Which timeframe chart is best for intraday trading?
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Which timeframe chart is best for intraday trading?
Best Time Frame Chart for Intraday Trading in 2024
One important aspect of a successful day trader is selecting the right time frame chart.
Yes, choosing the right time frame chart is a game changer.
The time frame chart you choose can significantly impact your trading strategy and decision-making process, and ultimately it results in your profitability.
Out of my trading experience, I will share the practical reasons behind choosing the right time frame chart and by the end, I will share the best time frame chart for day traders.
Understanding Time Frame Charts
Before getting into the main topic, let beginners understand what is time frame chart.
Time frame charts represent price movements over a specific period, such as minutes, hours, days, or weeks.
Each candlestick or bar on the chart displays the opening, closing, high, and low prices within that time frame.
Different time frames reveal different levels of price detail, ranging from minute-by-minute fluctuations to broader trends over several days.
How to Choose the Right Time Frame for Intraday
The best time frame chart for intraday trading depends on various factors, including your trading style, risk tolerance, and market conditions.
Here are some common time frame options and their characteristics. Choose the right time frame that suits your goals and strategies.
1-Minute Time Frame Chart:
The 1-minute chart provides detailed price movements and is suitable for scalpers who aim to capitalize on small price fluctuations within minutes.
Traders using this time frame must react quickly to market changes and closely monitor their positions.
A little negligence may lead to huge losses within seconds. Sometimes that may lead to profits also.
Who Can Choose This Time Frame: Scalpers, Professional Traders, Gamblers.
5-Minute Time Frame Chart:
The 5-minute chart is the most used time frame by day traders in India. It gives a better understanding of the marketing movement and helps identify the day’s trend in the first three candle sticks.
Who Can Choose This Time Frame: Day Traders (Beginners & Professionals)
15-Minute Time Frame Chart:
The 15-minute time frame chart provides a broader perspective while still capturing intraday trends.
Who Can Choose This Time Frame: It is suitable for traders who prefer slightly longer holding periods and want to avoid excessive market fluctuations.
30-Minute Chart:
The 30-minute chart smoothens out price fluctuations further, making it suitable for swing traders looking to capture intraday trends lasting several hours.
This timeframe is not suitable for day traders.
1-Hour Chart:
The 1-hour chart is favored by swing traders and those who prefer holding positions for longer periods.
It filters out short-term fluctuations and helps identify significant trends. This timeframe helps swing traders understand the actual trend of the market.
Practical Example:
Let us consider two traders, each using a different time frame chart for intraday trading:
Trader A:
Utilizes a 5-minute chart for intraday trading. They focus on short-term price movements and aim to capitalize on quick momentum shifts.
Trader A identifies a bullish reversal pattern on the 5-minute chart, indicating a potential buying opportunity in a stock.
They enter a long position based on this signal and set a tight stop loss just below the recent low.
As the price goes up, Trader A exits the position with a profit before the end of the trading day.
Trader B:
Now let us see how Trader B acts using a 15-minute time frame.
Trader B Prefers a 15-minute chart for intraday trading. Trader B identifies a stock that has been steadily climbing on the 15-minute chart throughout the morning session.
They wait for a pullback to a key support level and enter a long position, anticipating a continuation of the uptrend.
With a longer time frame perspective, Trader B holds the position for several hours, eventually exiting with a substantial profit as the stock reaches its intraday high.
From my experience, Finding the best time frame chart for intraday trading requires careful consideration of various factors, including trading style, risk tolerance, and market conditions.
Rather than implementing others’ strategies, It is always best to establish your own strategy and time frame for a better result.
Experiment with different time frames to find the one that aligns best with your trading goals and preferences.
For me, a 5-minute time frame chart works best for intraday.
Best Time Frame Chart for Intraday Trading
Before I explain the best time frame chart for intraday trading, you must listen to my experiences.
If you don’t have that much time to gain knowledge, the below line gives a quick answer out of my experience.
Ans: 5 Min Time Frame Chart is the best choice for intraday traders.
Want to dive into my experience? go through the below lines.
Episode 1: Beginning
For the very first time when I entered into intraday trading, I bluntly began to gamble on entry-level and exit-level without applying even stop-loss.
In less time, I lost the entire capital in my first move of day trading. You must remember, never to begin a trade blindfold.
I panicked and flew away from the stock market with no guts to progress further. It was quite strange that my query was addressed by a professional in Quora and subsequently, I drew a little strength and went back to trade.
But, this time it involved a thorough trade plan that included time frame analysis for day trading. And, here, you can absorb my experience and pitch all possible potholes which you might indulge in Intraday trading with a suitable time frame.
Now, while I address your query, you need to understand the time frame concept in stock trading.
Time frame is the selected period that ranges from a few minutes to hours to a day to weeks to months or even years.
In your selected time frame, you can view the trade patterns on charts like candlesticks and these time frame charts when analyzed, help you deduce many factors.
Whenever I do intraday trading, I take the aid of a 5-minute & 15-minute time frame just to know about the kind of market it could shape up in a day, like, a buyers market, or seller market.
Further, the best time to observe the trading signals is in the morning after the trading session begins at 9:30 am.
You must wait for the volatility of the stocks to settle down with a certain pattern. Then, the decision of your entry-level to trade should be an hour after the commencement of the day trading.
Important Note:
You must always keep in mind, that the 5-minute time frame is the best time frame chart that gives the direction of the trade.
I have also shared my experience of the biggest loss in my stock market journey here.
Tips for an Effective Day Trading Time Frames:
A 5-minute chart is good for day trading but you can also employ 1-minute, 5-minute, 15-minute, and 30-minute charts.
If you trade an instrument with lower volatility then 5-minute charts are highly beneficial.
Usually, if you prefer to trade instruments with high volatility then maintain your pace on 1-minute or 2-minute charts.
When you want to monitor price movement on a lower level, you must employ a larger scale, say, a day chart.
Selecting time frames in the afternoons are of prime value and trades in and around 01 pm is the most ideal time. Alternatively, relax till the market rings closing bells to resume trading.
Make use of multiple time frames to make an ideal entry point into the markets, you are advised to consider two to three-time frames in your day trading activity and do not cross the timeframe count.
Intraday Trading Time Analysis
There is no rocket science that defines the best time to do intraday trading, but still you must follow the logic before beginning your day trade.
For better understanding, go through my experience in intraday trading.
Observe the first 15-minute Trade Signals
Enter the day trading scenario, watch the trade signals. You will be surprised to notice that the first 15-minute trading, usually, shows huge stock prices variations.
After the first 15-minute, stock intraday trade, you will be able to identify the trade characterisation, which means, will it be a buyers market/sellers market?
If the trade signals trend synchronizes with the sellers market scenario, then you must withdraw yourself from trading on that day.
As the intraday trade calls for a buy and sell of a stock.
Know when you should trade, first half or second half of the day trading?
The entire day trading session can be divided into two parts. Many raise the query that states: What is the best time to do intraday trading? Is it the first half or the second half of the day trading sessions?
Logic states that the evolving news on corporations, businesses, and financial updates of policies of the government alter the stock market volatility.
For positive news, the stock prices expand, and for negative news, the stock prices collapse. Therefore, during the first half of the day trading, you can begin to buy stocks.
In the second half of the trading, you will have to study attentively the trading signal charts such as candlestick patterns, etc to deduce certain important facts.
Over a period, the stock trades show an upward trend or create a trend-reversal and these facts become a measure to define/redefine your business day trade plan.
If you find the trading signals favoring your purchased stocks then you must attempt to sell out and make small profits whenever it is possible.
Later, if you find the trend that can reap benefits you can continue to buy and sell stocks to profit during the day trading.
Important Note:
Make use of stop loss techniques because the violent stock variations can lead to an absolute loss while you make a trade investment.