Do day traders do technical analysis during market hours?

Hey Guys,

I was wondering do day traders and swing traders do technical analysis such as charting and other forms of analysis during market hours?

I ask the above as these kind of traders want to get in and out quickly making a lot of trades each day and I just don't see how they find the time to go looking at charts and other things while there stock is rising and falling. I would imagine that their eyes would be glued to the monitor. I know they use stop losses but still I would imagine they do all the analysis in the night before and early hours before the market opens the next day. Then clear their mind not think about the charts and just trade when the market opens. Is this true?

Swing traders can more get away with only looking at the charts at day-end, but that's a bit harder for day traders. Keep in mind that it's not just buy/sell at the open and close later. Day traders can potentially get in to trades at any time of the session, not just on the open. That generally means they have to be looking at the charts quite often, if not continuously. Realize, though, that for someone who's been doing things for a while, chart analysis is a pretty quick process. Also, if you're a system trader all you're looking for is the buy/sell signal.

Can only speak for myself. I do some analysis before 8am. I prefer not to do it the night before, because a lot can change overnight, that renders the analysis a waste. This analysis involves daily charts and hourly charts. But I am certainly doing some analysis intra-day. And yes that means staring at the hourly chart, and even shorter timeframes.

Then clear their mind not think about the charts and just trade when the market opens. Is this true?

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I wouldn't agree with this. I am staring at the charts almost constantly, to see setups, and then once I am entered into a trade, I'm again watching it so I know when to get out.

The time I spend looking at charts depends upon the timeframe of the trade I am in (edit: or looking to get in).When I am actively trading indices I will be looking at 60, 30, 20, 5, 3 and 1 minute charts during the session having also analysed the daily and weekly picture prior to the session. If I am in an intraday trade based on a 30min signal then I don't need to watch as much as if I am in on a 5min signal.

Going to longer timeframes, if I have position trades on in stocks lasting a few days to couple of weeks I will be doing end of day analysis supported by intraday alarms if required or the occasional look through the day.

Agreed that looking at charts at the days end doesnt make much sense because so much can happen overnight. You can definitely take a look - but make sure to revisit in the morning before the open

All,

Just a quick question for you guys. I have heard the below statement few times but don't know what it means.

what does it mean by trading long side above value and the short side below value ?

The Long side is if you bought to open a position (you got long). Conversely, the short side is if you sold to open a position (you got short). Above value is expensive, below value is cheap. I'll leave you to put 2 and 2 together.

I'll look at charts every so often but mostly just watch the price action from the screen, I can sit for 3-4 hours in one go without looking away without any problems. I get a better idea of resistance levels and support this way. Looking at charts can be dangerous as you start to have preconceived ideas of what lies ahead.

If markets are quiet then I spend some time doing technical analysis, looking at charts and making my major technical levels for the next day or two.

Even in busy conditions its worth taking a small break and going over charts and other indicators as quickly as possible to stop the heart getting carried away with the price action and forgetting the technical basics!

Many thanks for all your replies to this thread guys

Lot's of great and useful information presented

So I have been doing a lot of chart learning lately, and some paper trading.

I have something I would like to know

Is Due Diligence where you try researching a company to find out what you can tell about the company for a particular stock your interested investing in?

Isn't due diligence the same as fundamental analysis, as I hear fundamental analysis is where you research a company to find out whether their good to invest in much like in due diligence, so are they the same thing? I hear from people their not, I wonder what your take on it is?

Is technical analysis just the ability to read charts and find out from them what their saying?

sopodo said:

Hey Guys,

I was wondering do day traders and swing traders do technical analysis such as charting and other forms of analysis during market hours?

I ask the above as these kind of traders want to get in and out quickly making a lot of trades each day

Click to expand...

Why ? Do you think this is more profitable than finding good setups and having pre-planned exits ? Lots of trades can lead to smaller profits and higher transaction codes

sopodo said:

and I just don't see how they find the time to go looking at charts and other things while there stock is rising and falling. I would imagine that their eyes would be glued to the monitor. I know they use stop losses but still I would imagine they do all the analysis in the night before and early hours before the market opens the next day. Then clear their mind not think about the charts and just trade when the market opens. Is this true?

Click to expand...

No - prior day's analysis provides ideas on general market direction and may (depending on your strategies) suggest potential setups around the time of market open e.g gaps, but if you are following price action you will be looking for setups and exits in real-time.

Watch some stock prices and at the same time market prices in real-time and you will realise that it isn't necessarily as frantic as you might think, unless you want to be a scalper

Charlton

Mr Flibble said:

I'll look at charts every so often but mostly just watch the price action from the screen, I can sit for 3-4 hours in one go without looking away without any problems. I get a better idea of resistance levels and support this way. Looking at charts can be dangerous as you start to have preconceived ideas of what lies ahead.

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I agree. You'll get better the more screentime you get. Watching price form is probably one of the most important things you should do. You learn how the market moves and you'll start to see the day has structure to it as levels are tested.

Good questions Sopodo. Technical anaylysis is primarily reading the charts and assuming the price action you see is taking into consideration the fundamentals. I am in a trading room with Trander_Dante (pro trader). We take into account fundamentals but don't trade off of them. Mainly, we are aware of high impact news reports and stand aside. We are day traders/ swing traders. We primarily trade forex with some futures. The markets are always open but we have an analysis of the charts with setups we're looking for at the end of U.S. session and before the London session opens. But we are watching charts all day. Things change and our analysis has to change with it. We can't predict the market, but try to read where it is telling us it wants to go.

I don't trade stocks, so can't help you there. But if I did, then due deligence to me would be to know all I could about the company and how it's stock behaves. Due deligence in Forex is for me to know how the pairs I trade behave. Are they volatile, how much do they range, are they correlated to anything and so on.

Hope this helps.

Hope this helps.

the daytraders I have seen who were making the most money, never looked at any charts, they only watched level 2.
some of them did have an idea what the closing price from the previous day was and some other prices in their heads but no charts.

DeadMoney said:

the daytraders I have seen who were making the most money, never looked at any charts, they only watched level 2.
some of them did have an idea what the closing price from the previous day was and some other prices in their heads but no charts.

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That's really interesting. I've heard that a lot of the most successful day traders try to keep things very simple and focus just on price candles, time & sales / Level 2, and perhaps volume (and/or one other indicator). In contrast, many new day traders wind up trying to use 6 different technical indicators all at once, get too many conflicting signals, and don't do as well.

We trade using only technical analysis, just focusing on the levels and we avoid trading in between the levels. We keep it simple and do not use many indicators, just stochastic and use fibonacci a lot. These guys are very good for levels and market direction www.charmercharts.com and helps us get set up each morning.

levels? do you mean pivot points or support/resistance levels. sorry for basic question

I am a day trader. I cant remember holding a trade overnight, except for once or twice where it was on the minus and I had to wait for it to come back to my EP or close to it to minimise losses. ( yes that happens when you look at the chart for too long.. )

I use SMA 200 and price action only. Its important to look at the market atleast once an hour and more frequent if I am holding a trade.

The hardest part is to trade what you see and not what you think. If you spend enough time looking at multiple TF and all those S&R levels you will start believing that the price will do this and that. And most often then not you will get burned.

Its best to enter a trade based on what you see on your chart and monitor it. Buy Or Sell??......you would have to look for bias on higher TF and S&R areas etc etc. All this is best done as you are getting ready to take a trade. You cannot be sure until the price starts moving in the direction that it wants to go. Hence technical analysis prior to the trading day is all good but you will still take a fresh look at the price and its movement before taking the trade.

I cannot speak for those who trade based on H4, Daily or Weekly charts even, as these traders and their system might be based on different analysis and triggers.

For traders like me who play very short TF i.e Min 30, looking at price as it moves every 30 minutes or so is the way to go. On average you would be able to take a trade worth atleast 50 to 100 pips ( I trade GBP JPY only ) in about 2 to 3 hours of monitoring, After that u can take it easy until price action principals dictate a possible shift in the price direction. Then its back to action stations until the reversal is confirmed and you can move your stop loss to break even or better still lock it in at about 30 pips profit. Kick back, relax and wait for it to come to the next level of resistance or possible reversal before looking at the charts again.

Some days you just need to glance at the charts and you know what its going to do. Some days you could stare at it from all angles and you r just not sure cause its such a mix signal on all different TF. These are the days you should not take a trade or if u really cant help it, enter with bare minimum lots.

So i guess thats my two cents worth. happy trading

sopodo said:

Hey Guys,

I was wondering do day traders and swing traders do technical analysis such as charting and other forms of analysis during market hours?

I ask the above as these kind of traders want to get in and out quickly making a lot of trades each day and I just don't see how they find the time to go looking at charts and other things while there stock is rising and falling. I would imagine that their eyes would be glued to the monitor. I know they use stop losses but still I would imagine they do all the analysis in the night before and early hours before the market opens the next day. Then clear their mind not think about the charts and just trade when the market opens. Is this true?

Click to expand...

That's one reason I quit trading stocks - you can study 500 charts after close, find a few with that perfect set-up - then an opening gap screws it all up. Too much work for me.

These days, I stick to trading mainly only one thing - the EUR/USD. I love the moves it makes and I know it's personality real well. Anymore, I just glance at a few different time frames and look for when the next setup might occur, then wait..wait..wait - sometimes wait some more - -then (half the time) miss the trade completely lol.

Find yourself a handful of setups that work for you and then you only need to make quick glances - looking for just those setups. They will start popping right out at you after a year or two.

sopodo said:

Hey Guys,

I was wondering do day traders and swing traders do technical analysis such as charting and other forms of analysis during market hours?

I ask the above as these kind of traders want to get in and out quickly making a lot of trades each day and I just don't see how they find the time to go looking at charts and other things while there stock is rising and falling. I would imagine that their eyes would be glued to the monitor. I know they use stop losses but still I would imagine they do all the analysis in the night before and early hours before the market opens the next day. Then clear their mind not think about the charts and just trade when the market opens. Is this true?

Click to expand...

As an active day trader I look at the charts (which contain technical analysis indicators) of what I'm trading nearly constantly while the market is open. Once you've been closely watching stocks move intraday for several months you can process technical analysis data extremely quickly. If the overall market and what I'm trading is extremely non-volatile a certain day, I'm at a profit, and I have a stop loss in place, I might step away for a little while, but I will still check back frequently and do further technical analysis to determine how to adjust my stop loss.

I actually don't do much technical analysis outside of market hours (usually only about 15 minutes before the market opens to make note of the major areas of potential support & resistance in stocks on my watch list). I compile my watch list from the best-looking stuff I find in my stock screening program (StockVision), so I use software to do lots of the technical analysis for me instantly.