Day Trading Tips: How To Choose the Best Chart Interval for Day Trading
By Barry Burns
One of the greatest day trading tips you’ll ever pick up, is how to find the best time period for your charts.
Here are a 4 things to consider:
1. If your trading account is extremely modest and your greatest risk is a small percentage of that, then you may have to make use of an interval that is so fast that it’s very noisy. Obviously that’s not a good situation and the only way out of it is to have a larger investing account. Numerous traders are simply underfunded and this can be a large part of the cause for their failing.
2. The quicker the time frame, the less time you have for identifying and entering a trade. This can result in missing entries. How fast is too quick? The remedy to that varies from individual to person. It will depend on how quickly your brain and hands are! You’ll simply realize that by trading and finding out for yourself. But if you discover yourself having a difficult time getting into trades that you observe, you may possibly want to go to a higher time frame.
3. The psychological need for trading frequency. This is just one of those day trading tips that is rarely discussed. If you go to a chart interval that is too long, then your trade frequency may get beyond your attention span. Longer-term intervals are good for proving much more precise signs, however they provide fewer trades in a provided period of time. This may contribute to missing trades, not due to the fact the market is moving too fast, but because there is so little for you to do, that you get diverted and do not notice the configurations when they come.
4. You may possibly additionally want to utilize a time period that is very common. This particularly is applicable to minute charts. 5 minute charts and 60 minute charts are extremely common time frames and it may be helpful to make use of these simply to see exactly what everyone else is looking at.
Many traders utilize what I refer to as “magic numbers” pertaining to chart periods – usually Fibonacci quantities – imagining they possess some significance. In my view, that is a completely useless method to select a time frame.
The above recommendations will supply a chart interval that is actually based upon finding the time frame that is the finest intersection of smart money management principles and your own trading psychology needs.
Following these 4 rules will provide you a “meaningful” way to uncover the best time frame for your stock chart, and this can be one of the best day trading tips you can take to heart.
Dr. Barry Burns is the owner of Top Dog Trading which beginning and advanced traders with many unique day trading tips.
He started his study of the markets under the direction of his father, Patrick F. Burns, who became independently wealthy through trading and had over 70 years of trading experience before passing away in 2005. He has been the featured speaker at DayTradersUSA, and developed a 5 Day Course for WorldWideTraders. Dr. Burns has been a headlining guest speaker for the Market Analysts of Southern California, given seminars around the country at many Wealth Expos as well as many Traders Expos, been interviewed on the Robin Dayne Elite Masters of Trading Radio Show, and is the former moderator of the FuturesTalk chat room.
He has a doctorate in Hypnotherapy and is a certified NLP practitioner, and therefore able to help people with the psychology of trading.
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