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Best TIME-FRAME to trade – INTRADAY Vs POSITIONAL

Today’s article is about “WHAT IS THE BEST TIMEFRAME TO TRADE THE MARKET ?”.

There are different form of traders with different trading strategies trading the market using different timeframes. Short term traders are using lower timeframes like 5min,15min,30min,hourly charts mostly & medium to long term traders prefer higher timeframe charts like daily,weekly,monthly.Today We’ll focus on the usage & significance of all these different timeframes in your trading style & how your trading result can be impacted for choosing which timeframe you use.

As we all know, there are only two ways a trader can approach the market:

“Intraday trading”  or  “positional trading”

Intra-day trading : when you buy & sell on the same day, your trading style is known as “intraday trading”

Positional trading : When you buy today & hold the position overnight at least for a day, your trading style is known as “positional trading” . Positional trading can be with different types like some traders hold a position for 3-4 days who are also known as “swing trader” & some holds a position for weeks, month & even years are usually known as “medium to long term traders/investors”. So it depends on the type of profit target & trade setup you have for the trade you initiate.

Now : ANOTHER SPECIAL CATEGORY of traders you’ll see in the market who is neither a positional trader & nor a intraday trader. “It always depends” for this category of traders to decide – “what is their trading style based on their current trade position(profit/loss) status!!” They buy something with an intention to have an intraday trade, but finally at the end of the day when they see their position is at huge loss or against them, they convert themselves into positional trading style & hold the position for next day with ultra-extra leverage on it with a hope that “tomorrow will be our day to profit  & the stock will turn around for us”. Finally market kicks them out of their hold position with huge amount of losses.

Being a trader, we must know our own TRADING TYPES – either you are a positional trader or you are an intra-day trader.If you’re a positional trader, then you must know for what timeframe you hold a position – short term, medium term or long term ? RULES for your trading style or strategy must be set before you enter a trade & more importantly you must know what you’re doing.

Personally,i am a positional swing trader with an avg holding period of 3-4 days. I use 70% of my trading capital for swing trades & for rest 30% capital I use for positional trades which I hold for avg 3-4 weeks or more. I do not prefer trading “INTRADAY” & in short you can say “ I HATE THE CONCEPT OF INTRADAY TRADING ”. Now this article is based on why I do not like this form of trading & I’ll be explaining you the limitations, loopholes of intraday trading & why it is a KILLER/ENEMY for your trading career in long run.

In my trading career, I’ve never seen the big boys(banks,HNIs,etc) doing a single trade with a hope to make money today itself (intraday) and it was shocking for me when I joined them as till then I was struggling to make money by doing intraday & tried all my skills & materials of technical analysis to dig out consistent profits on the same day using any possible intra-day trading method. And in my experience today, I can definitely say – more than 90% retail traders are looking for something which will make money for them on a daily basis.I receive mails & phone-calls asking me “how much we can make per day? ”  So why this INTRADAY TRADING is so lucrative to retailers??

Reason 1 > you get 10-20 times leverage on your trading capital to trade more :

Using the margin facility, you can buy more than what you have & without thinking about the other side of profits(while in loss) , you start using this charming facility of leveraging in a best possible way & finally end up loosing all your capital.

Reason 2 > It feels good & exciting to make money daily & instantly!!!! :

A gambler is allowed to get excited with his bet (win or loss) but never for a good trader in market. For a trader, trading the market is not a “ONE DAY SHOW” but for a gambler it is.Now it’s upto you how you prepare yourself – as a gambler or a logical trader.

Reason 3 > No worries of what will happen tomorrow regarding a crash of market & so :

In business, you always have a business risk – what if your clothe store in market gets a fire tomorrow or what if there is a earthquake tomorrow & you loose your Rs 5cr worth of investment in a building. So, all these accidents are a part of our life & thanks to ALLAH that it doesn’t happen in every other day. But still we’ll have to be prepared for all of these in life with proper planning & calculated risk. You must know if something wrong goes tomorrow which is out of your control, what will you loose & how to manage that. But if you do not calculate your risk factor & buy 10 lakhs of shares keeping Rs 50,000/ in your trading account then any of this sudden accident can finish you up for rest of your life & we can see how many suicides take place after each crash happens in market.Most of them you’ll see are stock brokers who gave 10-20 times margin to their clients so that the clients trade more & the broker can make more commissions that way but when a crash happens, all his clients are in heavy losses & now he’ll have to collect the extra money of losses(which is not available in client’s trading a/c) from each of them which is a liability of huge amount – He just cannot handle this pressure of liability & finally kills himself to remove the burden on him.

Reason 4 > It feels good & exciting sitting in front of the trading screen & watching the price moving up & down:

This process is a good way wasting your time & energy and also it shows that you have a “no-plan” strategy to trade when you’re waiting for the market to open & rushing into a trade, then roaming around the trading screen with different level of excitement with your position with a psychological roller coaster ride in you.

Apart from above reasons, there are a lot of other stupid reasons why retail traders are so much fond of intraday trading & all those reasons really make no sense at all !!

Lets find out the reasons “ WHY WE SHOULD AVOID INTRADAY TRADING “ & here i’ll explain using one of my trading strategy covered in ADVANCED PRICE ACTION COURSE.

PROBLEM  1 : Time limitation

Whenever we initiate a trade, as a disciplined trader-we all have a strategy with a “stoploss” & “target” in place. But there is no such strategy which can define the time period of hitting your stoploss or target area. For example, in below chart you can see, a bearish PIN BAR sell signal (learn : PIN BAR strategy)formed in-line with the strong sell-off momentum on 16th jan around 10PM in hourly timeframe.Since we got  a support area in DAILY time-frame around 175, this level will be considered as target area for this trade. Now, we’re ready to hit the entry in this trade using our most important trading tools – “money-management tricks” & “risk-reward ratio calculation”.

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Now, below chart will show you the final trading result of above discussed trade from an INTRADAY TRADER & POSITIONAL TRADER prospective which will clarify you that “why using the same strategy one person is a winner & the other one is a looser”.

Someone who was shorting NATURAL GAS with ultra-leverage for making the profit on 20th-jan itself has ended the day with a loss as price did not react to the sell formation on that same day.The intraday trader will have to close his opened position as commodity market will close by 11.30PM & now the time-limit will decide his fortune & not the the trading strategy setup.

On the other side, Someone who shorted NATURAL GAS on a swing trade basis with a holding capacity of  3-4 days, has made good amount of money finally as he was able to execute his trading plan properly. SO it shows with the same strategy & planning, someone looses money & someone makes money in this market. I shared this trade setup in blog for daily timeframe  though I did not share the intraday chart  there. So I was trading intraday chart which was inline with my daily chart setup but I did not initiate the PIN BAR “sell position” in my a/c to do “intraday only” with huge leverage but it was being traded as a swing positional trade!!

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Below I’ve shared one more example on the same NATURAL GAS chart where you can see the same things happened like earlier. The trade finally has hit our target area after entry but leaving behind all the intraday traders at loss who was just trading for the day.All the swing traders got the chance to ride the whole sell-off momentum & finally ended up making money.

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Same happened below on ACC stock. Buy signal based on PIN BAR formed on 9th & price pushed a little up.But the major bullish momentum arrived on the next day of entry day & hit the target on 2nd day from entry. Again with the same price action strategy, an intraday trader lost & a swing positional trader won.

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PROBLEM – 2: YOU need to be a professional/expert/experienced trader for reading intraday price-action to catch it’s momentum >

I’ve seen people who are beginners or learners yet in market, start analyzing lower timeframe charts like 5min,15min,30min,60min & totally ignore higher time-frame charts like DAILY,WEEKLY,MONTHLY as they think following lower timeframe charts, they’ll be able to catch more number of trades & will trade more frequently in a day making more money.This sort of mindset of a trader, is nothing but a KILLER for his trading career. When you start to learn “HOW TO DRIVE A CAR” or “WHEN YOU’VE JUST LEARNT HOW TO DRIVE A CAR” which kind of roads do you prefer to practice driving or which kind of roads will you prefer to drive regularly for first few days – obviously you’ll choose roads which are free of much traffic & you’ll definitely ignore rush hours to drive on the road. The same goes for trading. When you are analyzing intraday timeframes on live market,it’s like driving a car in a heavy traffic area in extreme rush hours as you’ll find more candles,patterns & trends forming in a very short span of time & shift of trends with patterns are very fast & frequent there. But when you start seeing a higher timeframe chart, you’ll see a clear price actions with candles,trends & patterns over there & also you get sufficient time & energy to devote for analyzing the chart as only one candle is formed in a day for daily chart & so on for weekly,monthly.Hence trading or analyzing higher timeframe charts are like you’re driving your car on a road with peace of less traffic in a no-rush hours. Below is a chart showing you how it looks like in a 15-min timeframe chart :

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As the above chart shows no clear direction of the market & too much noisy while trading it.It takes no time for price to reverse there & change it’s direction with patterns.But the same index chart below in a higher timeframe(weekly) shows us a clear picture of a overall  uptrend strength & it also formed a price action buy signal on a key flip support area (learn : FLIP level strategy) of 8200. SO, higher timeframes always provide you the neat & clean price action to have a clear overall direction in the market.

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Below is another example of confusing intraday chart with 15min timeframe. What you see here is nothing but some zigzag momentum going on overall & there nothing really to trade as do we have a clear direction here ?

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The same stock while analyzed on a daily timeframe, gave us clear view on the trend & a trade setup. The equidistant trend channel show us clear uptrend direction & 1130 level is seen as key flip support where we can initiate a buy entry based on price action signal to join the bullish upmove & currently we can see price heading towards our resistance target area.

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I personally trade 5 min,15min,60min charts in lower time-frame & daily-weekly-monthly in higher time-frames. So, i am not against trading lower time-frame or intraday charts but only thing i am saying is that – THERE IS A WAY HOW YOU DO IT. Our focus chart or the main stream chart should be higher timeframe charts as those chart shows us the overall picture regarding what’s going on in the market & to have an early buy/sell entry or to filter-out higher timeframe price movement, we come down to lower timeframe charts & trade accordingly.But even though we’re analyzing or trading a 5-min chart,there is a connection of daily/weekly chart with this 5min timeframe & we’re just not trading a 5-min chart alone.Like in first few chart examples i’ve shared with you,my entry was in 60-min chart but i’m exiting the trade on support areas of daily timeframes and also while taking an entry in 60min chart-i’ve decided to trade that 60min chart as i’ve seen something powerful in it’s daily timeframe which confirmed this trade setup in 60min. Finally it’s all about trading & analyzing multi-timeframe charts which gives you a better edge in your trading strategy. But to learn this form of trading , one should start with higher timeframe charts first & then once you are good in trading those charts,then only it’s time to have a look on lower timeframe charts. So, you need to be a real expert or experienced enough with higher timeframe chart analysis first to understand price actions going on in lower timeframe charts to trade, like after driving a car in a broader,less-traffic,non-rush hours for 3-6 months, you’ll gradually learn to drive in full traffic road in rush hours due to your experience & time spent with handling the car.

I’ll not extend the article anymore though i’ve plenty of more reasons why “INTRADAY TRADING HABIT IS A BAD IDEA”. Hopefully, i’ll create another lesson on “MULTI-TIMEFRAME CHART ANALYSIS for better chart analysis” in next few weeks once i manage some time from my trading desk. Till then, feel free to mail me your queries & share your feedback pls.

Checkout My FREE VIDEO TRAINING COURSE SERIES on PRICE ACTION TRADING in forex & indian stock market. 

5 responses on "Best TIME-FRAME to trade - INTRADAY Vs POSITIONAL"

  1. honey at

    Sir

    We are waiting for your new trading lessons.Your articles are always informative and useful.Thank you for good work.

  2. Kumar at

    Hi Rajib,
    Wonderful article showing swing or positional trading is better than intraday trading. Nice charts. Which broker trading platform did you use to capture the charts?

  3. Floyd at

    Hi Rajib,

    Some gems shared in these articles….keep up the good work.

    Am eagerly awaiting your article titled “MULTI-TIME FRAME CHART ANALYSIS for better analysis” as mentioned above…

  4. Frank at

    Excellent advice and wondering if you give trading lessons in the US market specifically natural gas or the always volatile UGAZ?

  5. Roy at

    Thank you sir. Excellent advice.

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