Intraday trading involves a close analysis of price movements. Since trading activity relating to a particular stock can change within seconds or within minutes, it is essential to choose the right time frame when analysing a stock.
If you pick the right time frame, it is more likely that your trading experience is smoother and you gain a positive result from your trades.
Let’s dive into everything you need to know about intraday trading time analysis.
What is intraday trading time analysis?
Intraday trading time analysis refers to using trading charts of different time periods to predict future price movements of stocks. For example, a trading time analysis could involve using time frames such as 1-minute, 5-minutes, or 1-hour.
Analysing these charts using the correct time frame can be key to success as an intraday trader. This is because intraday trading is largely about making the right trade at the right time.
Depending on the time frame, traders can use trading charts for short-term, medium-term, and long-term market analysis.
Types of intraday trading charts
Let’s take a look at the different types of intraday trading charts that can be used:
| Type of chart | Primary use |
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2-minutes chart |
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5-minutes chart |
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15-minutes chart |
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1-hour chart |
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Tick-trade chart |
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Which timeframe is best for intraday trading in India?
According to several market analysts, the best time to enter and exit trades for intraday traders is between 10:15 AM to 2:30 PM. There are good reasons for this.
By 10:15 AM, the early morning volatility subsides which reduces the risk of a trade. Also, closing your trade by 2:30 PM ensures that you don’t get stuck on a trade in case there is non-favourable volatility right before the end of the day.
Is it better to trade in the first half or the second half?
The answer to this can depend on the trader. However, statistically speaking, people tend to profit more often from morning trades compared to afternoon trades.
The likely reason for this is that morning trades are based on the news and trends of the day. In contrast, afternoon trades consist of trend reversals and profit bookings or trend continuation, which can be harder to predict.
How do experienced traders choose the time frame for their trades?
How long should you hold an open trade? This is a quintessential question that every beginner wants to know the answer to. Unfortunately, there is no right answer.
Most expert traders hold trades for very short periods of time. However, there is no strategic reason for this. The reason why they hold trades for short periods of time is that they enter into several trades through a trading day. These traders are usually scalpers.
A scalper aims to enter into ten to fifteen trades in a single day. So, they quickly enter into and exit from trades. Their strategy is based on making lots of small profits in a single day.
In contrast, a trader that enters into fewer trades in a day is more likely to hold trades for longer periods of time. These traders are usually swing traders or day traders. A swing trader aims to do just two or three trades in a day. Since they are doing fewer trades, they can hold a trade for a longer period and aim for higher profit from a single trade.
Hence, the length of time that you want to hold a trade depends completely on you, your trading style, and the trade in question.
If you hit your target price in a few minutes, then don’t be afraid to close the trade then and there. Similarly, if a trade is taking more than a couple of hours to hit the target price, then you can keep that trade open for longer.
Related Article: How to find the best stocks for intraday trading?
Wrapping up
If you’re looking to practise intraday trading, then the games in Classic Leagues on the TradingLeagues app may be ideal. With a simulated market experience, these games help you practise intraday trading in the realest way there is. What’s more, there are games all through the day and offer you a real time experience of not just one but three different markets- Indian market, crypto market and the US market.
Classic Leagues is part of TradingLeagues which is a fantasy stock market gaming app. You can compete with other players and learn while having fun. Play the Classic League on TradingLeagues today and start winning!
Frequently Asked Questions
How long should I hold a trade in the stock market?
The answer to this depends entirely on you. The higher the number of trades you’re aiming to make in a day, the lower should be your holding time. If you want to make lots of trades with smaller targets, then quickly close trades. If you want to make a few trades with more ambitious targets, then you may need to wait for longer.
Is the five-minute chart good for intraday trading?
Yes, the five-minute chart is one of the most popular trading charts. The five-minute chart is most used by intraday traders who are looking to gauge the volatility of a stock along with the best entry and exit point.
Which time-frame chart is best for intraday trading?
If you’re an intraday trader, then the 2-minute and the 5-minute trading charts may be the best option. These charts provide a very close picture of the price movements of a stock over the last few hours. They can be a great way to check the trend and the best entry and exit prices
