So you want to become a day trader? That’s awesome! As a beginner, one of the first things you’ll need to wrap your head around is selecting the right timeframe. I know, timeframes sound boring – but finding one that complements your trading style can seriously impact your success.
See, every candlestick or bar on your chart represents a specific timeframe: 1 minute, 5 minutes, 1 hour etc. Matching the right timeframe to your strategy is crucial, since it directly affects how long you hold positions, the number of trades you take, and ultimately – profitability.
But with so many options, how do you even start deciding? 1 minute? 5 minute? 15 minute? It’s enough to make your head spin!
Not to worry my friend. In this comprehensive guide, I’ll break down everything you need to know about trading timeframes for day trading success. From scalping to swing trading strategies, performing multi-timeframe analysis to avoiding common mistakes – we’ve got you covered.
So grab a coffee, put your feet up, and let’s get into it!
An Overview of Intraday Timeframes
Before jumping into specific timeframes, let’s quickly define what we mean by “intraday” charts. As a day trader, these are the go-to timeframes for analysis and execution:
1 Minute (1 Min): Each candle shows 1 minute of price action
5 Minute (5 Min): Each candle shows 5 minutes of price action
15 Minute (15 Min): Each candle shows 15 minutes of price action
30 Minute (30 Min): Each candle shows 30 minutes of price action
60 Minute (1 Hour): Each candle shows 1 hour of price action
Simple enough right? Now compare that to higher timeframes outside intraday:
4 Hour (4 H): Each candle shows 4 hours of price action
Daily: Each candle shows 1 full day of price action
Weekly: Each candle shows price action for 1 week
Monthly: Each candle shows price action for 1 month
As a day trader looking to open and close positions within a single day, you’ll primarily use those intraday charts for analysis.
But why does any of this matter?
Choosing a Match Made in Heaven
Imagine you want to execute 20 trades a day, holding them for just a few minutes each time – almost like a high frequency trading algorithm. Think a 1 minute or 5 minute chart would make more sense than say, a weekly chart in that case?
Lower intraday timeframes like the 1 minute or 5 minute charts allow you to jump in and out of micro price swings almost instantly. You can piggyback momentum, scalp volatile moves, and compound tiny 5 and 10 pip gains all day long!
Alternatively, say your strategy identifies reliable daily breakouts to swing trade over 2 to 5 days. Staring at a 1 minute chart would just give you a headache! The price action and noise levels on lower intraday charts simply don’t match swing trading models.
In this case the 4 hour or daily charts make perfect sense to plan entries and exits, while still monitoring price action just once or twice a day.
As you can see, marrying the right timeframe to your actual day trading strategy is absolutely crucial for success. Like peanut butter and jelly, or Netflix and chill – when this combo comes together, magic happens!
Now that you understand why timeframes matter, let’s explore popular intraday strategies and the ideal charts to use with each one.
Scalping – Riding the 1 Minute Rollercoaster
If sweating bullets in front of screens all day fueled by 5 cans of Red Bull sounds like your thing – you scalper you!
True to its name, scalping aims to scratch out tiny but consistent profits on every trade. We’re talking 5 to 10 pips at a time. This means you’ll need to jump in and out of positions lightning quick before they retrace.
Staring at a 1 minute chart definitely makes the most sense here. You’ll catch micro price swings almost instantly, allowing razor sharp entries and exits for those small scalps.
Just don’t forget your helmet before hopping aboard the 1 minute rollercoaster! Things move insanely fast down there – we’ve got volatile liquidity grabbing moves triggering complex algos by the millisecond. But as long as your strategy has an edge dealing with noise, scalpers absolutely kill it trading off lower intraday timeframes.
1 Minute and 5 Minute charts
Target Profits Per Trade:
5 to 15 pips
Trades Per Day:
20 to 100+
Time to catch our breath a little? Let’s move onto….
Intraday Trend Trading – Riding the 15 Minute Waves
If bouncing in and out of 100 trades gives you more anxiety than a caffeine overdose, intraday trend trading strategies aim to hold winning trades a bit longer – typically between 30 minutes to a few hours.
The name of the game here is still capturing those short term intraday swings and mini trends using momentum. But instead of scraping penny profits, trend traders typically target 15 to 30 pip wins overall.
So which timeframes work best?
Enter the 15 minute and 30 minute charts. These provide the perfect mix between actionable price data and reducing distraction.
You’ve still got volatility and momentum shifts to capitalize on. But zooming out to 15 or 30 minute candles filters out much of the choppy background noise scalpers deal with. This allows trend traders to hop onboard nascent intraday moves with greater confidence.
You’ll easily spot short term channel formations, flags, wedge patterns to trade reversals from. And smoothing out the price action helps run winning trades further targeting daily chart levels.
15 Minute and 30 Minute charts
Target Profits Per Trade:
15 to 60 pips
Trades Per Day:
2 to 5
Now let’s look at breakout strategies on higher intraday timeframes.
Intraday Breakout Trading – Playing the 1 Hour Box
Intraday breakout traders take positional trades aiming to hold winners much longer – usually for hours, even most of the trading day after entry.
Their bread and butter? Trading textbook horizontal support and resistance levels when price breaks out powerfully after consolidation.
These crucial chart levels form reliable trade triggers on higher 60 minute to 4 hour timeframes. Trading breakouts from longer period consolidation reduces whipsaws compared to lower intraday noise.
By harnessing momentum from strong directional Intraday moves, target profits can stretch much wider too from +30 to +100 pips beyond key chart levels.
This style clearly suits patient traders with lower screen time available or willingness. You’ll only catch a few prime set ups daily even during active volatility cycles.
But when properly executed, overnight or even multi day runners can tremendously impact overall profitability.
1 Hour and 4 Hour charts
Target Profits Per Trade:
+30 to +150 pips
Trades Per Day:
1 to 3
Now that we’ve run through popular intraday techniques, let’s discuss using multiple timeframes in our analysis.
Which Type of Trading Offers the Best Time Frame for Success?
Multi-Timeframe Analysis – Best of All Worlds
Here’s an awesome way to incorporate both intraday charts with higher timeframes for even smarter trade planning – multi-timeframe analysis!
Quite simple really. Start by spotting ideal trade setups or directional bias on larger 60 minute, 4 hour or even daily charts first. These provide reliable dynamic support and resistance to target.
For example, a clear ascending channel on the daily signalling overall bullishness.
Next, drop down to lower 15 minute or 30 minute charts to precisely pinpoint entries and exits. These intraday charts help time momentum pullback dips and breakouts within the larger bullish move.
By combining analysis across longer and shorter time horizons, multi-timeframe trading helps achieve:
- Increased conviction confirming trade bias using multiple chart evidence
- Evaluate risk/reward optimally using wider channel levels
- Enhanced entry timing benefiting from shorter term chart data
This flexible approach exploits the unique benefits across intraday and higher timeframes. With a little practice, you’ll find planning higher probability trades almost effortless!
Final Tips to Pick Your Perfect Match
Still feeling overwhelmed by all the timeframe choices? Let’s round up with quick tips to nail down the best match:
Match Timeframe to Strategy: Align charts with your actual trading style – intraday scalping uses different timeframes compared to daily breakout trading.
Consider Volatility & Liquidity: If trading instruments with wider daily ranges like Bitcoin or small cap stocks, shorter timeframes make sense to capture moves.
Evaluate Historical Performance: Backtest strategies across various timeframes. The one yielding best results warrants further optimization.
Available Screen Time: Favor shorter charts if you only have a few hours. Longer timeframes require longer monitoring.
Personal Trading Habits: Discretionary traders should feel comfortable analyzing the candle formations on chosen time periods.
Finding your perfect trading timeframe partner just takes a bit of experimentation and self awareness around trading habits. And the payoff when you lock in that special match? Priceless.
So remember to enjoy the process my friend – because the right moves executed well on charts you vibe with makes all the difference!