The best time frame for the stock trader could be the one that gets traded with daily charts. Is it better to hold a stock for days or weeks than to day trade? As usual, if asked like this, the answer is, it depends. But there are two strong arguments for swing trading, trading with a holding period longer than a day and shorter than a decade.
For one, it surely is not so exhausting as day trading. Enter the market near the open and you are ready to go to the beach. The second reason may be the killer argument. Swing trading works at all! Day trading is difficult and the fact that there are so many different styles to do it, may lead to more confusion than it helps.
Swing trading is essentially trend trading. The master tool of the stock trend trader is the daily bar chart. While modern trading software is able to visualize every time frame as bar charts or even candle stick charts, there is a big difference between daily bars and, say, five minute bars.
The day time frame coincides with the natural rhythm of humans. There is the pause of the night and increased activity at the open and the close.
Five minutes mean nothing. The worst charts use candle sticks on an intraday basis. Obviously all those candle stick day traders have not understood the idea of candle stick charting.
Another fine time frame is the week and accordingly the weekly chart with the pause at the weekend. But this pause is not as strong as the nightly pause and so the daily chart is the strongest weapon the chart reader has.
This is not only true for the human chart trader. Trading programs can also make sense of daily bar charts. Of course, they would do it with a trading algorithm that centers around end of day prices without actually drawing a chart.
Is day trading software that does it automatically, today often advertised as a trading robot, for beach traders? Only if you want it hot! While the sun burns your skin on the beach, your robot smokes your trading capital at home. The reason is not only the less effective time frame, it is more the inferior trading strategy, namely scalping instead of trend trading combined with a relatively high slippage.
Beach traders are better off with the day unit based time frame and something like this neural network trend trading software to support their easy living style.
