All Forex traders develop their own habits, techniques and schedules. Choosing best time to trade Forex is a decisive step to achieve trading success. There are lots of small differences in the way people track, read, and trade the market, but one of the biggest and most important is whether they go for intraday or end of day trading.
Intraday traders buy, sell and close their position on their chosen currency pairs within the same day. End of day trading means carrying out your trading at the end of the trading day. Forex trading of course – unlike stock trading – can actually be done 24 hours a day. As one market closes another is usually opening, so in practice end of day trading means trading at the end of your chosen session. For UK-based traders, this could be when the London centre closes at 17.00 GMT. New York is still trading then, of course, and others prefer to end their day when New York goes offline at 22.00 GMT. Whether they choose the end of the trading day to end in line with one of these markets or at any other time, end of day traders place their orders at more or less set times.
There are benefits and drawbacks to both methods. Intraday trading allows the committed trader to follow fluctuations in the forex market, responding to changes as they happen and always looking to the next few pips. Forex is particularly suited to intraday trading, being far larger and more liquid than the stock market. As various currency pairs can rise or fall many times within the same day, you have the potential to make profits constantly – although doing so consistently requires skill, knowledge and experience. These fluctuations tend to be small but increased leverage and extremely low transaction costs compared to the stock market allows forex traders to make the most of their positions and increase their profits.
Intraday trading is not suitable for everyone however. It is very time-consuming and good intraday traders will closely follow fluctuations and relevant news releases throughout the day. When new traders first delve into the market they can tend to get carried away and even a little obsessed, feeling like they do have to keep their eyes on the market all day and way into the night. If you have a regular job to keep or a life to live however, committing the requisite time and energy to intraday trading can be difficult.
End of day trading allows you to operate to your own schedule and also to filter out the volatility and noise that affects the market throughout the day and individual market sessions. The end of day trader can focus on how the market moved throughout the entire day, identifying trends that can be drowned out by the clutter of intraday trading.
Some individuals will be more suited to intraday trading but for the majority, end of day trading is a more convenient, less strenuous option that also tends to offer a better return efficiency by providing a higher profit ratio for the time and effort expended.
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