BEST TIME FRAMES FOR DAY TRADING
INDIAN STOCK MARKET
Having a successful trading career not only depends on the trading system or style that you use but also depends on other intangibles, such as day trading time zones. Understanding the market dynamics during different times of the day will take your trading to the next level.Think about your trading history and notice if you see a pattern in the different day trading time zones in relation to winning and losing trade percentages.
What a day trader must understand is that even if a chart has a great setup, the time at which the trade is placed may be in a day trading time zone which typically starts a counter trend move. For example, many traders who day trade breakouts will be far more successful during the first two hours of the day than any other time frame during the day. Typically breakout attempts will fail and reverse which will only serve to frustrate the trader and cause you to doubt your approach to trading.Let's now take a look at the different time zones and understand the general market dynamics during each time zone.
Day Trading Time Zones
The first 15 minutes of the day are the most volatile of the trading day. While this is the most dangerous day trading time zone, it can also provide to be the most lucrative if you understand how to trade in this time frame. It is usually recommended that novice traders stay out of this zone and wait for the imbalances created from overnight news or earnings releases to settle down. Many technical indicators do not work well in this time frame as the volatility is too strong. In most cases, volume will also be the highest of the day during this time.
Trading the First Half Hour: the 10-minute Reversals• First “fill open orders” 9:30-9:38
• Retracement/FIRST REVERSAL 9:40
• Does it a) go strong after 9:40? or b) chop and have a tentative consolidation?
• 9:40-9:50: PIVOT TIME
• 9:50 SECOND REVERSAL
•10am: MAJOR TREND CONTINUATION/REVERSAL
Trading the 15-20 minute Trends from 10-11:30am• 5-15 minute round trips fine
• Heavy use of trailing stops to lock in profits
• Live by the CHART more than the TAPE
• You have to use more discipline to avoid fading tops, bottom fishing, eg be more SELECTIVE in your entries here
In general, market timing is a strategy that endeavors to be fully invested in the market when it is advancing and to be all in cash or to be short when the market is declining. And that is what is different about market timing, compared to buy-and-hold. Of course, this definition applies to investing in any investment vehicle whether it be individual stocks, mutual funds, options, futures, gold or bonds.