Advantages of Data Based Intraday Charts

A trader requires to be aware of the trading strategies followed by other traders and adapt the best style that suits their trading strategies. Data Based Intraday Charts gives vital information for trading in a particular session. A trader can extract various information through these charts and execute exceptional intraday trading processes.

Time Intervals Based Intraday Trading

Traders have the flexibility to choose the time intervals that align well with their trading strategies. A lot of traders in the stock market work on intraday price charts based on the time intervals including shorter time frames like 5 minutes to 60 minutes intervals.

Choosing a different time frame represents the open high low and close in a single bar of the candlestick.  For intraday trading, traders use a shorter time frame, suppose you trade on 60 minute price charts, it will print at gaps of 1 hour similarly for other time intervals.

Data Based Charts

Apart from time intervals, when traders can observe the price action from various data intervals for example tick, volume, and range bar charts allows traders to make decisions upon data-based chart intervals. 

Among these data charts, tick size shows a specified number of transactions. Volume charts indicate the number of contracts that have traded during the session. Range bar charts represent a predetermined price range of the security helping in trend identification. 

Tick charts

It is a powerful data based intraday chart interval to specify the number of transactions after the trading session. A trader is flexible to choose any number of transactions in the interval based on the tick charts so that it adapts to the trading style. A 144 tick chart prints a new bar on the chart representing 144 transactions irrespective of the order size. The number of bars increases during the periods of high market activity on the other hand fewer bars appear during less volatility.

Market Dynamics with Volume Charts

Data based intraday trading depends on the volume that the particular security has for trading. You can identify the number of shares or contracts being traded in a particular session through trading volume in a security.

The bars on the volume chart print a specific number of volume thresholds irrespective of the size of individual transactions. Traders can identify the activity in the market and gauge the market movement.

For example, in a volume chart of 1000 trading volume, each bar represents 1000 shares traded and a new bar form after trading of 1000 shares.

Range Bar Charts

The third form of data based intraday charts is trading with range bar charts. It focuses on identifying price movement and market volatility. Each bar in this chart represents the specified range that has occurred. 

For example; in a 10-tick bar range, a new occurs when 10 tick price movement is reached. These bars allow traders to make a precise move and identify small price movements with high accuracy.

Demand and Supply

Data Based intraday charts can be marked with the help of demand and supply as it follows top down approach. The approach considers higher time frames as well as lower time frames to plan the entry. Therefore, intraday charts are supported by the higher time frames which increases the efficiency of the trade.

Correct Data Interval

Data based intraday charts allow the flexibility of customizing data intervals which best suits the trading style and preferences of individual traders. If you are looking to capture the big moves in the market, try to consider large data intervals for a long position. On the other hand, if the plan is to capture short term trades or small moves, you can plan trading on small data intervals.

Apart from time-based charts in intraday trading, the data-based range bar charts like tick size, volume and range bar charts offer a significant advantage of gathering insights into the market activity. As a trader, you can be sure of executing the correct trades as per your trading style as well as respond swiftly to the fluctuating market conditions.

Financial world investors continuously seek to achieve an edge in the market by staying ahead through various tools in strategies to gain prominence. Data based charts in intraday helps them to gain in depth information of market activities by selecting the correct data interval.

Limitations of Data Based Intraday Charts

High Volatility

Short term charts are subject to higher volatility and hence increase the difficulty in identifying trends and patterns.

Market Noise

Intraday charts, which are based on shorter time frames, are prone to market noise and hence lead to false signals.

Reaction to Small Events

Intraday charts reflect strongly on minor news events or low volume trades which does not signify long term trends.

The Bottom Line

Intraday trading can be made successful by applying a demand and supply approach in trading techniques. Based on a top down approach, the theory makes sure to consider each and every time frame to plan the best entry or exit. GTF – Trading in the Zone course is the best platform to study the demand and supply theory helping you to become a successful intraday trader.

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