What is EOD trading?
End of day trading, also referred to as EOD trading, is a trading style that enables you, the trader, to benefit from market volatility in one of the most time efficient ways possible. Once a day, when the market closes in New York (5pm EST), you pull up the chart and make decisions over your existing positions and any further buying or selling of forex pairs. Daily candlestick charts are the most useful for this style of trading
What are the benefits of EOD trading?
End of day trading has many benefits. Perhaps the most obvious is that it can simplify your whole trading process. Firstly, you are not going to spend hours in front of the computer watching charts, so you will find this helps clear your mind set.
One of the big mistakes that forex traders make, is that they watch the markets for hours, this often results in over analysis, which is swiftly followed by over trading. End of day trading is done through a “set and forget” approach meaning that it goes some way to removing that emotion which can so easily cloud judgement when you are watching the forex markets so closely.
In short, this strategy is considered very stress free and very practical. Given the short amount of time needed, you can actually keep your day job whilst trading the forex markets. Sometimes traders believe they have more control over the markets if they are watching the screen.
This is an illusion, no one has control over the markets whether they watch them or not! However, you do have more control over yourself when you are not sat watching the market and that could make a big difference to your trading.
Which strategy can be used?
Breakouts is one strategy which is particularly well suited to end of day trading. The forex market moves through periods of low volatility, before expanding into a trend.
The idea of a breakout strategy is to capture the moment that it breakout into the trend. So, wait for the low volatility period to form and then trade on the first move outside of the range. For example, wait for the Bollinger band width indicator to drop below 25 and then for the price to close over the Bollinger band in the direction of the trade.
Who should I do EOD trading with?
When trading FX make sure you use a broker which is renowned for their tight spreads and fast execution, such as Vantage FX. This Australian based, ECN award-winning forex broker offers its clients some of the tightest spreads in the industry, along with exceptional execution.