Stacked Moving Averages

Step-by-Step Code Tutorial

Step 1: Start a New Study

Go to your ThinkOrSwim studies panel and create a new study. Name it “TI Stacked Moving Averages” and clear any default code from the editor.

Step 2: Define the Exponential Moving Averages

We’ll plot three EMAs: the 8, 21, and 34 periods. Here’s how to add them to your script:

plot EMA8 = ExpAverage(close,8);
plot EMA21 = ExpAverage(close,21);
plot EMA34 = ExpAverage(close,34);

Each line creates an EMA based on the closing price. The ExpAverage function in ThinkOrSwim calculates this for us.

Step 3: Add the Simple Moving Averages

Next, we’ll add two SMAs with 50 and 200 periods:

plot SMA50 = SimpleMovingAvg(close,50);
plot SMA200 = SimpleMovingAvg(close,200);

Here, we use SimpleMovingAvg to create a simple moving average.

Step 4: Customize Colors and Styles

Now, let’s assign colors to these lines so they’re easily distinguishable, and make the SMAs dashed:

EMA8.setDefaultColor(Color.Cyan);
EMA21.setDefaultColor(Color.Magenta);
EMA34.setDefaultColor(Color.Yellow);
SMA50.setDefaultColor(Color.Yellow);
SMA200.setDefaultColor(Color.White);
SMA50.setStyle(Curve.Short_Dash);
SMA200.setStyle(Curve.Short_Dash);

The setDefaultColor function applies color, while setStyle allows us to make the SMAs dashed for easier differentiation.

Step 5: Create Stacked Conditions

Now, we’ll define two conditions: one for when the moving averages are bullishly stacked and one for bear stacking:

def bullstacked = EMA8 > EMA21 and EMA21 > EMA34; 
def bearstacked = EMA8 < EMA21 and EMA21 < EMA34;

In the code above, bullstacked is true when the shorter EMAs are above the longer ones, while bearstacked is true when the shorter EMAs are below the longer ones.

Step 6: Plot Bullish and Bearish Stacked Arrows

To make it easy to see when the moving averages stack bullishly or bearishly, let’s add arrows. We’ll plot them only when the stack changes:

plot bullStackedPlot = bullStacked and !bullStacked[1];
plot bearStackedPlot = bearStacked and !bearStacked[1];
bullStackedPlot.setPaintingStrategy(PaintingStrategy.Boolean_Arrow_Up);
bearStackedPlot.setPaintingStrategy(PaintingStrategy.Boolean_Arrow_Down);
bullStackedPlot.setDefaultColor(Color.Yellow);
bearStackedPlot.setDefaultColor(Color.Yellow);

The !bullStacked[1] and !bearStacked[1] parts ensure that the arrows only plot on the first bar where the condition changes, preventing continuous arrows on each bar in a stacked phase. The setPaintingStrategy function controls the arrow direction.

Step 7: Apply and Test the Indicator

Save your code and apply it to your chart. Observe the indicator in different market conditions to see the arrows appear when a bullish or bearish stack starts. This indicator gives you an at-a-glance look at when trends begin to stack, helping you identify market shifts quickly.

Conclusion

The Stacked Moving Averages Indicator combines EMAs and SMAs to give a clear view of trend direction and strength. With custom colors, dashed styles, and stack indicators, this tool provides a visual aid for tracking trend shifts in ThinkOrSwim. Try experimenting with different lengths or adding more moving averages to customize it further for your trading needs.