When I first started trading back in the 1980s, retail traders used to trade the IMM futures market as it allowed small traders access the FX markets, as the interbank Forex markets were at this time, only used by large financial institutions and high net worth individuals. The IMM was only open for 7 hours a day and we traded the close. This was due to the level of activity in this period and even today, with around the clock trading, I still think the US close is a great time to trade. You don't have to trade the exact close – any time near to it is fine.
Trading Forex Closing Data – Anyone Can Do It
There is a considerable gap after the US Close, before the London session opens which is the next period of high volume trading in the currency markets. So no matter where you live in the world, you should be able to trade sometime between US close and London open, let's take a look at the advantages of transacting trading signals, just once per day.
You Need Spend Very Little time on Your Strategy
the great advantage of trading closing prices over intra day is it allows anyone to trade currencies even those who are in full time employment. You have one single time, where you will spend around hour looking at the currency pairs in your portfolio and then, decide the trading signalsyou need to transact in line with the rules of your trading strategy.
You do your analysis, place your trades and then, your finished until the next day. In terms of trading currencies this may sound like very little work and it is but always keep in mind, the time you spend on your trading plan is not in any way connected, to how much money you make from it. In terms of making profits from your trading strategy, the normal correlation that many people see, work in other areas of business which is - the bigger your effort the greater your reward simply doesn't apply when trading Forex markets. I see many traders, spending many hours a day studying the markets and make trades throughout the day who lose or achieve mediocre profits and others, who spend under an hour a day who make far bigger profits!
These traders have spent less time on their trading and achieved better results and this is due to the fact they have, avoided false trading signals which are a product of emotion and have focused on the best high odds trading opportunities for profit.
Trading Closing Data Helps Avoid Emotional Trading
If you look at currency trading throughout the day, you will be more inclined to trade with your emotions to the fore, as you see prices spiking up or down on Forex charts and if you suddenly see the price spike against you, you may be tempted to get out of a trade to quickly or even enter a trading signal purely based on a short term move in the market. By watching Forex prices constantly, you will find your emotions can tempt you to make trades you shouldn't. By waiting for the close, you can see how the market is has settled up for the day with all the news stories and opinions, discounted in the price. Prices have settled down and you can then decide which signals you should execute based on your Forex trading strategy.
Less Trades are Taken as You Focus on the High Odds Trades
If you trade end of day data, you will less tempted to trade and this means you will be focused more on higher odds trades. You wont be taking a trade just on a short term emotional judgement and will make less trades and be focused on, the high odds trading signals rather than trading on a short term view.
Maintains Sharper Mental Focus
Looking at currency trading once a day helps you maintain a sharper mental focus in terms of your trading strategy and as we have said, it helps keep your emotions out of trading and also, helps to strengthen discipline. You will trade with more discipline due to the fact you have removed yourself from trading the noise of the market and can focus on the big picture. By just focusing on one price, you will feel sharper mentally and focused more on what really matters in terms of price action. In conclusion, you will trade with greater confidence and discipline which we all know, are the real keys to currency trading success.
A Note on Stop Close Orders
In terms of market timing, we have looked at entering trading signals at the close and of course you can set a stop loss order which will take you out the market at any time its hit but one currency trading tip I think is worth considering for well capitalized traders is also, to use stop close orders on certain pairs. How often do you see the price of a currency spike through an important level of resistance in the daily session which stops many traders out and then, the rally fades and continues to the downside? Loads of times and the reverse is true on a bear market.
In terms of the daily session, stops are clipped out all the time, above an important level of resistance or below a level of support only for prices to move back down again. On some trades, you might want to avoid being stopped out by this short term volatility and consider using a stop close. We have covered using the stop close in more detail on other areas of this site and it can be very effective in certain market conditions.
Learn to Trade End of Day for Bigger Profits in Less Time
the advantages of trading end of day rather than intra day are numerous and we have listed them above and this trading method is great for all traders novices or pros and can enhance your potential profits, decrease the amount of time you spend on your trading strategy and allow you to trade with less stress while improving confidence and discipline at the same time.