In looking back at my historical trading results my big winning trades that I have banked and held on to were longer term trades. Even with trading weekly options the ones I was able to hold for almost a week or at least roll the profits over throughout the week were where my big returns came from. I am not a day trader, I am not a scalper, I had worked on those strategies for years and I just did not like sitting in front of a screen all day. It was a lot of work while I made much better returns in trending markets and swing trading markets with surprisingly little effort AFTER I had done my homework and had my trading plan rules and a system. Of course the market has to give me the trends and swings to trade and keep a lid on the volatility.
I currently only actively trade the first hour and the last hour of the stock market trading day and run multiple systems depending on the market environment. This is how my trading has evolved over the years through trial and error of what works for me and my methods and it also fits my personality. I trade end of day signals the same day that they occur right at the close. Some systems take end of day signals the next morning on open, I do not, I take them when they happen.
It is interesting that Ed Seykota and Nicolas Darvas some of arguably greatest traders of all time were both end of day traders. They had very different strategies with Ed Seykota a very mechanical system trader with huge early back testing of strategies for the futures market and stringent risk management with stop losses in place. Nicolas Darvas would buy the biggest momentum stocks in the stock market with huge position sizes and hard stops under near term support. Darvas let his buy stops take him in and his trailing stops take him out.
This is not for everybody this is just one of several options that a trader has to choose from.
Some Advantages to End of Day Trading
- If your system test was for the end of day then why be concerned with intra-day noise?
- It saves the stress of watching the daily ups and downs and volatility that is many times just noise inside of a bigger trend.
- You can save 30 hours of your life for other things.
- End of day trading my fit your personality better than active trading.
- It is possible to have much bigger wins on the daily chart than the hourly ones.
- The easiest path to profits in a trend is to hold your positions and let the profits run.
- Less decisions that you have to make.
- Less work to do with one signal a day on a trade.
- You can save on commission cost and bid/ask spread slippage.
- You want to trade more like Seykota and Darvas and this may take you one step closer.