3-24-2023: What Time Frame Should You Trade?

 What Time Frame Should You Use?

There is no one-size-fits-all answer to this question, as the best time frame to use when trading stocks will depend on your individual goals, trading style, and risk tolerance. Here at Awake Global Capital, we day trade, so we would stick to the short term time frames.  However larger investors such as Warren Buffet usually hold onto their trades for a longer period of time (position trader) and he might use a 4 hour, daily or even weekly chart. In addition to that he would be more of a fundamental investor – meaning that he does a lot of research instead of analyzing chart patterns. 

Generally speaking, traders can be broadly classified into three categories based on their time frames:

  1. Day traders: These traders typically buy and sell stocks within the same trading day, seeking to capitalize on short-term price movements (1 -30 minute). 
  2. Swing traders: These traders hold positions for a few days to a few weeks, seeking to profit from medium-term price movements (30 minute to 4 hour). 
  3. Position traders: These traders hold positions for weeks to months, or even years, seeking to profit from long-term price movements. (4 hour to 1 week+). 

If you are a beginner, it may be best to start with a longer time frame, such as swing trading or position trading, as these strategies typically involve less risk and require less time and attention than day trading. As you become more experienced and comfortable with trading, you can experiment with shorter time frames if you wish.

Ultimately, the key is to choose a time frame that aligns with your goals, fits your trading style, and allows you to manage risk effectively.