Best Time Frame for Intraday Trading

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In an intraday trading strategy, the trader purchases and sells stocks on the same trading day with the intention of profiting from swift price changes. For that, they use various strategies, follow different guidelines and refer to specific intraday time frames. In this article, we try decoding what the best time frame for intraday trading. It’s worth noting that we are not referring to the time frame on the chart, but are instead trying to provide some tips on when intraday traders should place their trades. 

What Time Should I Start Trading?

In India, the stock exchanges begin regular trading operations at 9:15 am. Should you place your trade order as soon as the opening bell rings? No, especially if you are a beginner, since some time frames during the day are better suited for intraday trading than others. Broadly, a regular trading session can be divided into three sessions using a stock trading app:

                        Session                        Timing
Morning Session            9:15 AM to 10:15 AM
Mid-Morning to Mid-Afternoon          10:15 AM to 2:30 PM
Closing Session            2:30 PM to 3:30 PM

As an intraday trader, it is in your best interest to find an appropriate time frame to perform intraday trading to maximise efficiency and profitability. Even experienced traders prefer trading at a specific time as compared to trading at any arbitrary point in time during the trading session. 

While there is no one-size-fits-all answer, many intraday traders prefer trading during the mid-morning to mid-afternoon sessions—between 10:15 AM to 2:30 PM. That is because it is generally only 10 AM when the initial volatility settles, the stock market cools down, and the price action is relatively stable. 

 

What is Intraday Time Analysis

The popularity of online trading has grown among investors seeking the convenience of buying and selling stocks from their residences. Intraday trading time analysis involves analysing patterns in the stock market. The operation of stock markets during a single trading day varies based on factors such as market hours, prevailing economic conditions, and trader sentiment. Intraday trading distinctions within a day have a substantial impact on price movements, liquidity, and the overall trading environment.

Successful day trading depends on a thorough understanding of the dynamic shifts in market conditions throughout the day. The ability to grasp and navigate intraday volatility is crucial for achieving success in day trading. The initial moments of a trading session typically exhibit heightened volatility, marked by swift and significant price movements. Traders respond to overnight news and the release of economic data, leading to rapid changes in prices. Intraday traders may utilise strategies to take advantage of these early price swings.

Should you Trade When the Market Opens?

The opening of the market is often associated with increased volatility. Prices can experience significant fluctuations due to overnight news, earnings reports, or other factors. For beginners, it is better to wait until the mid-morning session, and if that’s too much, at least consider waiting out until 9:30 AM. But If you are comfortable with high volatility and have a strategy that works well in such conditions, trading at the market's opening time might be suitable. 

The intense turbulence during the first hour of stock market opening can be attributed to several factors. It's important for traders to be aware of the various factors that affect market volatility. Some traders thrive on the volatility during the market opening, while others may prefer to wait for more stable conditions later in the trading day. Additionally, risk management is crucial during periods of high volatility.

Choosing the Intraday Trading Right Time Frame

To determine the right time frame for intraday trading, it's essential to analyse various time charts. Depending on your preference, you can make informed decisions when buying stocks online for intraday trading.

  • A 1-minute chart proves beneficial for extremely short-term scalping strategies and identifying opening range breakouts. Successful trading in this time frame requires swift execution and continuous monitoring.
  • A 5-minute chart serves well for short-term momentum trades, recognising support/resistance levels, and establishing intraday trends. It provides more contextual information compared to the 1-minute charts.
  • The 15-minute chart, a popular intraday time frame, balances capturing short-term moves and filtering out noise. It offers clear signals for key support/resistance and trends.
  • Moving the 30-minute chart suits swing trading, featuring less noise than lower time frames. Crucial intraday support and resistance levels become prominent, providing a broader market context.
  • The 60-minute chart identifies longer-term intraday trends and is useful for discerning larger support/resistance zones for the day.

Check out the Intraday stocks for today here.

Should I Trade in the First 15 Minutes?

The decision to trade in the first 15 minutes depends on individual preferences, risk appetite, and the ability to steer the market's early fluctuations. The initial moments of the trading day may witness increased volatility as the market responds to overnight news, economic data, or corporate announcements. 

The initial few minutes typically experience lower liquidity than later in the trading session. This reduced liquidity can lead to broader bid-ask spreads and difficulties executing trades at desired prices, potentially influencing trading costs and overall profitability. Experts hold contrasting opinions on the right time frame for intraday trading, but there is a general consent to avoid the first and last hours due to increased volatility. This volatility is attributed to the market's reaction to overnight news, economic data, or corporate announcements. While volatility can offer trading prospects, it simultaneously raises the risk of sudden and unpredictable price swings. Similar volatility is also anticipated in the final hour of trading as many traders square off their positions. 

Why is it important to trade during the right time frame?

Selecting the right time frame aligns your trading strategy with the market conditions, increasing the likelihood of success. You effectively utilise your capital and enhance your profitability if you know what to expect regarding volatility, liquidity, and trading volumes. By adapting your trading approach to the right time frame, you increase the likelihood of discovering setups that are compatible with your strategy. Trading during a suitable time frame also helps with risk management, helping to mitigate the potential for excessive losses.

Conclusion 
Selecting the right stock market app is crucial for seamless trading. Intraday traders should strive to find the right time frame that aligns with their trading strategies and risk tolerance. While the exact time frame may vary based on individual preferences and strategies, intraday traders in India generally favour certain periods during the trading day. The mid-morning to mid-afternoon session, between 10:15 AM and 2:30 PM, is often preferred due to optimum levels of volatility. 

In contrast, the first hour after the market opening is characterised by extreme volatility and may be riskier, especially for beginners. By understanding the market conditions during different time frames and selecting the most suitable periods to trade, traders can enhance their probability of success, efficiently utilise their capital, and manage risk effectively using stock trading apps.

FAQs on Best Time Frame for Intraday Trading

Volatility is advantageous for intraday trading since it provides plenty of possibilities for trade entry and exit. An intraday trader is not going to be able to benefit the most from the stock price if it is stable and moves sideways. However, extreme volatility is undesirable, though, as it increases the likelihood of stop-loss hits.


 

At 3:30 PM, the market shuts, so you firstly have only 30 minutes to settle a deal if you start an intraday trade at 3 PM. In the last 30 minutes of the trading day, the price momentum may or may not occur. Trading around the stock market's closing time is therefore not recommended.


 

Intraday traders generally refer to day charts and, in terms of candlesticks, they refer to 5-minute or 10-minute candlesticks.

No, you don’t need to trade throughout the entire mid-morning to mid-afternoon from 10:30 AM to 2:30 PM. 


 

Besides time frames, intraday traders should also consider other factors such as risk management, position sizing, market liquidity, trading volumes, and overall market conditions. 


 

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