When you are new to intraday trading one of the most common queries while analysing charts is – What is the best time frame for intraday trading?
From the experience of multiple traders, 5 min and 15 min chart time frames are the best time frames for intraday trading. There are system based on 1 min and 30 min chart too, but they are either too volatile or too slow.
Of course, there are traders who take a trade based on 30 min or even 1-hour time frame too, but specifically for intraday traders, these 2-time frames are most effective.
Time frame choice according to intraday trader
There are two types of intraday traders – Scalpers and Day Traders.
Best intraday time frame for scalpers
Scalpers trade for a small profit in multiple trades and thus they may have 10-15 trades in a day. Thus, the lower time frame of 5 min or 3 min is most used and suitable for them.
If you are using any indicators in your intraday trading strategy, then you can chose the lower time side of time frame.
Whereas, if you are using candle stick chart patterns only (price action), then bigger time frame are more suitable. It is because price action based chart patterns take time to form.
Best intraday time frame for day traders
On the other hand, day traders are just swing traders with single day focus. Thus, they do max of 2-3 trades in a day and try to remain in the trend for that stock for the whole day. In such cases, 15 min chart along with 30 min chart works best for them.
Just like scalpers, if you are using indicators in your day trading strategy, then you can use 15 min or even lower time frame. But, for price action based trading only, 15 min and 30 min time frame combination is best for intraday trading.
Which is the best time frame for intraday trading – first half or last half?
Now, this is little tricky. But most of the profitable trades are statistically present in the first half of the day.
It is the time when retailers are digesting the incoming news of the day.
The 2nd half of the day is mostly either for trend continuation or reversal. This means you can use the profit made from the first half of the day to take additional trades in the second half of the trading session.
Should you trade as soon as the market opens?
No, you should not start trading as soon as the market opens. You have to let the market settle down a little bit and then see the trend to decide about your trade.
Only when you have been intraday trader for quite sometime, you can chose to trade at market open, if stop loss is very near.
Most of the professional day traders, do take benefit of the market open price but only if they see it in line with their strategy and risk control.
To protect yourself from making a loss in intraday trading, best to avoid trading in the first 15 min, wait for entry and then make a trade.
Which time frame to use for RSI in intraday trading?
Now, for this query, I asked many intraday traders and the answer was – RSI kind of doesn’t work in intraday trading time frame.
Unless you use it with a higher timeframe and then go intraday candle set up to take the trade. This means, if you are looking for trade then price action based setup leading indicator as compared to RSI as a technical indicator.
This answer is for RSI only, there are other technical indicators which work well in intraday.