best chart interval for daytraders

Discussion in 'Technical Analysis' started by arzoo, Aug 16, 2002.

  1. arzoo


    I'm still a newbie at daytrading and have been using 15 min intervals. I'm wondering, though, what do you more experienced guys use, and which one you feel is more effective.
  2. mpow


    5 min
  3. alain


    depends what you are trading, depends on your trading style, depends on your risk tolerance, depends on the liquidity... very individual. I always backtest certain patterns that are part of my trading method and then I compare the results of the different time frames. Then I know with a higher problability in which timeframe my trading is more effective. But I do this only once a month...
  4. Any successful trader that's actually making a living will tell you this...

    there is NO BEST chart interval for daytrading...NONE.

    With that's absolutely critical your using multiple chart intervals with such charts side by side on your computer screen.

    Why?...the strongest or high probability daytrading trade setups (trends...if your not a scalper) will have confirmation on different chart intervals.

    In other words, if your not a scalper and you get a Short signal confirmation on the 1min chart but it's still a Long signal on the 3min chart and you make a trade via the 1min chart've already reduced the odds for a successful trade.

    Remember is about probabilities. You only want to take trade setups that have the highest probability for profits or follow thru...often called cherry picking.

    Thus, in my opinion and experience...the most profitable trade setups have multiple chart interval confirmation.

    Me favorite (not best) chart interval is the 1min chart for my trading style.

    Next to that chart on my computer screen is the 3min chart. Some setups are via the 3min chart and some are via the 1min chart...yet, both must be confirming the trade setup.

    Also, I use the 15min chart and daily chart for support and resistance levels and a bigger picture at trend analysis.

    P.S. I notice a lot of newbies that are new to trading come in with the notion and post such notion at looking for the BEST software, BEST website, BEST books, BEST broker, BEST pattern, BEST chart interval, BEST indicator...

    there's no such thing as the BEST.

    It's all about what's suitable for your trading style or trade methodology.

    Remember this...what works for one trader...most likely won't work for another trader.

    Just in case you were asking about a scalpers interval...most scalpers I know use either the 1min chart or tick charts that converts tick data into bar or candlestick charts.

  5. alain


    I totally agree!
    it's very individual...
  6. i look for a particular pattern on the 5 min chart and then drop down to 3 min chart. if the same pattern is confirmed in , i am in the trade about 90 % of the time. it requires lots of waiting. this pattern confirm only occurs 2-3 times per morning.( do not trade pm)
  7. you know on the commercial when Yogi Berra says: "and they give you cash, which is just as good as money"?

    well you're about to embark upon a journey, that all successful traders have already done. you're about to begin one of the most individual fact finding journeys on the road to trader nirvana.

    you will have to experiment with a variety of intervals, depending upon these essential factors:
    1) your pipeline, or bandwidth from the NOC (network operations center) to your computer, through your ISP
    2) your processors and machine currency. simply put, if you're using one of the most current machine configurations, like the Pent 4 with a 400 FSB (front side bus, dual bandwidth) or the newer 533 mhz FSB; along with the latest DDRam (double rate ram) with more than enough to load the programs into memory instead of paging back and forth; a 2Ghz or faster processor, etc, etc
    3) a very thin footprint application
    4) no other competing applications running, like eSignal, Tradestation, Nirvana or any of the host of other applications
    5) no other communications software (MSN, ICM, or other instant messengers), no other pipeline hoggs (like email clients, internet browsers, etc)
    6) whether you're trading NASD Level II or Level I NYSE/AMEX stocks

    The last one is the most important, because when you have 4 of the 5 top volume NASD stocks on Level II, and Time/Sales windows and Charts and Stock Index/Quote screens and so forth, you're just about killing the processor and the bandwidth, hence you need to significantly over power the application, just in these cases.

    The threads regarding Echo or Redi "locking up" or the applications "going down", basically do so because of the motherboard's inability to prioritize and preference all those open windows with these demanding applications. So, it is entirely possible to "over load and melt your processor".

    After your configuration issues are resolved, then multiple charts on the same stock with side-by-side comparison of the intervals will give you what you need to decide what is the best.

    Because, there is NO BEST INTERVAL, just what works for you!

  8. arzoo


    Thanks very much. You guys are right, i think the right question would've been which type of interval suits you better, or something like that.

    I've read some posts lately and you guys are very helpful, hope I can slowly improve on my trading.

    I noticed that some of day traders here have big balances, which makes me wonder how they trade. I ask this coz i notice that bids and offers in some issues arent that big, even in more common issues like brcm and amat. So how do guys who have like more than 100k and 4-10x leverage trade these? or do they stick with guys like csco and the other bigger but less volatile ones?

    Sorry if my question is kinda naive, its just i'm new at this.