New day traders, commonly, wonder which timeframe they should watch. Should they use a one-minute, a five-minute, or tick chart? Here are the time frames day traders should watch depending on their day trading strategy.
Kinds of Charts Time Frame
The way the data is viewed will never change the volatility of the market, it will only affect the amount of information you get. A tick chart, for example, shows most of the data since it allows new bars to appear for each transaction.
Or else, we have a one-minute chart. This chart shows the price movement each minute. Other than that, we also have five-minute charts, which also show the price movement in every five minutes, and many more.
The longer the time frames of a chart will show less information.
The Time Frames to Watch
Every time frame shows the exact same information, in a different way. The shorter time frames, normally, show more detail than the longer time frames.
In day trading stocks, try to always monitor the tick chart near the open. There will be a lot of transactions happening during that time. Thus, it allows you to do big moves and reversals in only a few minutes.
You will miss several pieces of information if you use the one-minute chart since there will only be one or two bar appears in every one minutes.
That number is way low if we compare it to the 10 to 20 bars appear in every few minutes on a tick chart. Thus, tick charts can give you way more trade signals, especially if you trade high volatility stocks.
Continue to use this tick chart for the rest of the day.
As the Day Progress
Throughout the day, you will get a lot of bars chart in the tick chart, especially in the high volume and volatile trading day. You may get difficulties to view the entire price range when you zoom it in.
Thus, to assess the overall trend, you have to move into one-minute or two-minute charts. That way, you can monitor the intraday levels, overall volatility, support and resistance.
After Lunch
Mostly, trades happen near the open and stop around 11:00 or 11:30 a.m. EST, prior to new York lunch hour. During these hours there are few quality trade opportunities.
After lunch hour (around 1:00 p.m. EST), however, traders go back to trade. While some other traders wait until it gets near the close hours. Thus, in the late of the day, the tick and one or two minutes chart usually not show the entire trading day.
Stick to your tick chart, while having your four or five-minute chart open. That way you can see the overall trend during the day.
