Any internet search including the word Forex will immediately serve you a plethora of popular high frequency trading systems, surrounded by those attractive money buzzwords.
These heavily marketed Forex systems are pushed in front of you through banners and annoying pop ups.
If you’ve ever had the misfortune of actually adopting one of these systems and you put your heart into it – you will already know first hand these over-hyped packages never deliver on what they promised. My condolences – we’ve all been there.
Today, I would like to introduce you to a far superior stress-free and relaxed approach to trading Forex that yields much more reward potential than those rapid paced, mentally draining trading strategies.
I love the “end of day” trading approach. Its great because you only have to spend a small amount of your time in front of the charts per day, and have a much better chance of achieving the results you want for less effort.
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.
One of the biggest advantages of end of day trading is the way in which it allows traders to carry out their trading activity around a demanding day job or other various time consuming life commitments.
Whether you are: working full time or part time, studying, trying to progress with your career, or even a stay-at- home parent (maybe a combination of a few of these) – the techniques used in end of day trading will slide easily into your schedule, all without compromising your trading potential.
Most new traders have stumbled across Forex trading because they are looking for a “quick fix”.
It’s the same old story really. People are brainwashed to think Forex is the means to quickly solve all their financial problems, and when opening a new trading account they’re already dreaming of buying that private island they’ve always wanted.
If you’ve ever seen the the Matrix series, a popular quote from the first movie is “nobody ever makes the first jump” – well, this is the perfect metaphor for the markets.
It’s pretty safe to say 100% of Forex traders lose money and blow their first live trading accounts – this is nothing to be ashamed of though, I see it as part of the initiation into the Forex world. It’s where you truly start grasping the realities of Forex trading.
Many of us dream of one day being able to chuck in our day jobs, switching to full time Forex trading and relying only on our trading income to support us. Until that happens though, you will still need a steady, consistent income to pay your bills and put food on the table.
This is where end of day trading really shines, because you’re only required to interact with the markets for very short periods of time each day – I am talking as little as 15-20 minutes.
During those 20 minutes, you will be able to:
- Do a quick, but effective scan of all your favorite markets to identify high probability trading opportunities
- Place any pending orders to take advantage of retracement prices, or catch any breakouts
- Place a logical stop loss that protects you if the market moves against you, and your trade idea fails
- Adjust any levels on your chart, or trail your stop loss if that’s something you wish to do
- Perform any other chart maintenance
SummaryMost of us have busy day-to-day lives. End of day trading allows a person to trade around a busy schedule by reducing the time you need to spend in front of the charts down to about 15-20 minutes. During this time you can effectively perform an array of tasks on the charts or place any orders which won’t need attending to again until the next day.
Live your life, Don’t be a slave to the charts
I cannot stress it enough.
An unbelievably large percentage of traders with all levels of experience, even mores so the newbies – spend far too much time glued to chart, hypnotized by the rise and fall of the candlesticks.
It’s easy to understand why most traders have an addiction problem with Forex, the main reason obviously being that money is involved.
Every trader has been in a situation where they are swept up in the excitement of seeing an open trade explode into nice profits. It brings on a euphoric feeling that plays with you, and tempts you to trade more. You don’t feel like you can lose at this stage, you’re the king of the charts right now!
The difference between “chart junkies” and educated traders, is not letting the euphoric feeling of winning money influence your trading behavior and having the ability to step away and break the connection.
The “chart junkies” who can’t disconnect fall into a really bad ‘zone’ where a sickness starts to fester. Not being able to sleep properly, letting anxiety build up and thinking about the charts obsessively throughout the day.
The draining and mind numbing effects take their toll not only on the individual’s account, but also on their day-to-day life.
I’ve seen troubled traders who have let the markets get to them. It’s not hard to tell something is eating away at them from inside – it impacts their social life and they sometimes become a very negative person to be around.
These guys/gals become so obsessed with every pip movement, they feel the need to constantly stare at the screen just waiting for something to happen.
I’ve been to this dark place – spending hours in front of my computer, passing off the opportunity to hang out with friends or go on dates with girls…all because I was addicted to trading.
You feel like you have a commitment to stay ready at the charts because you can’t afford to miss any trading opportunities – wasting away hours and hours of your life. It’s very unhealthy, you don’t sleep well and easily can fall into depression.
This is the main reason I switched to end of day style trading. It helped me detox this bad behavior and get back on track with trading. I’ve never looked back.
End of the day trading is sometimes called “close of play” (officially defined as the New York Stock Exchange close).
The main goal is to focus your trading efforts at a key time where you can see 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 ‘time-friendly’ strategy, you can really minimize your risk in trading, mitigate any undesired lifestyle changes, and take positive steps towards learning how to properly 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.
SummaryForex trading can be very addictive. A lot of traders find it hard to disconnect from the trading screen, leading to a whole array of self-sabotaging behavior. The brilliant thing about end of day trading is you only have to check the charts at one critical time of the session – the New York Close. This allows many people to take up trading, while not having a negative effect on their normal day to day life commitments.
Lower Your trading frequency, Be Rewarded With 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’re probably frustrated and looking for a way to approach the markets that will reward you with better success.
The fact of the matter is that every time you open a trade, no matter what it is, you increase your risk exposure.
The problem is low time frame charts give out lots of high risk signals that can easily trap you into bad positions. Also low frequency trading systems tend to use very tight stops, so the market can stop you out if it ticks against you a couple of points.
Unfortunately traders often interpret high volumes of signals as lots of opportunities to make profit. The misconception is: more candles = more signals = more money.
You can never predict the market with 100% accuracy – which is what a lot of new traders are gunning for.
There are a lot of trading systems out there advertised to have a 85% win rate. These kind of systems generally capitalize on short term market conditions, and are considered to have a “low shelf life”.
These are “churn and burn” kind of strategies are susceptible high losses when the market behavior shifts to adapt with current events.
Traders who step back and look at the bigger picture, and contrast the daily time frame vs minute pips, have a much clearer and more accurate view on how the market is moving. This means better accuracy, lower risk and higher reward potential for each trade.
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 higher priority, “A+ signals”, and capitalizing on them with a single swift and decisive move.
Scalping and day trading is a losing battle, it will burn you out and make you very bitter with the markets. Even some traders who contact me who have found some limited success with day trading don’t want to continue with it any more due to the high levels of mental fatigue.
Trading using the daily candle closing price is a refreshing, and positive change from lower time frames – you will find better clarity, higher accuracy and just really feel like you’re trading in a mature, professional manner.
Leveraging end of day trading with positive geared risk reward money management is an effective way to reduce the required win rate to turn over consistent profit. Some models only need a 30% win rate to turn over profit in the long run.
SummaryMany traders are drawn to high frequency trading systems and low time frames with the belief that the high turnover of candlesticks will provide more trading opportunities. While this is true, the trading signals generated are of extremely low quality. End of day trading takes advantage of higher time frames which roll out much more reliable, accurate signals that can get you into much better market moves.
Supplementing End of day trading With New York close candles
End of day trading strategies are focused mainly on using the daily time frame 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 which are synchronized with the New York close. This gives us the daily candle which shows the Sydney open – New York close price action.
New York close candles are considered to be the industry standard by many traders, and essential for end of day trading strategies. Most brokers are actually making the switch to a New York close price feed, because they know that’s what we want.
The closing price is one of the most important pieces of data on your chart. It can tell you a lot about a session, for example:
- The bullish power vs bearish power that session
- If the market was able to break through a level
- If the market was unable to break a level and caused a failed breakout
- If the market was decisive or indecisive
- Communicate the strength of a price action signal
The closing price of the rejection candle above communicates the intense bearish pressure with this signal. I call these ‘thick body’ rejection candles and they generally have a much better follow through rate.
Sometimes its just those subtle things that you overlook, like the closing price, that can give you a critical information to anticipate future price movements.
If you’re going to start using the end of day approach, make sure you tune into a New York close price feed.
SummaryDaily candles with a New York close are a good way to synchronize your charts with the true Sydney – New York 24 hour session. They abolish those annoying weekend candles and give you a more accurate representation of the market price action. Most brokers are now making the switch to New York close candles to keep up with traders demand for them.
Taking advantage of stop and limit orders
The best way to interact with the market is by keeping your time in front of the screen to a minimum by using pending orders.
There are two types of pending orders, “stop” or “limit” orders.
The technical differences between the two are beyond the scope of this article. To keep things simple, all you need to know is – stop orders are the best option for breakouts, while limit orders are best used for catching 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 Day is one of my favorite end of day breakout frameworks.
By implementing this kind of “set and forget” approach with a buy stop order – you don’t have to sit it in front of the screen and wait for the breakout to occur. The buy stop order will automatically trigger you in if one occurs.
This removes emotion from the equation, because you are letting the market take the reins from here on. The trade will either trigger and work out, or hit your stop loss – or not even trigger at all.
Set and forget married with end of day trading is a very powerful combination.
Check out what happened to the Inside day afterwards…
SummaryLimit orders are a trader’s best friend when it comes to de-commiting yourself from the charts. They allow you to set up your trade in a way where your order will only trigger under certain conditions. This allows you to practice the set, forget and collect style of trade management.
Trade with More Free Time, Detox Your Obsessive Trading Behavior & Get better Results
As price action specialists, we love the power end of day trading brings to the table.
It’s an excellent way to uncomplicate trading by removing unnecessary data and other external variables, like yourself, from the charts. It works really well for busy people. The last thing anyone wants is to be ‘obligated’ to sit in front of the charts wasting time that you really need to spend doing other tasks.
We are firm believers in the ’20 minutes a day method’, leveraging “set, forget and collect” style management to trade at the “full time trader” level while only committing not even 2 hours per week to the charts.
Finally, you can fit Forex trading easily into your busy schedule, and build a regular routine that keeps you in a positive state of mind and above all, helps transform you into a profitable, successful trader.
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 trading, you may be interested in our War Room Traders package. Here you’ll find a wealth of information, including our price action course, where you will learn how to capitalize on low volume, low risk, but high probability trades.
If you want to learn how to combine a busy life, price action trading, set-forget-collect trading with end of day trading strategies – then the war room is definitively for you.
Regain control over your trading and your life – break free from the addiction and be a happy Forex trader.
I hope this article was insightful, please leave your feedback below – I love to hear your feedback and comments
All the best on the charts for this week’s trading.