End-of-Day trading

End-of-Day trading

Why I choose to trade the markets after hours  End-of-Day

Do you want to allocate to trading no more than 1-2 hours per day?
Do you have a full-time job or a non-trading business?
Do you want to have life outside of trading?

If you said YES to any question above, the End-of-Day trading is likely right for you. 
And you should probably say NO to day-trading.


What is EOD trading? 

By EOD trading I mean any approach where you:
– do not need to look at the markets or perform any trading tasks during the work day
– you trade once every 24 hours, in the evening of your timezone, “after hours”

Why trade EOD?

– you can trade and still have a full-time job and some life-balance
– trading setups are believed to be usually stronger and more reliable on higher timeframes
– trading costs are smaller (if your take profit is 100 pips, the 2 pip spread matters less vs. if your take profit was 10 pips)
– there is less noise on higher timeframes (which you trade if you trade EOD; by “higher” I mean 1 hour and above – and with my system you do not need to look at market every hour although your setup is on H1)
– there is no time pressure, you do not need to take decision within 1 minute in stress, which is counter-productive

How to trade EOD?

Simplest answer is: trade the daily timeframe. That is, one day is one candle / bar on your chart. You look at the chart every day, i.e. every bar. You trade systems (whether this is price action setups or even indicators or divergences or anything else) on a Daily timeframe.

Risk level is not a problem (it used to be in the past). Now with most brokers offering micro accounts, even if your stop loss distance is a full daily bar range (e.g. 100 pips or even two times daily ATR), you can still limit you loss to just $10 if you trade 0.01 lot size.

Having fewer trading opportunities is a bit of a problem. We should trade best setups only, this is key to high quality. And , whatever system you trade, best setups may present themselves only every 20 or 100 bars… days in this case. Even looking at many currency pairs (beware correlation), there may be just a few setups per month.

A solution is the SDH1 system I present here. I use H1 chart (so I have trading opportunities as many as I would have on a H1 chart), but I use pending limit orders (enter at my price level) and set & forget SL and TP orders (get me out at a loss or a profit if a certain level is reached) so that I do NOT need to look at the market intra-day.  This approach can be applied to other systems, too.

Alternatively, if time and logistics allows, you can look at the market around lunchtime, or also in the morning. With this you could also trade H8 or H4 bars and setups. But for me, what is best, is a focused time to analyze the market in the evening, with no distractions and no time pressure, just a relaxed execution of my trading system.

Summary

Trade End-of-Day if you have a job and want to spend 1-2 hours per day on trading. Trade higher timeframes, use Daily bars or Hourly with pending orders and set & forget trade management method.