Day Trading CFDs – Which Time Frame Is Best For Your Trading Success?

The most common question I hear about CFD trading is what is the best time frame when day trading CFDs. Today we are going to take a look at the three most important factors to consider when finding your ideal time frame for trading CFDs.

1. How big of a profit are you looking for compared to your losses?

2. Always use three different time frames to trade safely

3. CFDs on Stocks versus CFDs on Indices or Forex. The Various Time Frames to Consider

What size profit are you looking for compared to your losses?

One of the most critical and overlooked components to day trading success is identifying the proper profit:loss ratio or what some people refer to as risk:reward ratio. All day traders should have the idea firmly planted in their minds how important it is to locate day trading opportunities where the probability of reward is at least 1.5 to 2 times the size of their risk.

By keeping this ratio firmly planted in your mind, you will ensure that you find high probability opportunities and completely ignore the need to trade just for the sake of trading. Trading for the sake of trading not only wastes you valuable time and money, it can also deplete your confidence level to the extent that you are hesitant or reluctant to jump into any other trades. In light of this, you want to select the timeframe that gives you ample opportunity to earn once your setup is in place.

Using three different time frames to locate high-probability daily trades

It is vital for day traders to have a success rate or probability of winning greater than 60%. This occurs as a result of trading in a short period of time, which reduces the chance of letting winners run. To locate high probability setups that win more than 60% of the time, it would be best to identify short, medium and long time frames to put the chance of success in your favor.

If you trade using a 30 minute chart, it would be best to trade in the direction of the trend and have the five minute chart and the one hour chart in the same direction as your 30 minute chart. The five minute chart will identify the early setup, the hourly chart will ensure you are trading the more dominant trend and you can use the 30 minute chart to time your entry. The combination of three different time frames will put the odds of day trading success in your favor.

Daily trade CFDs on Stocks vs. Forex or CFDs on Indices. What deadlines to consider

Depending on the type of CFD broker you use and the charts they give you access to, you will find that the best time frame for day trading share CFDs is to use the one minute chart for the first 35 to 40 minutes, then pass both. minute chart for the next two hours and move towards the close using a five minute chart. When trading Forex or CFDs on Indices, you will find ample opportunities and liquidity using any chart, from a one minute chart to an hourly chart.