Saturday, May 18, 2019

End of Day Trading Strategy

END OF DAY overnight Trading Strategy is a short term swing trading strategy to enter a position 5 to 10 minutes before the markets close, with the stop placed below low the entering day. End of day strategy works well with trading accounts under the pattern day trader" rule, which states that a stock-trader with less then 25K in their account can only make 3 round trip day trades (opening and closing a stock position within the same day) over a five-day period.

This strategy must have the wind at its back with the Daily Trend and Intra-Day Trend:

A. Daily Trend: the 9/20/50 moving averages all trending in the same direction
B. The Current Days Daily bar is trading off a Daily Buy/Sell Zone. This can be a pullback to  Buy/Sell Zone (supply/demand level) and the current day is showing a strong wick/move out this zone
C. EMA Support on the current Daily entry candle
D. Intra day trend: Current days trading shows strong intra-day price rejection which form a candle wick on the daily bar. Prefer entry when price is trading near the high of the day for longs - low of the day shorts.

Forming Daily Chart BUY and SELL Zones: A simple way to form Buy and Sell Zones on the Daily Charts is to find strong wicks, wicks larger then the candles body, that continue the current trend. These wicks represent zones of price rejection where demand exceed's supply and can be targeted for swing trades on pullbacks or EOD trades.

Traders can manage risk/reward one of two ways:
  1. A set 3 to 1 risk reward ratio, which works best when trading with the overall trending markets
  2. A conservative approach of a 1R to 1.25R exit goal and a trail the stop using the low of the day (for longs) as the new stop point. A 1-1 risk/reward ratio with a daily trail stop keeps winners bigger then the losses with the boost of the trend and momentum of the stock behind the trade. This is the method I track and trade with the EOD/Swing Trade Ideas we email out daily.

TRADE EXAMPLES with both 1-1 and 3-1 Risk/Reward
NKE: Long EOD entry off a buy zone and 20ema. Could of entered for a longer term 3-1 Risk Reward swing trade as well.

CSCO: Long and Short off the same Zone. Below the Sell Zone (see strong wick on red candle) had a EOD setup 4 days latter with 9ema support. This same stock then had price trade up and through this sell zone turning into a buy zone. This setup a EOD Buy with the 9 and 20ema support.


IBM: 3 Short EOD short trades with 9ema support. Each also set up a nice 3-1 Risk Reward swing trade short.

AAPL EOD Short inside a prior buy zone that was turned into a sell zone on the daily char. Trade had 9ema support. This also setup a nice swing trade short.

PM Two Long EOD trades with multiple EMA support above what was a prior sell zone and now a buy zone.

HOW I DAY TRADE - MARKET NEWSLETTER The Newsletter is a service for active traders with a focus on short term Buy and Sell Zones and is provided for educational purposes. The purpose is to educate traders on short term trading setups through a two-step process of selecting Daily Charts and applying intraday trading setups. Always use a Stock trading simulator to test, master strategies and become more educated in the markets before risking real money. Become successful on a simulator for a minimum 6 months before risking your money and always use a stop. If the markets conditions don't feel right or if you're unsure of the current days trading environment then PASS on the trade. A missed trade is better than a losing trade.

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Disclaimer

I DO NOT MAKE RECOMMENDATIONS TO BUY OR SELL SECURITIES - I JUST POST TRADES I MAKE OR FIT THE RULES OF MY TRADING PLAN ON A DAILY BASIS. DO YOUR OWN DUE DILIGENCE - YOU ARE RESPONSIBLE FOR YOUR TRADES, INVESTMENTS, AND DECISIONS! ALL CHARTS COURTESY OF TRADESTATION, SCHWAb & TD AMERITRADE