Best Time Frame for Intraday Trading

In an intraday trading strategy, the trader purchases and sells stocks on the same trading day to profit 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 to decode the best time frame for intraday trading in India. 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: 
 

As an intraday trader, it is in your best interest to find an appropriate time frame to maximise efficiency and profitability. The best time to do intraday trading can vary based on market conditions, volatility, and personal trading strategy. Even experienced traders prefer trading at a specific time rather than at any arbitrary point 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 and 2:30 PM. That is because it is generally only at 10 AM that the initial volatility settles, the stock market cools down, and the price action is relatively stable. 

Intraday Trading Time for Commodities

The Multi Commodity Exchange of India (MCX) determines the timing of the commodity market. Commodity derivatives trading takes place digitally on MCX, which facilitates price discovery and risk management for market participants.

This Exchange was founded in November 2003 and follows the guidelines provided by the Securities and Exchange Board of India (SEBI). MCX is normally open Monday through Friday, 9:00 a.m. to 11:30 p.m. However, the session ends at 11:55 p.m. due to daylight savings time, which usually occurs between November and March of the following year.

There are two sessions during commodity market time: morning and evening. The morning session runs from 9:00 am until 5:00 pm. The evening session runs from 5 p.m. till 11 p.m. or 11.55 p.m.

Keep in mind that futures trading on agricultural commodities is open until 5:00 p.m. However, trading hours for other commodities, such as energy goods, bullions, and metals, extend until 11:30/11:55 p.m. Trading is still halted on Sundays, Saturdays, and other holidays. The list of holidays is available on the MCX website.

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.

Several factors can account for the intense volatility during the first hour of the stock market opening. Traders need to be aware of the various factors that affect market volatility. Some traders thrive on the volatility during the market opening hours, 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 Right Time Frame for Intraday Trading

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? 

After understanding which time frame is best for intraday trading, let’s look at why it's important to choose the right time frame that aligns your trading strategy with 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. 

Best Candlestick Charts for Intraday Trading

Visual representations of trade data over predetermined periods are called candlestick charts. Candlesticks, which are red and green bars with two lines at either end, are used in these charts. Traders may better perceive market emotions and movements by using candlestick patterns.

Typical intraday candlestick patterns include the "5-minute Candlestick chart" and the "15-minute Candlestick chart." The four points on a candlestick are referred to as the "open high low close" (OHLC). The "5 minutes Candlestick chart" allows traders to view the OHLC for the preceding five minutes. This is a popular intraday trading method since it shows short-term market volatility.

Conclusion 
A Demat account stores stocks and is essential for placing buy/sell orders on the stock exchange. Intraday trading involves buying and selling stocks on the same day, with stop-losses to protect capital. Volatility is not ideal for day trading, so it's best to predict market direction and momentum. Selecting the right stock market app is crucial for seamless trading, and traders should choose a time frame that aligns with their strategies and risk tolerance. In India, mid-morning to mid-afternoon sessions are preferred due to optimum volatility. The first hour after market opening is riskier for beginners. Understanding market conditions and selecting suitable trading periods can enhance success, efficiently use capital, and manage risk effectively using the stock market app.