Which is your trading time-frame?

Timeframes are an extremely significant component that a trader is required to focus on. Traders are broadly classified based on the timeframe they trade in .The trading strategy of a trader is also interlinked to the timeframe in which he trades.

Nov 18, 2017 03:11 IST others Jayesh Bhanushali |

Timeframes are an extremely significant component that a trader is required to focus on. Traders are broadly classified based on the timeframe they trade in.The trading strategy of a trader is also interlinked to the timeframe in which he trades.

The three main segments traders can be categorized under are

Positional Trader is a type of trader who has a long-term view and generally tends to build a position with a trading horizon of more than a year. He is not concerned with the day to day fluctuations of his assets and is concerned about the primary trend in the market. Fundamental analysis is one of the primary tools made use of by the Positional traders.

Swing Trader tries to capture the gain with a timeframe from an overnight hold position to few weeks. These traders tend to identify situations in asset classes which have the potential to spike up in a short timeframe.  The risk with swing trading is holding overnight positions which can be subject to gap up or gap down openings; hence the position size is slightly smaller than that of day traders. Technical & Derivative analysis is one of the primary tools made use of by the Swing traders.

Intraday trader is a class of traders who tend to open and close their positions within the same trading day. Intraday traders try to capitalize on the small moves in an underlying; they trade in markets by mainly making use of leverage and generally take large bets. The use of leverage could act against them as well.  The main advantage is that they do not have overnight position risk like in the case of Positional and Swing traders. They tend to take positions in rapidly changing market conditions looking for quick profit opportunities. Technical analysis is one of the primary tools made use of by intraday traders to take swift entry-exit positions in the market.

Which time frame is the best to trade in?

Traders tend to choose time frames based on their trading strategy, goals/ objectives, their skill set, time limitations and their risk appetite. A lot also depends on the personality of the trader.
Some traders also tend to analyze multiple time frames, determine the primary trend, secondary trend and short-term trend and then take a position based on their strategy.  
Only actual trading would give you the decisive answer. Many traders learn this only through trial and error.



 

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