has more data to access during a backtest. For example, the TradeStation report above is from a backtest that covered 8 years. In comparison, an intraday chart under one hour can only go back 180 days in Thinkorswim, which may not be enough to provide an adequate sample size.

TradeStation has a huge advantage when it comes to automated trading too. If you want to set up automated trading in TradeStation, you simply apply a strategy to the chart and enable automated execution, and the system will do the rest for you. It will keep trading until you disable automated execution again.

If you want to set up automated trading in Thinkorswim, it requires a few more steps, and is a lot more cumbersome. Each time you enter an order, you have to go through the conditional order setup. Saving order templates makes this easier, but it can still take a couple minutes to set up an order. You can set up a long trade and a short trade, but once one of those trades is executed, you will need to replace it if you want the system to take another trade in the same direction. Because of this, I would classify Thinkorswim's conditional orders as semi-automated trading, rather than fully-automated.

Unlike with TradeStation, an automated system in Thinkorswim requires separate code than that used to backtest a strategy. There are also limitations with thinkScript when used for automated trading, so the code cannot be too complex. Because of this, only relatively simple strategies can be converted into an automated trading system in Thinkorswim, while any strategy can be used for automated trading in TradeStation, regardless of how complex it is.

TradeStation has a clear advantage in terms of backtesting and automation. However, in my opinion, TradeStation falls far behind Thinkorswim when it comes to usability and user friendliness. I find Thinkorswim to be much easier to use. In addition, TradeStation seems to crash fairly often, at least on the version I use, which is version 10. For these reasons, I wouldn't feel confident enough to put my money on the line using the TradeStation platform. So, I use TradeStation exclusively for backtesting, and I use Thinkorswim for everything else.

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