The popularity of high frequency trading systems which litter the internet is not only a great example of mass hysteria being plain wrong. But it is also a great potential opportunity for smart traders who understand the conditions created by the trading of the masses.
Any internet search including the word forex will immediately tell you how popular these trading systems are. Every high frequency trading system is pushed in front of you through banner advertisements, pop up windows and sponsored searches. If you’ve ever adopted one of these systems, you will already know first hand these systems don’t deliver what they promised.
Fear not though, we are going to explore and discuss the real and tangible benefits of end of day trading strategies using the daily timeframe. There are no claims of riches overnight here but then we enjoy not having sleepless nights after a day wasted staring at charts either.
Keep your day job and still do well with your trading
Forex trading, much like any form of market speculation will always come with an element of risk. Being able to manage that risk effectively will be the difference between success and failure. But managing risk is not just about the risk in your portfolio, it applies to your life too. One of the biggest advantages of end of day trading is the way in which it allows traders to carry out their activity around a day job or other life commitments. Whether you are working part time, studying, holding down a career or even a stay at home parent (maybe a combination of a few). The strategies employed by end of day trading will fit easily into these commitments without compromising your trading success.
It’s the same old story really, people are brainwashed to think Forex is the means to quickly solve all financial problems, opening a new trading account pre=planning to buy a private island they’ve always wanted. If you’ve ever seen the movie ‘The Matrix’, a popular quote from the move is ‘nobody ever makes the first jump’. This is a perfect metaphor for the markets. It’s pretty safe to say 100% of Forex traders lose money and blow their first live trading accounts.
Your Forex career should not start off by going to the bank and getting an extension on your mortgage, risk your life savings or basically just ‘bet the farm’. You would be in financial ruin, because the fact is you will burn it all up as a newbie. Don’t expect to win the tournament if you just started boxing yesterday.
Many of us dream of one day being able to chuck in our day jobs, switching to full time Forex trading and rely only on our trading income. Until that happens, you will still need that steady income to pay your bills and put food on the table.
If you use end of day trading strategies, its only necessary to be involved with market for very short periods of time each day, perhaps as little as 20 minutes. During the 20 minutes you will identify end of day trading opportunities, set them up and let the market work for you. Then you can go back to your daily chores, whether that means finishing that pending assignment, taking the kids to school or heading into the office for a day’s work.
Live your life, DON’T be a slave to the charts
This is a recurring theme in both this article and much of the advice you’ll find on this site. And we cannot stress it enough. An unbelievably large percentage of traders with all levels of experience (an even higher percentage with newcomers) spend far too much time glued to the price screens and charts, hypnotized by the rises and falls of the candlesticks.
It’s easy to understand why. Everyone has been in the position at one time or another where the excitement of seeing a position jump into nice profits brings a euphoria feeling that entices you and makes you feel invincible. The difference between chart slaves and educated traders is that slaves are unable to break away from this feeling and before long they become ‘addicted to the markets’. The draining and mind numbing effects take their toll not only on the individual’s trading fund but as importantly, on their day to day life.
Slaves to the charts become so reliant on every pip movement for their strategy to work that they become like hired security guards. These guys have to constantly stare at the screen just waiting for a “burglar” to strike. The belief that they can’t afford to miss anything has them wasting hours on end when in reality they could be achieving the very same results with only a few minutes of trading each day.
By checking the markets at the end of the day, sometimes called “close of play” (officially defined as the New York Stock Exchange close), you are focussing your trading efforts on the time period that demonstrates exactly what happened during that 24 hour forex session. This gives you time to setup your trade orders before you go back to your busy life.
When you adopt this strategy you are minimising your risk in both trading and undesired lifestyle change while at the same time taking positive steps towards learning how to spot and enter a forex trade. It’s hard to argue with a system that allows you to keep your day job while you learn, continue to spend time with friends and family and even not have to substitute this new venture with any hobbies or interests that you would otherwise have been doing in your spare time. It’s a hard deal to beat.
Lower trading frequency, higher accuracy
Now be honest with yourself, if you’re reading this the chances are you may have blown a trading account or two by adopting high volume systems like scalping and other day trading strategies. If that’s the case, you may not understand why your overall trading didn’t succeed. The fact of the matter is that every time you open a trade, no matter what it is, you increase your risk exposure. Low time frame charts can give out lots of high risk signals that trap you into bad positions.
Unfortunately traders often interpret high volumes of signals as lots of opportunities to make profit. You can never predict the market with 100% accuracy. Traders who step back and look at the bigger picture, the daily timeframe vs minute pips, have a much clearer and more accurate view on how the market is moving. This means a lower risk and higher reward potential for each of their trades.
So it is just a matter of isolating the time when these lower risk signals are most common and focussing efforts there. This is end of day trading where those 20 minutes per day (or even only 2-3 days a week) will be most effective in allowing you to gauge the market for the clearest signals. End of day trading is not about jumping into the markets with a flame thrower, torching every signal you see. It is about identifying the high priority, A+ signals then capitalizing on them with a single swift and decisive move.
End of day trading the Daily Charts with New York close candles
End of day trading strategies are focused wholly on using the daily timeframe and it’s easy to see why. Every broker operating in the market has a slightly different price feed to the next. This means that their daily candles open and close at different times. Here at ‘The Forex Guy’, we only use brokers who offer a price feed with daily candles closing at the New York close. This gives us the daily candle which shows the Sydney open-New York close. As far as we are concerned this is the industry standard, an essential for end of day trading strategies.
We have seen already that daily charts offer much more reliable intel than others and so in combining the daily timeframe with the most important period of the day, Sydney open-New York close. We are creating the environment which is most likely to help us profit.
In this key time for forex markets, using end of day trading methods, the daily charts will become comparatively very easy to read. This is because all the unclear and distorted signals which come from intraday market noise are silenced under the revealing of the true market picture which comes from the daily time frame. Using end of day trading, you can easily pinpoint entry points and stop losses with greater confidence and accuracy.
Taking advantage of stop and limit orders
The best way to interact with the market is by using pending orders so that you keep your time in front of the screen to the minimum while at the same time maximising on profitable opening and closing positions. Pending orders can be either “stop” or “limit” orders. The technical details between the two are beyond the scope of this article. The main difference between the two lies in your entry price strategy. Stop orders are the best option for breakouts while limit orders are used for retracement entries.
Here is an example of how we used a ‘buy stop’ order to automatically catch the breakout of this Inside Day signal. The Inside bar is one of our favourite end of day trading strategies.
By implementing the “set and forget” approach to the market, you are making the most of your time flexibility while really harnessing the power of end of day trading strategies. After all, all of us are at the will of our emotions from time to time so by setting your trade and walking away while you are still thinking clearly and analytically. There is no fear of you suddenly reacting to a spark and making an incorrect emotional decision as a result.
We used the set and forget approach the inside day, which basically means after we setup the trade it requires no more intervention on our behalf and will either hit profit or be stopped out. Set and forget and end of day trading is a very powerful combination. Check out what happened to the Inside day breakout we just looked at…
Wrapping up today’s End OF DaY Trading article
As price action specialists we love end of day trading strategies because of the way the two marry up so well together. Our simple trading approach is uncomplicated by removing unnecessary data and other external variables from the charts. We are firm believers in the ’20 minutes a day method’ using the daily time frame. It works really well for busy people, especially on those busy days when you’ve got plenty to do. The last thing any wants is to be ‘obligated’ to sit in front of the charts wasting time that you really need to spend doing other tasks. The “set and forget” strategy allows us to fit trading easily into our everyday lives and build a regular routine that keeps us positive and above all profitable. We gain from forex but never at the cost of our personal lives.
If this has struck a chord with you and you want to learn more about how we apply end of day trading strategies to our price action approach, you may be interested in becoming a War Room member. Here you’ll find a wealth of information on how to capitalise on low volume, low risk, high probability trades. You’ll learn how price action combines perfectly with end of day trading strategies to help you regain control over your trading and your life.
We’re looking forward to seeing you in our War Room trading community and start trading with the benefits of price action.