Best Time Frame for Intraday Trading

The old adage “less is more” is often applicable when it comes to intraday trading. Generally, it might prove wise to limit one’s intraday trading to a few key hours as opposed to purchasing and selling stocks the entire trading day. In fact, devoting one to two strategically chosen hours each day to trading has proven to be more beneficial for traders who work with stocks, index futures, and ETFs.

The Best Time Frame for Intraday Trading

Finding the best time frame is very beneficial for long term intraday traders. As they are known for important market activity, utilizing these hours can help maximize your efficiency. On the flip side, those who day trade for the whole day get very little time for other things with insufficient rewards. Even experienced intraday traders can lose their money if they trade outside of the best time frame for intraday trading. This begs the question: what is the best time frame for intraday trading? The answer: Between 9:30 to 10:30 am.

Should I Trade in the First Fifteen Minutes?

One to two hours of the stock market being open is the best time frame for intraday trading. However, most stock market trading channels open from 9:15 am in India. So, why not start at 9:15? If you are a seasoned trader, trading within the first 15 minutes might not be as much of a risk. For beginners, it’s recommended to wait until 9:30. The reason behind this is simple; in the first few minutes of the market opening, stocks are likely reacting to the previous night’s news.

Trades often will depict sharp price movements in a particular direction. This is called the “dumb money phenomenon”, as people are making their best guesses based on old news. Seasoned traders may make some valuable trades within the first 15 minutes. They usually take advantage of extremely high or low price points and reverse it in the opposite direction. To beginners who have never heard of the dumb money phenomenon, or the strategy employed by seasoned traders to push back against it, the market will appear highly volatile. Hence, waiting until 9:30 is a safer bet than jumping in at 9:15.

Best Time Frame for Intraday Trading

Trading at the Opening of the Market

Volatility is not all bad. The ideal amount of volatility for beginners arrives in the market after these initial extreme trades have occurred. Hence, this makes the time frame between 9:30 am to 10:30 am the ideal time to make trades. Intraday trading in the first few hours of the market opening has many benefits:

  • – The first hour is usually the most volatile, providing ample opportunity to make the best trades of the day.
  • – The first hour provides the necessary liquidity to get in and out of the market. Liquid stocks are higher in volume so they are likely to be sold off faster.
  • – The stocks traded or bought in the first hour have been shown to be some of the largest moves of the whole trading day. If done correctly, it can offer the highest returns compared to other time frames during the trading day. If done incorrectly, losses can be massive.
  • – After 11 am, trades usually take longer and occur in smaller volumes; a bad combination for intraday traders who need to wrap up their exchanges before 3:30 pm. If you require more time, it’s worthwhile to extend this session until 11 am. However, the strategyof limiting one’s trades to the first hour is better fitted to day trading.

Keep the Bigger Picture in Mind

The 9:30 to 10:30 range is not a hard-and-fast rule for every trader to follow. It is suited to beginners, in general, but can be customized to personal needs. It’s wise to keep the bigger picture in mind.

For instance, in addition to utilising the best time frame for intraday trading, another strategy is to keep the day of the week in mind. Monday afternoon is often a desirable time to make purchases on the market as it has historically tended to drop at the start of the trading week. Experts suggest selling on Fridays right before the Monday-dip occurs.

Additionally, not every trader needs to fill up that first one hour with activity. Those who tend to make multiple trades in the trading day can choose a shorter time frame. Alternatively, intraday traders who only make a handful of trades per day can opt for a longer time frame. Depending on how active they are, seasoned traders are also known to switch their time frame on different days.