Lab Experiments
Thinkorswim Buy-the-Dip Indicator
The Buy-the-Dip Study is a custom Thinkorswim study designed to help traders identify early intraday pullbacks in bullish momentum stocks. It highlights potential trade entries when a stock briefly pulls back during an uptrend, providing a clear visual signal with a green arrow directly on the chart. This study saves time by automating the detection of key technical conditions, so traders don’t have to manually scan each chart.
What It Does
Detects short-term uptrends using the 9-period and 20-period exponential moving averages (EMA).
Identifies small pullbacks (typically 1–3% below the intraday high) for potential entry points.
Confirms the stock remains in a bullish structure by ensuring it is above VWAP.
Filters for high-volume bars to ensure momentum is supported.
Plots a green arrow below the first bar of the dip, providing a clear and concise visual cue.
Shows only one arrow per pullback to avoid clutter on the chart.
When to Use It
During intraday trading, especially in the first hour after the market opens, when momentum is strongest.
On stocks that gapped up pre-market or have strong intraday momentum, as these are more likely to continue trending.
In combination with news catalysts or earnings reports, which often create sharp intraday moves.
As a tool to identify potential dip-buy entries in an ongoing uptrend, rather than as a standalone buy signal.
Best used with tight stop-losses to manage risk if the pullback does not continue upward.
How to Add It to Thinkorswim
Open Thinkorswim → Charts.
Click Studies → Edit Studies → Create.
Paste the ThinkScript code for the Buy-the-Dip Study into the editor.
Name the study (e.g., “Buy-the-Dip Arrow”) and click OK → Apply.
The green arrow will appear on your chart whenever the stock meets all the conditions.
Adjust parameters like pullback percent, EMA lengths, or volume multiplier as needed to match your trading style.
- To hide the arrows without removing the study, click the eye icon next to the study in the Edit Studies window. Clicking it again will make the arrows visible.
# Buy-the-Dip Arrow (Single Arrow per Pullback)
# --- Parameters ---
input pullbackPercent = 3;
input emaShortLength = 9;
input emaLongLength = 20;
input avgVolumeLength = 20;
input minVolumeMultiplier = 1.5;
# --- EMA Trend ---
def emaShort = ExpAverage(close, emaShortLength);
def emaLong = ExpAverage(close, emaLongLength);
def uptrend = emaShort > emaLong;
# --- Pullback from intraday high ---
def highToday = high;
def pullback = close < highToday and close >= highToday * (1 - pullbackPercent/100);
# --- Price above VWAP ---
def aboveVWAP = close > VWAP();
# --- Volume filter ---
def volFilter = volume > Average(volume, avgVolumeLength) * minVolumeMultiplier;
# --- Combine conditions ---
def buyDipCondition = uptrend and pullback and aboveVWAP and volFilter;
# --- Only first bar of the dip ---
def firstPullbackBar = buyDipCondition and !buyDipCondition[1];
# --- Plot arrow ---
plot buyDipArrow = if firstPullbackBar then low - 0.02 else Double.NaN;
buyDipArrow.SetPaintingStrategy(PaintingStrategy.ARROW_UP);
buyDipArrow.SetDefaultColor(Color.GREEN);
buyDipArrow.SetLineWeight(3);
I think this study/indicator is pretty interesting, so I’ll be trying it out over the coming weeks to see if it’s actually useful. Keep in mind, this is just for learning and experimentation!
Disclaimer:
This Buy-the-Dip study is for educational and experimental purposes only. It is not a buy or sell signal, and I’m not responsible for any losses. None of what I say constitutes financial advice. Always do your own research and trade carefully. Use at your own risk; past performance is not indicative of future results
