Best Time Frame for Day Trading: A Complete Guide

If you are an experienced trader, trading within the first 15 minutes might not be as risky. However, most stock market trading channels in India open at 9:15 am. The best time to trade intraday is within one to two hours after the stock market opens. 

Introduction

In day trading, a financial instrument is bought and sold multiple times in a single day. Small price changes can offer many opportunities for profit if they are taken advantage of. It is dangerous for newbies or anyone not following a well-considered strategy. Some brokers are not suitable for day traders because they make a lot of trades. On the other hand, some brokers cater to find the best time frame for day trading. 

How Can Day Trading Be Difficult? 

Several factors can complicate the process of day trading, and they include a lot of practice and know-how.

It's important to realize that you're up against professionals who make their living by trading. The technology connections in the industry allow these people to succeed even if they fail initially. If you hold investments for less than a year, you'll also have to pay taxes at the marginal rate on any short-term gains. You can offset any gains with losses, though.

 It is usually possible for professional traders to eliminate them from their trading strategies, but things can be different with your capital.

What are time frames in day trading?

Beginners often test all possible time frames and choose the wrong time frame. For day traders, selecting the right time frame is a simple concept that will help them make the right decision from day one.

Time Frames in day trading?

It's all about the time-based chart interval when people talk about trading time frame. A majority of trading platforms offer the option to view the charts daily, weekly, monthly, or even yearly. However, daily traders have limited benefits from those time frames. For a day trader, intraday time frames are necessary for timing entries and exits. Using the intraday time frames, it is possible to enter trades with an excellent risk/reward ratio.

60-Minute Time Frame

Swing-traders frequently use 60-minute chart intervals, but multi-time-frame analysis can also provide profitable day-trades if this chart interval is combined with a smaller chart interval. During regular trading hours, the market is open from 9:30 a.m. until 4:00 p.m., and the first candle begins at 9:30 a.m. Therefore, the last 60-minute candle for a day only includes volume from 3:30 p.m. until the end of the regular trading hours until 4:00 p.m.

15-Minute Time Frame

For day traders who follow multiple stocks throughout the day, 15 minutes is probably the most popular time frame. A higher interval would be appropriate for long watchlists. To analyze and scan the current market behavior, you need a realistic chance. The risk of missing the best possible entries increases if the selected time frame is too low and too many symbols are screened at one time. 

5 Minute Time Frame

Traders who focus on a few stocks a day often use the 5-minute time frame to analyze high-volatility stocks. Five-minute charts are beneficial during the first 60 minutes of a trading day. For analyzing the stock and preparing orders, the time per candle is sufficient

1-Minute Time Frame

A disciplined attitude and a thorough understanding of the market structure are essential for trading in short-term time frames, such as the one-minute chart. Knowing what to look for is critical. The chances of opening a trade with low risk and high potential will increase if a highly volatile stock breaks its previous day high with high momentum.

Multi-Time Frame Analysis

New traders are mainly get fall into the trap of trading against the primary trend. High-frequency traders are infrequently considered. Working from the highest time frame to the lowest is the best way to find entries with high-profit potential. Bullish sentiment is indicated if the current price is above the previous day's high, above the opening range of 60-minute and with higher lows and higher highs all over the place. It's against the trend to short such stocks, and a short squeeze will likely lead right to the next high. Day trading time frames along with trend until its broken is the most promising approach according to the higher time frames.

What Time Frames Should You Monitor?

The information you see is not affected by time frames, just as time frames do not affect volatility. They will, however, display that information differently. Charts with a shorter time frame provide more detail, while charts with a longer time frame provide less detail. The detail is still including long-term chart, but the chart zooms out to emphasize long-term trends rather than short-term details.

You should monitor a tick chart near the open when day trading stocks. Around market opening, there are so many transactions that you could have several big moves and reversals in a matter of minutes. If traders are viewing a one-minute chart, they may miss these tradable moves because they occur so rapidly. Despite the high trading volume, there may have only been one or two one-minute bars formed, making it challenging to determine trade signals. Tick charts, however, may form 10 or 20 bars within a couple of minutes after the market opens, and these bars may provide multiple trade signals.

A high-volatility stock trade is especially likely to result in this scenario. You can continue to trade the stock based on the tick chart throughout the day once you determine how many ticks per bar are appropriate for the stock you are trading. The most detailed information is provided and an alert when nothing is happening. A tick bar will take a long time to complete (and for a new one to begin) if only a few transactions are being processed.

On the other hand, the one-minute chart will continue to produce price bars as long as one transaction happens every minute. It creates the illusion of activity during slow trading periods, but traders who observe the tick chart know that there is little trading going on. In this case, they may decide that it's better to wait. The key to profitable day trading is movement and volume.

What are the best time frames for day trading and their pros and cons? 

Intraday trading often adheres to the adage "less is more". One might find it prudent to limit intraday trading to a few key hours rather than trading stocks all day long. Traders who work with stocks, index futures, and ETFs benefit from dedicating one to two strategically chosen hours each day to trading.

Long-term intraday traders need to find the best time frame for day trading. Taking advantage of these hours can help maximize your efficiency since they are known for important market activity. On the other hand, those who trade the entire day get very little time for other things and receive insufficient rewards. Trading outside the best time frame for intraday trading can cause even experienced traders to lose money. Therefore, how long does it take to trade intraday? About 9:30 a.m. to 10:30 a.m.

Traders new to the market tend to experiment with every time frame and often pick the wrong one for the wrong reason. Traders use a variety of forex time frames to speculate. There are two most common time frames: long- and short-term. These transmit through to trend and trigger charts. Choose the right time frame for day trading is a simple concept that can help you to make the good decision right from the start.

Here are some things to consider

Slippage

You have slippage if the price you got differs from the price you wanted for the fill. Slippage increases when the spread gets more comprehensive and volume are high in less active markets. In addition to reducing slippage, limit orders also have the disadvantage of not guaranteeing that an order will be filled.

An essential aspect of charting is choosing the right charting time frame. Generally speaking, a longer screen time is associated with a lower charting time frame. Those who monitor for longer and trade more frequently are more likely to make mistakes. Thus, choosing the charting time frame under your trade frequency preferences is crucial.

The advantage of time frames above 60 minutes and 15 minutes is that they can be traded via mobile devices without a considerable time commitment. Trading systems and hotkeys should only be executed on time frames like the 1-minute chart. Charts in general, are divided into different time periods. Examples include 1 minute, 5 minutes, 10 minutes, 15 minutes, and everything in between. 

1-Minute Chart Time Frame

Someone who likes to see detail in price movements on a 1-minute time frame may find the 1-minute timeframe useful for short-term trades that only last a few minutes. Bars and candles are generated every minute and trade signals can occur frequently (depending on your strategy), trading the one minute requires nearly constant attention.

One-minute chart traders typically has the opportunity to take more trades per day than those using larger time frames since price bars occur frequently. More trades mean more profit and a winning system's account compounding. If a trader doesn't have a winning strategy, he could lose his capital quickly since there is more activity.

5-Minute Chart Time Frame 

If you are looking for big intraday swings and do not need to see the open-high-low-close price every minute but would rather see summary data over five minutes, a five-minute chart may be helpful for you.

Five-minute charts require less focus than one-minute charts but some attention. There is more time between data points since candles form every five minutes. Traders who wait for candles to close before acting make sure that no action is taken for minimum five minutes, if not longer. There are fewer data points (bars/candles) when trading 5-minute charts than 1-minute charts. There may be one or two trades in a two-hour trading window, maybe more, but fewer than on a 1-minute chart. In the 1-minute chart, stop losses, and profit targets are often larger. The result is usually fewer trades per day, which isn't necessarily good or bad. 

10- or 15-Minute Chart Time Frame

The bars/candles appear over a more extended period on a 10- or 15-minute chart, requiring less constant attention. It would take 10 or 15 minutes between actions if you waited for candles to close (you don't have to).

It is possible for traders to only take a few trades a day on this time frame. If only trading during a two-hour or fewer windows, many days may have no trade signals. It takes more time to get into and out of trades during this time frame, traders may have to spend more time in front of the screen. On the 5-minute chart, the stop loss and profit targets are usually larger. Few trades per day are reduced, which isn't necessarily good or bad. 

Multi-Time Frame Analysis

Multiple time frames create trading opportunities for some traders but not for others. Trade on a single time frame means you see it on the 1-minute chart (or whatever time frame you choose).

Using a multiple time frame means looking at a longer-term chart and using it as a filter for trades on a lower time frame. Traders would look at the 5-minute and 10-minute charts to determine the trend direction and then look for entry opportunities based on that trend direction on the 1-minute chart, for instance. As another example, use a 30-minute chart to establish the overall direction, and then use a 10-minute or 5-minute chart to enter.

That sounds good. And it is. However, it also has disadvantages because trend changes are typically visible on lower time frames before higher time frames. Trading opportunities may be missed if you use a higher time frame filter. There is no perfect solution or combination. Multiple time frames can be used to construct a winning system. However, understanding the pros and cons should help you make the right choice.

What are day trading time frames alternatives?

Day Trading Chart Time Frame Alternatives are Tick Charts and Renko Charts

In many discussions, time frames are assumed to be the only charting option. This is not the case. Other chart types exist as well.

Tick charts

There are a fixed number of transactions in tick charts. When a certain number of transactions have been made, a bar completes. Therefore, bars can form quickly during busy times, but bars can form slowly during quieter times.

Renko charts 

After a certain amount of price movement, Renko bricks are formed. As the price moves in the same direction and the amount required, they continue to form. Bricks change color and begin to move in the opposite direction if the equivalent of two brick sizes reverses the price. Price movement, not time, determines what color the bricks change.

There are many types of alternative chart types. These two are just a couple of examples.

How to choose the best time frame to trade?

For graphic trading charts, there are a variety of time frames available. In addition to time-related measures, you could look at the number of trades made or their price range. There are many options available. Trading prudently makes it easy to choose the right time frame or another variable for a particular trading style and type of asset.

It can take new traders days, weeks, or even months to find the best time frame or parameter for them. Consider experimenting with the five-minute charts and 30-second charts, for example. You might think you missed something after trying all the non-time-based options, including tick charts and trading volume, so you try them all again, assuming you made a mistake. If you find a profitable trading system or technique after trying all the time frames, you may adjust it.

Is it possible that time can be irrelevant?

When considering a time frame about your trading method, a prominent price pattern on a two-minute chart will also be noticeable on a two-hour chart. In the absence of an intersecting price pattern, the price pattern is not essential.

Bottom line

You can get more detailed information and find more potential trade signals during active market conditions in such a chart. It also shows you when market activity is low. You should trade off the tick chart; you should always have your tick chart open. On your tick chart, you might not be able to see all of the current day's price data. It is essential to look at what has happened throughout the day for trading time frame trends, volatility, and intraday support and resistance levels. Open a separate one-minute or two-minute chart if you want to see the entire day's price action. To see the whole day, you may need to increase the time frame on your chart as the day progresses. Step by step, from three minutes to four minutes to five minutes. Don't get too complicated. Be present at the moment.