Choosing the Best Timeframe to trade…

A lot of time we get asked by Investar users about the best timeframe to trade.

Choosing a timeframe depends on two things:

1. Whether you are a long-term, short-term or intraday trader.
2. What is your holding period.

Here are typical timeframes that are used by different types of traders:

• Long-term: Weekly and Daily
• Short-term: Daily and Hourly
• Intraday: 1 hr and 15-min, 30-min and 5-min, 15-min and 3-min

As shown in the above examples, it is always a good idea to use 2 timeframes. The longer timeframe is used to get an overall picture and strategy  and the shorter timeframe is used to make the final trade.

Why is the holding period also important? If you are an intraday trader and your holding period is 2 hours or less, you have to use smaller timeframes like 15-min and 3-min, you cannot use 1-hr and 15-min as it would be too slow for you to exit if you used higher timeframes.

Another thing to remember is that as you go smaller in timeframes, you will also see more whipsaws (i.e. false signals), hence it is best to lower your timeframe only upto the point that is absolutely necessary based on your trading type and holding period. e.g., if you are a short-term trader, there is no point in using a timeframe like 5-mins, as it will cause you to have lot of whipsaws.

With Investar, it is possible to see charts in two different timeframes very easily. All you do is create two different Chart Views and save them in a Chart Layout.

Here are the settings for a Long-Term Investor:

Here are the settings for a Short-Term Investor:

Choosing a proper timeframe is extremely important to get the proper trading strategy, we hope the guidelines above will help you pick the most suitable timeframe for your trading!