I’m a banker and don’t have enough time to do IntraDay trading ( my backtesting on Pi & paper trading was showing me good results if I would have done that ). Therefore I’m planning to do something called like Swing Trading in which I’ll hold any Stock Future for some hours or some days and will book my profit or loss whatever I get. But my main concern is MOST OF THE STOCKS WHICH ARE GOOD HAVE A LOT OF GAP UP OR GAP DOWN OPENING. which can ruin my profit and make my A/C Zero as Future are settled on Daily basis at the end of the day. Kindly guide me. Is it good or bad.
I HAVE USED STOCHASTIC MANY TIMES DURING INTRADAY AND HERE ALSO I WANT TO USE THE SAME BUT AM NOT SEEING GOOD RESULTS DURING MY DATA ANALYZATION.
The timeframe really depends on your strategy and personal trading style. Moreover, you may not stick to one timeframe over time, but would evolve over time depending on how it works out. In principle, if you want to take trades ranging from hours to days, you can use any timeframe between 1-4 hours.
About your question about gap-up/gap-down opening, more often than not, the gaps would be in the direction of trend. So, if you have spotted the trend right, you can benefit from the gaps (the same way as buy today, sell tomorrow (BTST) strategies). Also, in many cases, these gaps may be compensated in the early hours of trade by people booking the BTST profits. So, in case you are caught on the wrong side, you might get a chance to exit near previous day’s closing price to reduce losses.
If you have spotted the trend right, the only thing that can result in huge loss-making gap ups or gap down would either be news driven or an overnight unexpected macro phenomenon (e.g. US elections). In case there is a big event lined up after market hours, you can stay out of those stocks. If it is completely unexpected (like the surgical strikes), then you can’t really do anything about it. That’s a part of this business. But these events don’t happen very often and if you have good money management habits, it won’t hurt you too much.