Best Time Frame For Day Trading - Which One to Choose? - Earn2Trade Blog (2024)

What time frame is best for day trading is a question asked by many market participants, especially beginners. Whether that is trading on a 15-minute, 5-minute, or 1-minute chart, one should first decide on the overall investing approach he wishes to adopt.

While a trader can only base his trades on a single timeframe, many experienced traders also use multiple time frames to confirm trading signals. In this article, we explore the best day trading time frames and how to benefit from using several time frames at once.

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What Is a Day Trading Time Frame?

Time frames directly affect the frequency of your trades, so it is crucial to pick a time frame that is appropriate for your goals and trader profile. In other words, you should first determine what type of trading you will engage in before picking the right time frame. For example, day traders and long-term investors don’t use the same time frames because they follow different trends and trading strategies.

Generally, time frames can be displayed in minutes, hours, days, weeks, months, or even years. If the time frame is smaller, you can expect more trading signals. However, this isn’t always a good thing, as much of this data can be noise that is difficult to filter through and can sometimes negatively affect your trading decisions.

You can switch between different time frames on the chart. The candles represent different time units, depending on your selected time frame.

Since day trading is among the intraday trading types that analyze smaller price movements of just a few minutes to a couple of hours, it usually relies on small time frames such as 15-minute or 5-minute charts.

Best Time Frame for Day Trading – Which One to Choose?

Common Trading Time Frames

It is quite common to see novice traders struggling to choose a time frame. First of all, it is important to note a couple of things. Usually, longer time frames generate more reliable signals. The reason is that shorter time frames can produce more deceiving signals and noise, making it harder to identify trends and signals.

That said, traders are better off using longer time frames to determine the primary market trend. Once the primary trend is identified, traders can use different time frames to pinpoint short-term movements.

However, picking the right time frame heavily depends on what type of trading you are involved in. This is because swing traders, long-term investors, and day traders use different time frames.

For instance, swing traders analyze daily charts before making a move. They often utilize weekly time frames to identify the primary trend and 60-minute time frames to identify short-term opportunities.

Long-term investors can keep their positions open for several months or even years. They commonly use weekly or monthly charts to identify the primary trend and daily time frames to find optimal entry and exit points.

What Is the Best Time Frame for Day Trading?

Day traders focus on smaller price moves within a single trading day. While they often utilize margin trading and leverage to increase their profit potential, day traders can usually choose between several different time frames. However, it depends on how long they plan to keep their position open during a trading day.

In day trading, the aim is to take advantage of price movements over a period of a few minutes to several hours, assuming that all positions must be closed by the end of the trading day. This is why day traders generally use smaller time frames. Good examples of commonly used time frames in day trading include 1, 5, 15, 30, and 60-minute charts.

Remember, choosing a trading frame that suits your strategy and trading profile is crucial. This is why practicing using different time frames in demo trading is highly recommended before making real trades.

Scalpers looking to make a profit measured in a few pips typically use 1-minute or 5-minute charts. In essence, their strategy is based on the belief that it is better to record several trades during the day and make small, consistent gains instead of single one-off wins. This is why they also tend to place a narrow stop loss to protect their accounts while also moving fast to close their winning trades.

Trading On a 15-Minute Chart

A 15-minute time frame is commonly used by day traders who carry out several trades within a single day. Because they have a wider watchlist, they need a somewhat longer time frame to help them scan and analyze price movements in the best possible way. In this case, a shorter time frame would contain a lot of noise and make it harder for a trader to refine entry points.

For some day traders, a 15-minute chart is a preferred choice for identifying intraday patterns and detecting key entry points. This time frame provides traders with proper insight into support and resistance levels and allows them to cash in on major intraday price movements.

As noted earlier, trading on the 15-minute chart is one of the most common day trading strategies.

Trading On a 5-Minute Chart

The chart allows day traders to trade around price reversals and keep their positions open when a new trend emerges. This approach is common among traders focused on trading short-term momentum shifts.

Both 15-minute and 5-minute charts are used by traditional day traders, who aim to make just a few trades per day. When choosing between the two, it largely comes down to your trading strategy.

1-Minute Time Frame Trading

They are mainly used by experienced scalpers. As explained earlier, scalping is a trading method that attempts to cash in on multiple small price changes.

This time frame requires a thorough understanding of the market structure and strict trading discipline. Trading with 1-minute charts requires a well-established exit strategy and lots of information.

Trading in this time frame demands constant attention because new candlesticks are generated each minute, and fresh trade signals can emerge anytime. Since new candles/bars are produced so often, 1-minute chart traders usually make many transactions, compared to those who use 5-minute or 15-minute time frames.

Trading On Multiple Time Frames

In trading, making money is all about identifying a trend and planning your trades around it. Market trends are usually categorized as primary, intermediate, and short-term. But markets exist in multiple time frames at the same time, and because of this, price trends for a particular security can sometimes conflict with each other, depending on the time frame.

Example of Using Multiple Time Frames

It is common for traders to use a longer time frame to identify the primary trend, an intermediate time frame to look for signals, and a shorter time frame to pinpoint entry and exit points.

For example, below is a 1-hour AAPL chart. We start by identifying the dominant trend, which in this case is an uptrend, given the tendency of higher lows and higher highs.

Best Time Frame For Day Trading - Which One to Choose? - Earn2Trade Blog (2)

After identifying that the price action is moving in an uptrend, we will use the 15-minute chart to define our entry point. Our day trading strategy is based on the following principle: we will look to buy a stock moving in an uptrend as soon as there’s a correction in price action that pushes the price toward the 200 moving average (the red line) on the 15-minute chart.

Best Time Frame For Day Trading - Which One to Choose? - Earn2Trade Blog (3)

Within one trading day, our strategy yielded two buy trades. In both cases, the price action fell to the 200 moving average before spiking higher. The stop loss should be placed several pips below the moving average, while our take profit level should be somewhere double the number of pips we are risking.

For instance, if our stop loss is ten pips below the entry point, we are attempting to make at least 20 pips to make our strategy profitable in the long term. In both cases, our take profit targets were hit, resulting in an estimated 40 pips profit for a single day.

Conclusion

Choosing the best time frame for day trading activities depends on what type of trader you are. Those retail investors looking to make smaller profits per trade while executing several trades per day will usually go for a 5-minute or 15-minute chart.

On the other hand, traders who are laser-focused on nailing a one, low-risk trade during a single day-trading session are more likely to use a 30-minute or 1-hour chart. More experienced traders prefer using multiple time frames to confirm trading signals and identify trade levels (entry point, take profit, and stop loss).

The selection of time frames represents a unique choice for each trader. As a general rule of thumb, traders should choose the primary time frame they want to use and then complement it with additional time frames.

Best Time Frame For Day Trading - Which One to Choose? - Earn2Trade Blog (2024)

FAQs

What time frame should I use for day trading? ›

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.

What is the best time frame combination for day trading? ›

The combined use of 5-minute, 15-minute, and 30-minute timeframes makes trend identification most effective. For this reason, this strategy is the most reliable trading style for day traders.

Which time frame chart is best for option trading? ›

15 minutes time frame for options trading is best. 30 minutes and 1 hours are used for positional and swing trades. What time frame should I use for day trading? There are different time frame in intraday chart pattern which are useful while trading.

What is the most profitable time frame for trading? ›

What I Use and Why. From experience, I can tell you that two of the best time frames to trade are the daily and 4-hour. This isn't to say that you can't be profitable trading a different time frame, but these two are what made me profitable as they work the best with the price action strategies I use.

What is the best timeframe for intraday trading? ›

One to two hours of the stock market being open is the best time frame for 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.

Which time frame is best for trading analysis? ›

Dev offered guidance: "For day trading, where the goal is to open and close positions within a single trading session, you need shorter timeframes. Consider using 30-minute (30M) to 5-minute (5M) charts for intraday analysis. These shorter intervals provide the granularity required for making quick decisions.

What is the best chart for day trading? ›

For day trading, candlestick and bar charts are particularly useful due to their detailed price action representation. For long-term analysis, line charts offer a clear view of overall trends.

What is the preferred chart for timeframe? ›

Line graphs are used to track smaller or larger changes over a period of time. They can also be used to see how a certain metric changes over time.

What is the best timeframe for a beginner trader? ›

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.

Why trading on higher time frames is better? ›

Higher timeframes will allow you to eliminate “market noise” and catch the big and “tasty” price swings. At the same time, you will probably make more trades on lower timeframes. This can allow you getting money just by scale: the more trades you open, the more chances of good trades you will have.

What is the best time zone for day trading? ›

Key Takeaways

The U.S./London markets overlap (8 a.m. to noon EST) has the heaviest volume of trading and is best for trading opportunities. The Sydney/Tokyo markets overlap (2 a.m. to 4 a.m.) is not as volatile as the U.S./London overlap, but it still offers opportunities.

Is trading with daily time frame good? ›

Trading inconsistently – All trading signals are stronger and clearer on daily charts than on time frames below, thus it makes your trading more effective and consistent over the long-term due to the increased reliability of the signals.

What is the best time frame for trading chart patterns? ›

Start with a primary time frame, often daily/weekly, to identify core pattern. Then choose shorter intervals, e.g. Hourly / 15-min charts to determine accurate entry/exit points. Additionally, incorporate a longer time frame, such as a monthly chart, to assess the overall trend.

Which time frame is best for day trading cryptocurrency? ›

For instance, a swing trader may utilize a daily chart to observe the long-term trend and, after that, a 4-hour chart to search particular entry and exit points. The ideal timeframe for crypto day trading, in general, is a ratio of 1:4 or 1:6, like for entries in an hour chart and for finding the trend 4-hour chart.

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