End of day trades and end of day trading… you’ll no doubt have heard the terms before, but do you know what they really mean and how they can make you a much more successful trader in the long term? Possibly not. It’s not the first thing that traders – new or old – tend to think of. But these end of day trades and the strategies that go with them can be extremely useful indeed.
End of day trades are those trades that are looked at on the daily timeframe, so they close down at 5pm New York time (when the Forex markets close across the world). Remember that because it’s important; not all brokers, assuming you are using one, will use the same timeframe, so you need to ensure you are looking at the true close, otherwise you might get a false idea of what’s happening. Ideally, you want to find a broker who can offer you five daily bars per week, all of which close at the right time.
If you carry out end of day trades regularly they will certainly help your trading results improve. Plus they’ll make trading a lot more simple than it might otherwise be. How? It gives you fewer options for trading, so you won’t get lost and confused; you’ll easily be able to make a decision that works for you. On top of that, you need to do it quickly; this is a daily timeframe, after all. So you need to make a decision and stick with it. This will help you in future trades, even those that aren’t part of the daily timeframe, and that’s a good thing – the less time you spend trading (and thinking about your trades) the better.
End of day trades will also help you to get into the right trading mindset. You won’t be able to sit and watch trades all day, so you won’t get into the habit of it. This is a major downfall of a great number of traders, so if you never get into it, you’ll never have to wean yourself out of it. You’ll be less likely to over-analyse things and over-trade, and that means you’ll be less likely to lose a lot of money. End of day trades are the ideal ‘set and forget’ kind of trading and understanding how these benefit you will stand you in good stead for the future.
End of day trades give traders a good framework to use for all trades. This prevents too many mistakes from being made. After all, humans are programmed to avoid risk where possible and to stay away from anything that might cause pain. It’s all about pleasure for people. This is how the human race has managed to stay alive – and evolve – up until now. Trading is different though; trading is all about risk and involves some pain (because losing is inevitable).
Yet the framework that end of day trades will give you can help you to avoid the pain for as much of the time as possible, as well as taking calculated risks which means that the worst of trading is muted somewhat and you can enjoy the spoils and rewards instead.
As far as anyone can be in control of any aspect of trading, end of day trades give you that option. It still may not be total control (some would say the only thing you can be in control of during a trade is your own actions), but it is a lot better than when you trade on the longer timeframes and you start to wonder whether you’re doing the right thing or not. If you find that you’re not in control at all and allow the markets to control you instead you will make costly mistakes.
It’s far easier to feel in control when the timeframes are smaller as there is less time to worry and ‘talk yourself out’ of things.