End-of-day trading as a Philosophy

I am not a big fan of intra-day trading. The reasons are pretty simple; there is more random price movement or market ‘noise’ on the intra-day charts, and they thus contain more ‘clutter’ and are just more difficult to trade than the daily charts. For a skilled trader who is already successful, intra-day trading might be something to consider, but even then I would personally discourage it!  But, if you are a beginner, a struggling trader, or simply someone who doesn’t have a lot of time each day to devote to trading, trading the daily charts in an end-of-day manner as I do is going to be your best option.

The most successful traders are position traders, they carry positions overnight often.  For people like Larry Williams and Courtney Smith, this is the only way to trade.

End-of-day trading basically allows you to fit in trading around your schedule, whatever it may be. You can keep your day job with no problems. Many people seem to think that if they can’t sit and watch the markets all day then they can’t trade, this is simply not true.

In fact, being away from the market is actually good for you – this is a ‘hidden’ advantage to end-of-day trading. Since you won’t be as involved with the markets you will less emotional and less prone to over-trading or over thinking and this will likely increase your bottom line at the end of the year. It’s a statistically proven fact that low-frequency traders make more money over the long-run than high-frequency traders, on average.

As an end-of-day stock trader you can live your life exactly as you are now, but instead of spending 10 minutes extra watching television at night, you can simply analyze what your trading system is telling you to do next and place the trades for the following day.  It might seem too good to be true, but really it’s not, the truth of the matter is that once you learn an effective trading strategy and develop it into an effective trading plan, you really do not need to spend hours analyzing the markets each day.

We have a tendency to make trading far more complicated than it really is. I am not saying that trading is ‘easy’, because as we all know it’s not easy to make consistent money in the markets. But, most people make the entire process of trading far too complicated, and really the analysis part of trading is actually very simple assuming you have a system or strategy that makes money on past data consistently. The difficult aspect of trading lies following your plan and remaining unemotional. Deciding to enter or not is the easiest decision you have to make in the markets; essentially it all boils down to this; there’s either a signal or there’s not!

Once you have learned or developed an effective trading strategy, it’s as simple as checking the markets each day after the New York close and seeing if your system is telling you to alter a trade or position. Once you develop this into a routine it really should not take more than 10 minutes per evening.

By being a daily chart end-of-day trader you are making more effective and efficient use of your time. Since daily chart signals are more powerful and contain more ‘weight’ than intraday signals, it means your time is better spent analyzing the daily charts after the NY close where you can simply check the markets for a signal very quickly and then walk away. Any signal you find is likely to be much more significant than a signal you may have found earlier in the day on an intra-day chart. Thus, you are getting more out of spending less time in the markets by focusing on the daily charts rather than sitting at your computer all day trying to trade the intra-day charts.

End-of-day trading or position trading is not only a good strategy, but it’s also a philosophy. The philosophy of not being glued to your charts, of accepting that the market will do what it wants, and of generally just being less involved with the markets is a mature trading philosophy that shows understanding of how the markets work and of how the trading game is won. It really allows you to release that ‘need’ to be right and to control everything in your trading. So, even as you become more experienced and perhaps want to trade lower time frame charts, this philosophy of briefly checking the markets for your signals, place you stop and then walking away, will still benefit you and can still be used. This philosophy is at the heart of my personal trading style and so my advice to anyone wanting to trade is don’t trade intraday and strange as it may seem, don’t look at the portfolio during markets hours, the swings may only stress you out unnecessarily and have very little bearing on the outcome of the trade, so don’t look!