EOD Trading Strategy
EOD is an abbreviation of End-of-Day.
EOD doesn’t involve intraday trading because EOD strategies are based on closing prices. It is used to predict the behavior of the market in the coming days.
Some claimed it is clearer and less stressful to trade the end of the day since trading will be done when the regular session is closed and prices are closed.
In EOD trading, traders analyze what happened during the day and then make decisions for the coming days. The biggest advantage of EOD trading is time, and you don’t need to make decisions in a rush. You can place an order before the market resumes the next day.
7 Reasons Why The End-of-Day Trading Strategy Is Best
In EOD, you make decisions when the market is near to close or already closed. In other words, it is the opposite of day trading. Day traders have to watch charts all day, but in EOD, traders have to trade when the market is closed or when the market gets open. So, this trading strategy allows traders to focus on building strategies and do analysis instead of watching the market all day. All the end-of-day traders are different. Some traders trade on the close, and some do on the opening. So let’s have a look at the reasons why the EOD trading strategy is best.
All trading can cause stress. EOD is different from short-term trading and intraday trading, so it eliminates stress. In intraday trading, you need to be disciplined when your money is on the line, and it can be the reason of stress for many people. Most of the people fail in short-term trading because of stress. However, the end-of-day trading is the opposite. You don’t have to sit in front of the screen for the entire day. You don’t have to think much about profit or loss. As a result, you stay away from the stress zone. You can do whatever you want to do during the trading day because you will make decisions at a set time, either by the end of the market or by the opening of the market.
EOD trading is known as less stressful than the others, so it helps to improve the quality of life. You can feel relaxed instead of feeling exhausted. As it is mentioned earlier, in end-of-day trading, you don’t have to sit in front of the screen all day, so that you can do other rewarding activities. You can spend this time reading trading books and improving your chart- reading skills. You can play the game that you like, and at the end of the day, you can correctly trade with freedom and a fresh mind.
In intraday trading, the cost is involved. Every time you make a trade, you have to pay spread and commissions. For a large spread, let say 1%, you will have to make at least 1% profit to achieve breakeven point. So in short-term trading, it is difficult to achieve because the markets don’t have a movement of 1% for the whole day. End-of-day trading is cheaper because trading held for a longer period, and the chances of making profits are more. This cost-efficiency makes end-of-day trading better than short-term trading.
In intraday trading, you can’t produce profits more than the specified level of margin used and allowed by the range of the trading library. For example, the market moves only 10 pips during the entire day, and then it’s impossible to make significant profits. EOD trading strategy offers longer trades, so the profit potential is greater. You can hold the trade until the stock moves 90 to 100%.
The main reason why end-of-day trading is best is that it is easier to set up and implement. Lots of stock analysis programs are only designed for EOD trading. You can make use of Amibroker to get good quality end-of-day data. In intraday trading, you will get lots of false signals. EOD signals are much stronger than intraday trading signals.
Unfortunately, past trading data can be difficult to hold. Intraday data that is cheap can’t be relied upon. On the other hand, good intraday data can be expensive and out of reach for most of us. Meanwhile, EOD data is more affordable and accurate. You can easily implement this trading strategy, and testing strategy can is straightforward. You may find many pitfalls while setting the intraday system, and there will be not so many when building an EOD trading strategy. To get good EOD data, you will have to invest, but the data will be affordable and accurate.
Last but not the least reason why the EOD trading strategy is best is you can keep your day job. You need to be focused and disciplined in intraday trading all the time, and it is a full-time job. On the other hand, EOD trading only requires a few minutes or hours. In simple words, you can continue your day job and keep doing EOD trading. You can prepare your strategies in the evening when the markets are closed or in the morning before the market opening. In this way, you can do EOD trading without any worries because you know you will always get your salary from the day job.
EOD trading strategy is much better than intraday and short-term trading. In EOD trading, there is no time restriction, and you can hold your trade for a long time. The time factor allows trading without stress. It can help you to make more profits. You can continue your day job and improves your life quality. You don’t have to sit in front of the screen so you can invest this time in rewarding activities. It is much better than intraday and short-term trading. EOD trading signals are stronger than intraday, and data can be more accurate and affordable. So, EOD trading can be worth investment.
Sky Hoon. Read Full Bio
Website Owner, Twitter-er
He has been trading since 2008. He started this blog to share the journey about option trading. He dabbled in stocks, bitcoin, ethereum (in Celsius Network), ETF (lazy Dollar Cost Averaging) and also built websites for fun. He used this as a platform to share my experiences and mistakes in trading, especially options which I just picked up.