In a charting platform, time duration plays a major role. Choosing the best time duration is a priority skill required for traders. A time frame is defined as the time duration, used by traders to study a particular chart. There are multiple time frames available in charting software. The popular time frames used by technical analysts are given below
As the name indicates, intraday charts are mostly used by short-term traders. There are multiple timeframes in intraday charts. 1 minute, 5 minutes, 15 minutes, and hourly charts are available in an intraday timeframe. High-frequency traders prefer to use up to 15 minutes time frame. As the time frame reduces more candles will be formed and the trader will be able to take more trades in a day.
1 Minute :
In a 1-minute timeframe, a candle is formed every 60 seconds. The Open, High, Low, and Close price of the stock for the particular 1 minute is plotted in the chart. Below is an example of a 1-minute time frame chart. More buy/sell signals will be generated in this time frame for a particular day.
5 Minutes :
In a 5-minute timeframe, a candle is formed every 5 minutes. The Open, High, Low, and Close price of the stock for the particular 5 minutes is plotted in the chart. Below is an example of a 5-minute time frame chart. More buy/sell signals will be generated in this time frame.
15 Minutes :
In a 15-minute timeframe, a candle is formed every 15 minutes. The Open, High, Low, and Close price of the stock for the particular 15 minutes is plotted in the chart. Below is an example of a 15-minute time frame chart. 1 0r 2 buy/sell signals will be generated in this time frame.
Hourly chart :
In an hourly timeframe, a candle is formed every hour. The Open, High, Low, and Close price of the stock for the particular one hour is plotted in the chart. Below is an example of an hourly time frame chart. Buy/Sell signals will be less in this time frame compared to the previous time frames.
Daily charts are formed using the day’s Open, High, Low, and Close prices. Only one candle is formed for a day. Daily charts are preferred among positional traders. Position trading is a long-term trading strategy. Traders will hold positions from weeks to months, to even years. While using daily charts they will get a deep insight into the market for the long term.
The weekly charts candle starts on Monday and ends on Friday evening(if Friday is a holiday, then the last working day of the week is the end of the weekly chart). Only one candle is formed for the whole week. For a month you will find only 4 candles. Weekly charts are not preferred among swing traders. Investors and Positional traders prefer to use weekly charts to have a deep insight into the trend of the overall market.
The monthly chart candle starts on the first working day of a month and ends on the last working day of the month. Only one candle is formed for the whole month. For a year you will find only 12 candles. Monthly charts are not preferred among swing traders and positional traders. Investors prefer to use monthly charts to have a deep insight into the trend of the overall market.
Intraday and daily charts have more ups and downs. For a short-term trader, these lows and ups are viewed as an opportunity to earn profits. Long-term investors always avoid these short-term fluctuations and always stick to their well-defined strategies.
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