The Ultimate Guide to Timeframes

Published by Sharekhan Education | April 12, 2022

The Ultimate Guide to Timeframes

By Anand Sharma | Sharekhan Education

Perhaps the most common question asked by the novice trader is: what’s the correct timeframe to follow while trading? And that’s a legitimate question with no straightforward answer. While traders may come across the notion of analyzing different timeframes, they often overlook multiple timeframe analysis – which is the foundation of reading charts and creating strategies. With this post, we intend to define multiple time frame analysis and how to go about selecting different timeframes.

Defining Multiple Timeframe Analysis

The basic framework of multiple timeframe analysis goes like this: use higher timeframe charts to determine how far the price is likely to go, use intermediate timeframe charts for trend analysis, while smaller timeframe charts can help you determine optimal entry points.

Using three separate periods often provides a broad view of the market while also utilising all the meaningful data that is readily available. Using more timeframes can confuse the trader, diverting them away from their purpose.

Selecting the Right Timeframes

Selecting the right timeframe is also a function of the trader’s purpose and approach. And naturally, there are differing answers for all types of traders, especially  given that there are several timeframes to choose from.

The Hourly Income Trader

Hourly income traders take an aggressive approach to trading and often partake in several trades a day. Suggested timeframes: 75 minutes, 15 minutes, 5 minutes.

The Daily Income Trader

The daily income trader takes a less aggressive strategy; for them, one or two good setups on an average day would suffice. Suggested timeframes: Daily, 75 minutes, 15 minutes.

The Weekly/Monthly Income Trader

Weekly and monthly income traders often do not spend time in the live market; instead, they do their research and enter their trades into the system.

Suggested timeframes: Monthly (only for monthly income traders), Weekly, Daily, and 125 minutes (only for weekly income traders).

To Conclude

Combining three timeframes can boost the probability of a successful trade, independent of the other aspects of a trading strategy. Another advantage of combining the three is the increased accuracy of finding supply and demand readings and entry and exit points. Avoiding wrong entry points, poorly placed stops and unrealistic targets increase the probability of a successful trade.

We at Sharekhan Education heavily emphasize the importance of multiple timeframe analysis. And for a 360-degree understanding of trading and investing, its concepts and its strategies, we highly recommend you go through our extensive courses and pick out the one that best caters to your needs!

By Enrolling in this stock market course, you can learn the various aspects of trading