The old adage “less is more” is often applicable when it comes to intraday trading. Generally, it might prove wise to limit one’s intraday tradingto a few key hours as opposed to purchasing and selling stocks the entire trading day. In fact, devoting one to two strategically chosen hours each day to trading has proven to be more beneficial for traders who work with stocks, index futures, and ETFs.
Finding the best time frameis very beneficial for long term intraday traders. As they are known for important market activity, utilizing these hours can help maximize your efficiency. On the flip side, those who day trade for the whole day get very little time for other things with insufficient rewards. Even experienced intraday traders can lose their money if they trade outside of the best time frame for intraday trading. This begs the question: what is the best time framefor intraday trading? The answer: Between 9:30 to 10:30 am.
Should I Trade in the First Fifteen Minutes?
One to two hours of the stock market being open is the best time framefor intraday trading. However, most stock market trading channels open from 9:15 am in India. So, why not start at 9:15? If you are a seasoned trader, trading within the first 15 minutes might not be as much of a risk. For beginners, it’s recommended to wait until 9:30. The reason behind this is simple; in the first few minutes of the market opening, stocks are likely reacting to the previous night’s news.
Trades often will depict sharp price movements in a particular direction. This is called the “dumb money phenomenon”, as people are making their best guesses based on old news. Seasoned traders may make some valuable trades within the first 15 minutes. They usually take advantage of extremely high or low price points and reverse it in the opposite direction. To beginners who have never heard of the dumb money phenomenon, or the strategyemployed by seasoned traders to push back against it, the market will appear highly volatile. Hence, waiting until 9:30 is a safer bet than jumping in at 9:15.
Volatility is not all bad. The ideal amount of volatility for beginners arrives in the market after these initial extreme trades have occurred. Hence, this makes the time frame between 9:30 am to 10:30 am the ideal time to make trades. Intraday tradingin the first few hours of the market opening has many benefits:
– The first hour is usually the most volatile, providing ample opportunity to make the best trades of the day.
– The first hour provides the necessary liquidity to get in and out of the market. Liquid stocks are higher in volume so they are likely to be sold off faster.
– The stocks traded or bought in the first hour have been shown to be some of the largest moves of the whole trading day. If done correctly, it can offer the highest returns compared to other time frames during the trading day. If done incorrectly, losses can be massive.
– After 11 am, trades usually take longer and occur in smaller volumes; a bad combination for intraday traders who need to wrap up their exchanges before 3:30 pm. If you require more time, it’s worthwhile to extend this session until 11 am. However, the strategyof limiting one’s trades to the first hour is better fitted to day trading.
Keep the Bigger Picture in Mind
The 9:30 to 10:30 range is not a hard-and-fast rule for every trader to follow. It is suited to beginners, in general, but can be customized to personal needs. It’s wise to keep the bigger picture in mind.
For instance, in addition to utilising the best time framefor intraday trading, another strategyis to keep the day of the week in mind. Monday afternoon is often a desirable time to make purchases on the market as it has historically tended to drop at the start of the trading week. Experts suggest selling on Fridays right before the Monday-dip occurs.
Additionally, not every trader needs to fill up that first one hour with activity. Those who tend to make multiple trades in the trading day can choose a shorter time frame. Alternatively, intraday traders who only make a handful of trades per day can opt for a longer time frame. Depending on how active they are, seasoned traders are also known to switch their time frame on different days.
Many experts suggest that 10.15 AM to 2.30 PM is the right time to conduct intraday trading. Morning volatility usually tends to subside by 10.00 to 10.15 AM, making it the perfect time to place intraday trades.
The continuous trading session is from 9.15 am to 3.30 pm. During this period trades are continuous as orders match at time/price priority. Whenever the buying price is equal to the selling price, the transaction is complete.
It is not a hard and fast rule, but rather a guideline that has been observed by many traders over the years. The logic behind this rule is that if the market has not reversed by 11 am EST, it is less likely to experience a significant trend reversal during the remainder of the trading day.
A day trader could trade off of 15-minute charts, use 60-minute charts to define the primary trend and a five-minute chart (or even a tick chart) to define the short-term trend.
Traders that follow the 10 a.m. rule think a stock's price trajectory is relatively set for the day by the end of that half-hour. For example, if a stock closed at $40 the previous day, opened at $42 the next, and reached $43 by 10 a.m., this would indicate that the stock is likely to remain above $42 by market close.
Medium-term time frames, such as the 4-hour and daily charts, are often favored by beginners. These time frames strike a balance between providing enough trading opportunities and allowing for a broader perspective on market trends.
Ans: The appropriate time frame for options trading depends on your purpose and research of the trade. However, a range of 30-90 days can be a good time frame for most trades.
At Angel One, there is Rs. 0 brokerage charge on equity delivery. On other trades like intraday, futures, options, currency and commodity, the brokerage charge is Rs. 20 per executed order or 0.25% of the transaction value, whichever is lower.
What is the 3 5 7 rule in trading? A risk management principle known as the “3-5-7” rule in trading advises diversifying one's financial holdings to reduce risk. The 3% rule states that you should never risk more than 3% of your whole trading capital on a single deal.
The 5-Minute strategy is created to aid sellers and buyers engage in back tracking and spend some time in the location with the appearance of prices proceed in a latest route. The system depends upon exponential moving averages and the MACD forex trading indicators.
Here is how. Let the index/stock trade for the first fifteen minutes and then use the high and low of this “fifteen minute range” as support and resistance levels. A buy signal is given when price exceeds the high of the 15 minute range after an up gap.
Many experts state that the time frame between 9.30 am and 10.30 am is the best for intraday trading. Trading during these hours is considered beneficial. Intraday traders should avoid trading for the entire day because they might not be able to get sufficient rewards.
The best chart patterns for day trading include the triangle, flag, pennant, wedge, and bullish hammer chart patterns. How to find patterns in day trading? To identify chart patterns within the day, it is recommended to use timeframes up to one hour.
Ans: The appropriate time frame for options trading depends on your purpose and research of the trade. However, a range of 30-90 days can be a good time frame for most trades.
Support and resistance zones seen in longer time frame charts such as weekly or monthly charts are often more significant than those seen in shorter time frame charts such as the one-minute or five-minute chart.
The 3 minute chart trading strategy involves using a 3 minute chart to identify potential entry points. Traders using this approach look for specific patterns within each 3 minute bar, such as candlestick formations or price action signals.
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