Why You Should Wait for the End of the Day to Trade

by admin on January 7, 2013 at 5:46 am

One of the mistakes forex traders make is trading throughout the day instead of at the end of the day. This mistake can be made by those trying to time the market instead of waiting for the price to be locked in. Those sitting and watching the markets are often driven to do something to feel like they are doing something, so they trade throughout the day when waiting until the close would be better. Others try to trade during the day when it is convenient for them instead of waiting. They trade on their lunch break instead of when they can profit most from the forex market.

What is the end of the trading day?

The end of the trading day is not the end of your work day at 5 PM local time. The end of the trading day is when the stock market in New York closes. You can trade based on the end of the day prices any time after the market closes, including in the evening.

What are the benefits of waiting for the end of the trading day?

The benefit of waiting for the end of the trading day is that you know when it will be and can plan for it. You wont worry about watching the stock market throughout the day. Youll make fewer trades and fewer mistakes.

Another benefit is that prices are no longer fluctuating after the market closes. You dont have to waste time watching the prices rise and fall. You can simply make your trades based on your trading plan. Look for price action trading set ups for the next day. And then you are done.

It is less stressful to make the trades at the end of the day. Youll know the price and can decide based on the market signals whether to trade or not. There is no need to try to analyze a changing trend, because it wont change until the next market day starts.

You are also more likely to make the right decision by waiting for the end of the day. You will not be emotional invested in a trend or anxious to make a trade to cover prior losses. You will have a whole days worth of data to act upon instead of reacting to a five minute trend up or down. Youll also enjoy end of the day market reports on which to base your decision, instead of buying during an upswing and being left with overvalued assets after the fever breaks. You wont lose money trying to time the market during Federal Reserve Board meetings; you will know the Feds action and market reaction before choosing to buy, sell or hold. And by waiting until the end of the day, it will be easy to sit back and hold what you have if the market signals do not indicate that you should buy or sell.

The greatest benefit of this method is efficiency. If you are engaging in Forex trading to supplement your income, watching the market will interfere with your job. If you are day-trading throughout the day, youll make mistakes and act irrationally. Waiting until the end of the day adds sanity in addition to saving you time. Instead of checking the market at lunch and dinner and worrying about it the rest of the day, youll only check it once, analyze the one data set and then trade. Youll be done in thirty minutes, instead of wasting hours watching and waiting or overreacting.

About the Author

Johnathon Fox teaches a Forex trading course to his students and has a real ability to help traders become consistently profitable.