Dr Barry Burns - How to Day Trade - Secret Bar Intervals

How to Day Trade - Secret Bar Intervals
By Barry Burns

When most people first learn how to day trade, they do so on minute-increment charts. Each bar represents some increment of TIME - 1 minute, 5 minute, 15 minute, etc.

While this is certainly a viable way to setup your charts for a day trading system, there are other bar-increment options that are not based on time. Many new day traders are unaware of these.

For clarity, let's begin by defining terms. When referring to bar "increments," we are referring to how long a bar will continue to plot, from open to close, until that bar finishes and the next bar begins.

Even those who already know how to day trade are sometimes lacking in a complete trading education that would have provided them with the specific advantages and disadvantages of these various types of bars.

The 4 most common types of bars are these:

1. Minute increment bars: Each bar lasts for a certain number of minutes. As an example - a 5 minute bar would last for 5 minutes.
2. Tick increment bars: In this context a "tick" is a trade execution (regardless of the number of shares, lots or contracts involved in that trade execution). As an example - a 100 tick bar would last until 100 trades went through the market and when trade number 101 is executed, then a new bar would begin.
3. Volume increment bars: Each bar lasts until the volume parameter is met. As an example - a 10,000 volume bar on a stock would last until 10,000 share were traded on that stock; after that the next bar would begin.
4. Range increment bars: Each bar lasts until the market breaks out of a certain price range. As an example, an 8 tick range bar on the emini (8 ticks is 2 points) would last until the emini's would break out of a 2 point price range and then a new bar would form.

Whatever trading system you're learning how to day trade, it's worth running independent tests on it using all 4 of these bar interval choices. One is likely to out-perform the others, and making this simple adjustment may even make the difference between being profitable or not.

Dr. Barry Burns teaches traders how to day trade, is the owner of Top Dog Trading and was featured as a case study in the book "Using Candlestick Charting - How to Earn High Rates of Return Safely."

He has been the featured speaker at DayTradersUSA, and developed a 5 Day Course for WorldWideTrders.
Dr. Burns has been a headlining guest speaker for the Market Analysts of Southern California, given seminars around the country at many Wealth Expos as well as many Traders Expos, been interviewed on the Robin Dayne Elite Masters of Trading Radio Show, and is the former moderator of the FuturesTalk chat room.

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