4 Ways for End of Day Traders to Transform Their Trading

End of day traders who have been around the block often celebrate their approach of trading as being the "Safe Haven" of styles. After all, the prospect of making vast returns from big swings in the market with far less time spent chained to the desk is seen as a "win-win" - not least to those boggle-eyed intra-day traders who have been smashed to bits by the market scalping!

With the many advantages in favour of end of day trading, you may be asking: "What could possibly be the downside?" But what many traders don't realise when they blindly flock, in their droves, to trade the higher timeframes is that this style has its own set of problems too.

But unlike the more predictable and obvious mistakes made by the amateur trader, these sticking points are very specific and unique to end of day traders. By having both an awareness of them and knowing how to respond at the time will have a seismic bearing on your success as an end of day trader.

Join the Growing Band of End of Day Traders

In this article we will discuss common pitfalls that end of day traders typically face - pitfalls which are unique to the higher timeframes. But, perhaps more crucially, we will tell you exactly what you need to do so you can overcome them - if not, avoid them completely.

Trapped in the House of Purgatory

Ever caught yourself watching your trade after it's been triggered, only to find that you are now on an emotional rollercoaster of highs and lows? As your position flickers between profit and loss on your broker platform it causes you to feel of pain or gain depending on whether the trade is momentarily in your favour or against you. Sound familiar? Face it, we've all been there!

This is the very point where you have no idea whether your trade is likely to win or lose. Sure, you may have followed your strategy rules and no doubt it looked like a stellar set-up...but you are all too aware that nothing is guaranteed in the market...ever. 

You are in state of purgatory - where the outcome of the trade has not yet been determined, leaving you to go through the full range of positive and negative emotions depending on how well your trade is or isn't doing.

This is one hang-up we end of day traders have to get to grips with. By comparison, intra-day traders have it easy in this respect! While they generally have to "work" far harder than us Lazy Traders,  this is one of the few advantages intra-day trading holds over end of day trading because  the outcome of the trade is determined in far less time. Intra-day traders are in purgatory for less - they get their verdict within minutes, if not, hours. But, for the rookie end of chart watching end of day trader, this is often a prolonged amount of time spent thinking, hoping and praying for a positive outcome.

Long periods of purgatory for we end of day traders are often experienced as a crippling and mentally exhausting saga.  It can cause them to grow impatient and restless, causing them to meddle unnecessarily with their trades or, worse still, it can causing them to break their strategy's rules and second-guess what is actually a profitable trading strategy.

Did I call it right, or didn't I? Am I going to make money from this trade? What have other people seen that I haven't? Is this going to be a losing trade? ... These are the typical, disempowering questions end of day traders who are in purgatory ask themselves.  But what may seem like an logical emotional response will actually serve as a hindrance in the present moment, causing self-doubt and anxiety. Not a good place to be as a trader!

Combating such destructive tendencies is easy. Simply put the mouse down and walk away from the computer! Watching the trade will not help the trade go in your direction- in fact, it will do the very opposite. 

Firstly, you should only be trading a strategy which you fully understand and have faith in. If you aren't ...then find one that you do!

If you are trading a set-up with positive reward to risk, then you can simply keep those emotions in check by rationalising that if it's a win then you stand to make a lot more than if it's a loss (providing you have risk managed!).  Appreciate the market is not out to get you. If your trade set-up ends up losing you money then don't take it personally. After all, it's not your fault - it's simply you're in the midst of your strategy's distribution of wins to losses.

Struggling to Adapt to the Easy Life

We end of day traders have it pretty darn easy. The very nature of our set-and-forget trading means that there really isn't much for us to do most of the time. But it is this very reason why a lot of new comers to this style of trading struggle to adapt to this new lifestyle of time abundance.

They may be traders with a day job, who have come from a 9-5 Monday-Friday background which requires them to swap their time for money in a linear fashion. Or, they may have traded in a more labour intensive manner on the smaller timeframes, requiring their full attention at all times. So, naturally, the prospect of spending only a couple of hours a week, at most, analysing and setting up orders will be a completely new phenomenon for them to adapt to -  or, at worst,  just serve as being plain boring!

They will inevitably feel that the need to be doing something to satisfy their self-worth as a "trader". But this is where they can easily come unstuck!   

If there is nothing obvious to trade on the daily or weekly charts, the end of day newcomer could fall into a state of denial.  In a desperate bid feel like they are being productive and to "get some action," they will scour the markets looking for something - anything - to trade...even if the trade set-up isn't actually there.

In a state of delusion, they will typically place trades out of boredom or frustration in a market which actually has no set-ups. But these will typically be low quality trades which go onto lose them money. This is very much like mirage in a desert deceiving the weary traveller into thinking something lies ahead over the brow of the hill when it is, in fact, an optical illusion.

This vicious circle of denial, boredom and loss making trades will often lead the amateur end of day trader to doubt the strategy and their ability to read price action - even in markets where, frankly, there is nothing of value to read into!

A lot of the solution to combating this is in expectations management and simply being realistic. Remember that trading has the key advantage of being able to fit into your lifestyle rather than your lifestyle having to fit into trading. It's one of the few vehicles out there which you can automate and run in your absence.

If you suffer from separation anxiety from the charts, simply go any walk that metaphorical dog or take up the hobbies and interests that you could not entertain as an intra-day trader. Safe in the knowledge that you have used a stop-loss and by following your strategy's rules, that you will be able to internally turn trading from a stressful and time-consuming occupation into a peaceful and relaxing hobby. The power of letting go and not having an emotional attachment to the outcome of your trade is by far one of the most important things you will ever achieve in trading...and end of day trading is the easiest way to facilitate this.

A False Sense of Entitlement

Many new end of day traders delude themselves by thinking they're far more entitled to a winning trade simply because they've had to endure a longer wait than they otherwise would for that textbook set-up compared to if they were intra-day trading.  So, in return for demonstrating an elevated level of such patience and discipline they will inherently feel that that the market should reward them for it.

Sound familiar?

After all, they feel like they've waited long enough for a trade set-up on the higher timeframes which meets the rules and have no idea when the next bonafide set-up will arrive...and undefined waits are always the longest, right?  So, subconsciously, there will be a lot riding on that particular trade for them.

However, this mindset of "entitlement" in a market which holds no guarantees and is random by nature is particularly destructive because it imposes an emotional attachment to the outcome of the trade. Therefore, an overwhelming sense of loss will prevail if the trade does end up breaking even or, God forbid, closes at a loss.

But there is no guarantee the market will give you a winning outcome - no matter how much analysis you've undertaken or how advanced your technical skills are or how much you need the money. It will just carry on by regardless! Accept that markets owe you nothing. They random and so too are the distribution of wins and losses.

The old adage patience and discipline is essential for successful trading, but this is especially the case with the end of day style.

Complacency

Lazy Trading the higher timeframes means that there really isn't that much to do most of the time. It makes our trading life pretty straightforward and it means we can do what we want when we want, in addition to many other reasons outlined in the article:  Why Anyone Should Trade End of Day. The reality of it is this is exactly how end of day traders roll! Nope, end of day traders just would not have it any other way!

But be warned! The "C" word could rear its ugly head anytime soon! Yes, complacency is something that often happens with the uninformed amateur with this style of trading.

Not knowing your rules for entry and trading poor set-ups with no rhyme or reason behind them is complacent and sloppy. In fact, it's a typical mistake the amateur trader will make -  both intra-day and end of day.

But more specifically for the rookie end of day trader, missing the one set-up which goes to hit the jackpot is a constant threat if you scan the markets routinely.

Imagine checking the charts for three days in a row and not finding anything to trade. Then, you simply assume that it's ok not to bother on day 4 because you feel that it's unlikely granted you've not yet had a set-up for the previous three days. But, sod's law, in your absence, you miss the trade which sets-up, fulfils your rules and flies in your direction. The only problem is the trade  leaves without you. You're not just late to the party - you've slept through all of it!

This happens all the time to people who trade the daily timeframe and don't check the charts on a daily basis. Or, worse still, to those who trade the weekly timeframe and don't even bother to check on a weekly basis! The trade of the year which didn't hang around to be traded...it just went and did not look back.

Complacency won't only just cost you in taking sloppy set-ups but in lost profit from not indentifying the trade when it's ready to be taken. Remember, every strategy has a disproportionate distribution of wins and losses. No strategy wins the whole time...but to win the net sum of all trades which back testing has revealed for a profitable strategy, you need to take all of the set-ups.

Conclusion

While end of day trading is often celebrated by end of day traders for its numerous lifestyle advantages, the pitfalls specific to it differ greatly from those associated with intra-day trading. But by having a prior awareness of them, you will be able to hold yourself head-and-shoulders above many who simply turn up to "have a go".

To create is effort, to copy is genius. By following the advice from those who have already nursed their battle scars given to them by the market in the trenches, you will drastically reduced the likelihood of making the same costly errors.

Remember that to most of the battle fought is won simply by turning up and executing your profitable edge or strategy. Appreciate that the market doesn't care who you are, what style of trading you entertain or how desperate you are to simply make a fast buck...it will simply do its thing regardless!