InvestorQ : How to decide which trader should take on which piece of chart for his unique requirements?
Abhisha Yadav made post

How to decide which trader should take on which piece of chart for his unique requirements?

Answer
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Bhavika Nehru answered.
1 year ago


The time frame a trader selects to study is typically determined by that individual trader’s personal trading style and return requirement as well as risk capacity. Intra-day traders (these are the traders who open and close trading positions within the same trading day), prefer analyzing price movement on shorter time frame charts, such as the 5-minute or 15-minute charts. Very long term charts do not make sense to intraday traders as they need to enter and exit the stock within a time window of 5-6 hours. Their leeway is too short. Long-term traders who hold market positions overnight and for longer periods of time are more inclined to analyze markets using hourly, 4-hour, daily, or even weekly charts.

Price movement that occurs within a 15-minute time span may be very significant for an intra-day trader who is looking for an opportunity to realize a profit from price fluctuations occurring during one trading day. However, that same price movement viewed on a daily or weekly chart may not be particularly significant or indicative for long-term trading purposes.

It’s simple to illustrate this by viewing the same price action on different time frame charts. The following daily chart for silver shows price trading within the same range, from roughly Rs.16 to Rs.19, that it’s been in for the past several months. A long-term silver investor might be inclined to look to buy silver based on the fact that the price is fairly near the low of that range.

However, the same price action viewed on an hourly chart could show a steady downtrend that has accelerated somewhat just within the past several hours. A silver investor interested only in making an intra-day trade would likely shy away from buying the precious metal based on the hourly chart price action.