Lesson T1.4 · 4 of 6 · Technical analysis and reading a chart
Chart timeframes explained: from 1-minute to monthly charts
The timeframe tells you what period each candle sums up: one minute, one hour, one day, one week or one month. Short timeframes show lots of detail and lots of noise; long ones show the trend. You choose the timeframe by how long you plan to hold the position.
Terms in this lesson
- Candlestick chart
- The chart that shows the open, close, high and low price for each day.
- Day trading
- You buy and sell on the same day, to profit from small price moves.
- Trading commission
- What it costs you to buy, sell and hold shares at a broker.
Opening question
On a weekly chart, what does a single candle show?
A weekly candle sums up the whole week in four prices: Monday’s first price, Friday’s last, and the highest and lowest prices in between.
It does not matter if you get it wrong: trying first helps you remember.
What is a chart timeframe
Definition
What is a timeframe?
The period each candle sums up.
On a 5-minute chart, each candle holds the open, high, low and close of five minutes. On a daily chart, of one day. Platforms write timeframes in short: 1m, 5m, 15m, 1h, 4h, 1D (daily), 1W (weekly), 1M (monthly).
| Timeframe | Candles in one New York trading day |
|---|---|
| 1 minute | 390 |
| 5 minutes | 78 |
| 15 minutes | 26 |
| 1 hour | 7, one of them only 30 minutes long |
| 1 day | 1 |
The New York Stock Exchange’s core session lasts 6.5 hours, from 9:30am to 4pm New York time. Crypto trades round the clock: 1,440 one-minute candles a day.
Work it out
How many 30-minute candles are there in a normal New York trading day, from 9:30am to 4pm?
A hint
How many minutes is the session? Divide by 30.
6.5 hours = 390 minutes. 390 ÷ 30 = 13 candles.
The same asset on a daily and a weekly chart
Below is the same share, Apple, on two timeframes. The first chart shows the last 30 trading days, one candle per day. The second covers about four months (some 18 weeks), one candle per week.
Apple’s daily chart over the last 30 trading days, with one candle for each day.
Apple’s weekly chart over roughly the last 18 weeks, with one candle for each trading week.
Compare
You want to see which way the price has gone over the past four months, without the noise of every day. Which chart do you pick?
The weekly chart. It covers the period you care about and squeezes each week into one candle, so choppy days no longer hide the direction.
Example
Why do they look different?
Three falling days can be nothing more than a wick on a weekly chart.
On a daily chart, every bad day is a filled candle. On a weekly chart, the same fall can vanish inside a week that still closed higher. Neither chart is lying: each answers a different question.
Myth or fact?
“You see the trend better on a shorter timeframe.”
This exercise is in the free account, where we also save your progress.
Create a free accountWhich timeframe suits which trading style
Day trading1-15 minutes
- Positions close the same day
- Plenty of opportunities
- Hours in front of a screen
- Many trades, so many costs
Swing trading1 hour - daily
- Positions last days or weeks
- Can be done in the evening
- You hold risk overnight
- Fewer signals
Long termweekly - monthly
- Little noise, low costs
- A few minutes a week
- You sit through falls lasting months
- Takes patience
Check yourself
You work 9 to 5 and look at the market in the evening. Which timeframe suits you best?
This exercise is in the free account, where we also save your progress.
Create a free accountWhat would you do?
On the 5-minute chart your share has been falling for an hour. On the daily chart it has been rising for months. What do you do?
This exercise is in the free account, where we also save your progress.
Create a free accountWhat you learned
- The timeframe is the period each candle sums up.
- The same asset can show a fall on the daily chart and a rise on the weekly.
- You choose the timeframe by how long you hold and how much time you have for charts.
You reached the end
Keep what you learned
With a free account we remember your lessons, bring back the questions you got wrong exactly when you need them and keep your streak.
Save your progress with a free accountLessons are educational. They are not a recommendation to buy or sell. Investing involves risk and you can lose money. Sources: New York Stock Exchange trading hours, nyse.com (core session 9:30am to 4pm ET); Apple charts from einvestitii.ro market data, updated daily; Chague, De-Losso and Giovannetti, “Day Trading for a Living?”, FGV EESP.