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3 BEST Time Frames for Intraday Trading Strategies you should know - Day Trading - Forex Day Trading - YouTube
Channel: TRADING RUSH
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What is the best timeframe for intraday trading?
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Well, there is no such thing as the best timeframe
for Day trading, but to make money consistently
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as a day trader in the forex and stock market,
there are few things you should keep in mind.
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If you have been following the Trading Rush
channel for a while and have watched the "best
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time to trade forex" video, you know not every
market sessions are worth trading.
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For example, you can probably make more money
by trading during the London and New York
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overlap session.
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If you don't know anything about market sessions
in forex, check that video out and maybe subscribe
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to the Trading Rush channel while you are
at it.
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If you trade stocks where the market is only
open for a few hours, choosing the right timeframe
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where you can book a profit before the market
close, can be challenging.
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Most indicators don't rely on a specific timeframe,
so they usually work on all timeframes the
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same way.
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But trading on a smaller timeframe can create
few problems.
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For example in the Forex Market, there is
a lot of noise on the smaller timeframes such
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as 1 and 2 mins.
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Price action in the stock market is usually
clean and good enough for trading even on
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the 1-minute timeframe, but since there are
thousands of stocks available for trading,
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the results can vary from stock to stock.
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Another problem with trading on the smaller
timeframes is the spread.
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Spread in the stock market can be a lot higher
if there is low liquidity, but that can easily
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be fixed by looking at the liquidity of stock
before trading.
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But in the Forex Market where many traders
don't pay attention to the timings of the
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different market sessions, the spread can
become a huge problem.
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When a new market session starts, the spread
can get big very quickly which can turn a
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profit into a loss.
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Trade on a smaller timeframe, the noise, and
the spread will make you lose money.
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Trade on a higher timeframe and you will be
stuck in a trade for a long time.
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So what is the best way to trade forex?
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And what is the best timeframe that doesn't
involve problems like noise and bigger spread?
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Well, here are few steps to find the perfect
trade on smaller timeframes.
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To make sure your trade hits profit and loss
targets within a day and before the market
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closes, first open the thirty minutes timeframe.
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No, we are not going to trade on the 30 minutes
timeframe, because if you trade on the 30
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minutes, you will only have around 12 candles
before the stock market closes, and if the
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price starts to go sideways, you will be stuck
in a trade until you or your broker closes
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the trade for you.
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Forex usually doesn't have such problems,
but trading on 30 min and higher timeframes
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can get your money stuck in a trade for a
long time.
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As a day trader, that's not what you want
to do.
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To find the perfect timeframe, first look
at the long term trend direction on the 30
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minutes timeframe.
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You can simply use the 200 period moving average
to do that.
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Furthermore, it is a good idea to mark the
clearly visible support and resistance areas,
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because on smaller timeframes, you don't want
to buy at the resistance of the higher timeframe
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and vice versa.
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Once you have found the trend on the 30 min
timeframe, and since there is no one best
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timeframe in trading, and since indicators
don't depend on a specific timeframe, all
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the timeframes between 5 and 30min are perfect
for day trading.
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There are only 3 main timeframes between 5
and 30 mins. 5mins, 10 mins, and the 15 min
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timeframe.
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You can trade on other custom timeframes like
the 4 or 7 mins if you have the option, but
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since most traders will look at 5 10 and 15
as their main intraday timeframes, you probably
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should too.
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Remember, as a stock trader if 5 mins is too
slow for you, you can trade on 1 and 2 min
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timeframe, as long as there is less noise
and the spread is good.
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Trading stock on 1 and 2 mins timeframes can
benefit traders to trade the stock market
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gap opens.
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But in the forex market, 1 min timeframe has
a lot of noise.
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This doesn't mean they can't be traded.
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In fact, in the liive trading videos and the
small account challenge series, I have traded
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both forex and the stock market on the 1 and
2 mins timeframes.
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Here, since we are talking about the best
intraday timeframes where price action is
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clear and easier to read, 5 10 and 15 mins
are the preferred timeframes.
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Once you have found the trend on the 30 min
timeframe, switch to the 15 min timeframe
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and look for entry signals in the direction
of the 30 min trend.
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For example, if the trend direction on the
30 min timeframe is up, we will look for long
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entry signals on the 15 mins timeframe.
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Since MACD was the best performing strategy
we have tested on the Trading Rush channel,
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let's say we are using the MACD indicator
to find entry signals.
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If there is no trading opportunity on the
15 min timeframe, switch to the 10 minutes
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timeframe.
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Look for trades in the direction of the long
term trend, because it is better to trade
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in the long term trend direction to have a
higher probability of making a profit.
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If there are no trading opportunities, switch
to the 5 min timeframe and if there is still
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no trading opportunity, just come back later,
the market is not going anywhere.
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But if you do find a trading opportunity in
the long term trend direction, remember to
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calculate your profit target before entering
the trade.
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Make sure not to set your profit targets way
too far, otherwise they won't be reached before
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the market close.
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And if you are a forex trader who trades only
during a specific market session or during
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an overlap, lower your reward to risk ratio
if the price doesn't have enough time to make
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a big move in your favor before the session
ends.
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If you don't care about market sessions, keep
your trades running.
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Just remember that price can get more or less
volatile when one market session ends and
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a new session starts.
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So the important points to note from this
video are.
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Number 1.
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There is no such thing as the one best intraday
timeframe, but trading on the 5 10 and 15
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mins timeframes can be a good idea because
of the easier to read price action.
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1 and 2 mins are tradable but can have a lot
of noise and big spreads.
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Number 2.
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Use the 30 mins or higher timeframe to find
the trend direction.
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Then prefer taking trades in the direction
of that trend on the smaller timeframes.
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Sometimes, 30 mins and the smaller timeframe
will show different trend direction, and that
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is fine.
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Since we are trading in the direction of the
long term trend, reversal on a smaller timeframe
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is not really a reversal.
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It is more of a pullback reversal in a trend.
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I have explained this in more detail in the
Reversal Trading Video.
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Number 3.
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If you are a trader that likes to trade gap
opens in the stock market, you can benefit
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from the 1 and 2 min timeframes.
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Just remember that price can go in the opposite
direction quickly at the gap open.
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Number 4.
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Even if you are an intraday trader, it is
a good idea to look at the swing trading timeframes
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to find other major support and resistances
that are not visible on smaller timeframes.
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To find strong price levels, you can even
look at the daily timeframe first, and narrow
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your search down from there.
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You don't have to scan every single timeframe
below daily.
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Analyzing daily, 4 hours, 1 hour, and the
30 min timeframes are good enough to get the
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big picture.
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So that's all.
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Like the video if you liked it.
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Subscribe and ring that notification bell
because on the Trading Rush channel, we also
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test trading strategies to find their win
rates, and you don't want to miss that.
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And thanks to the wonderful Patrons for supporting
the Trading Rush channel on Patreon.
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Thanks to everyone for watching.
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