Understanding time frames when trading in Dubai

A time frame is the length of time an investor plans to hold stock in terms of stocks. There are various time frames ranging from short-term to long-term holding periods, with the most common being day trading and investing. The company you intend on buying/selling also determines what type of time frame you should use and individual needs and financial horizons.

There are several factors for determining what kind of investment strategy one might need.

Risk tolerance

Depending on how much risk an investor can handle, the higher the risk, the more short-term they should make their investment. A successful day trader will hold a stock position for a few hours to a day or two. If your portfolio drops too much, you might need a more long term strategy with less volatility.

Amount of time available

If you have enough time to commit to trading, it would be possible to trade during the day. In this case, most people opt for a shorter holding period because they are trading throughout the day and do not have as much time as those who only trade during market hours.

Experience level

If someone is new to trading, they will want to start with a longer-term investment strategy to make money steadily and not lose it all in one day. It also gives them time to practice without pressure from market fluctuations.

Investment horizon

A long-term investment horizon is perfect for retirement or saving up for something specific. If you have this holding period, you will want to pick a lower volatility investment because the stock market fluctuates significantly over a few years. 

Why should you use time frames when trading stocks?

Time is money; if you do not use time frames when buying and selling stocks, then you may lose out on the opportunity to make more money. You will also see your investment differently by changing how you look at it. An excellent example of this would be day trading stock during the day holding for only a few hours compared to investing for more extended periods of up to 2 years. By using time frames like these, you can increase your profits in several ways:

  • Proper market timing
  • Profits in rapidly rising markets or specific events (i.e. earning report release)
  • Reduced exposure when prices are high (better entry price when volatility is lower)

When should traders use different time frames?

Some confident investors will want to use a short-term or long-term strategy depending on what is happening with their money. If you have just inherited $1 million, then it would probably be best for you to hold cash assets until market conditions dictate otherwise because it’s not enough money to start putting into the stock market. If your portfolio is worth several million dollars, then there may be some room for trading during the day, but lower-risk investments should still take place too.

What companies determine time frames?

It all depends on how long they expect their growth trend to last and if they want people to buy the stock based on their company alone or whether they need an extra incentive like earnings announcements, events, etc.

Investing for the long-term can be wise because your portfolio will not fluctuate as much, and it will grow steadily. If you are trying to time the market, it is also essential to choose stocks that may not go up every day, but the overall trend should still increase your stock value in the end if held for an extended period. 

To see what the stocks are doing, you can have a look at the Saxo Dubai market.

What is the best time frame to use when trading stocks?

It is entirely up to you, depending on your investment strategy and the amount of money you have. As a general rule, holding periods can range from a few days for some people to several years for others. If you trade during the day, it would be best to keep a shorter period, around a few hours, because it will be less stressful. Long-term investors should look towards buying and holding their stocks over many months or even years.