End of day trading takes place the last hour or two of the day. End of day trading is also known as the power hour. The best time of day to trade are at the open and close. Power hour stocks have the potential to be lucrative when traded correctly.
From 9:30 to 11:30 there is a lot of liquidity in the market. Then it slows down until power hour. Power hour is from 3pm-4pm. Sometimes around 2:30 traders start to come back to the market.
When trading, is less is more. The best trading happens in 2-3 hours instead of spending the entire day trying to trade.
End of day trading stocks are the stocks with the most volume and the best setups the hour before close. After the first hour and a half of trading, the stock market slows way down.
Traders take a lunch and leave the trading to computers. The volume goes way down at that time. You need to understand what volume mean in stocks to truly understand how important it is.
Specific hours provide the best trading opportunities. As traders, the goal is make a profit. In order to do so, it isn’t about patterns and support and resistance but also timing.
Have you ever tried to trade in the middle of the day? Stocks trade sideways and volume is really low. It’s like watching paint dry. As day traders that is really painful to be apart of.
There are many day trading tips you can follow but many times time of the day isn’t apart of those. If you day trade for a living, then you get a nice break in the middle of the day.
Imagine if you got to take a good break working an office job. You’d be out of there napping or running errands. You wouldn’t stay working if you didn’t have to. Trading is just like that. Take a break and don’t force trades.
Trade the open. Then trade power hour. Power hour stocks aren’t hard to find and end of day trading has good setups for whatever style of trading you excel in.
Unless you’re swing trading stocks, you’re going to close out your positions. Day trading means you’re getting in and out of trades quickly. As a result, if you took a position before trading slowed down, then you’re going to want to close it out before the end of day.
That means come 3pm, traders want to get out of positions. Another thing to consider is that anyone wishing to avoid the PDT rule will come in to buy a stock to hold over night.
Hence the buying and selling that picks up with power hour stocks. Volatility is important to trading. Without it, you don’t get price action. End of day trading can help to grow your brokerage account.
Swing trading is a technique in which you buy a stock to hold overnight up to a couple of weeks. End of day trading works especially well if you’re going to hold a stock overnight.
Another great part of swing trading is allowing traders under the PDT rule to get around it. The PDT rule limits the amount of day trades you’re allowed if your trading account is under $25,000.
Any trading accounts under $25,000 get 4 day trades in a business week. As a result, you can be limited in your trading. However, swing trading allows you to bypass that rule by holding overnight.
If you find a good setup, you can buy during the end of day trading and sell the following day. As a result, there’s a lot of potential in getting a better entry than people who get into the stock the following day.
It’s important to remember that news can affect the direction of a stock overnight. As a result, pay attention to earnings dates and check for any potential news. That is a risk with swing trading.
If you’re new to trading, open a Thinkorswim paper trading account with TD Ameritrade. Then you can practice swing trading power hour stocks and see how the end of day trading works for you.
Take our Thinkorswim tutorial to learn how to set up your paper trading account.
Being disciplined in your trading is extremely important. One way to do that is by using limit orders with power hour stocks. Many traders use market orders.
Make sure you know and understand the difference between market order and limit order. Limit orders allow you to set your buy and sell price. Hence, you control where you buy and sell.
However, make sure you’re practicing good risk management when trading. It doesn’t matter what time you’re trading, you need to have a plan and stick to it.
Deviating from your trading plan rarely works out in your favor. In fact, you usually hear from traders that they took a loss when they didn’t follow their plan. End of day trading doesn’t mean your trading plan differs from how you trade the opening bell.
Trading power hour stocks may not have the volatility that the open has. However, no matter what time of day you trade you need to play the setups.
Support and resistance trading is still just as important with end of day trading as it is in the morning. Look for patterns as well as moving average crossovers.
The stock market is a battle between buyers and sellers. They fight at the open, take a break and regroup, then come back to end the day with another battle.
Those battles form patterns as well as support and resistance. As a result, it helps traders know how to trade. There’s no magic formula that tells you what a stock will do.
However, patterns can give you a sense of direction. If you want to know with certainty what a stock will do, then support and resistance might be the closest way to give that to you.
When swing trading you’re potentially looking for a larger profit margin.Hence it’s imperative to be able to find support and resistance. Trading with those levels in mind can and will change the way you trade. Many times we want to jump into a stock when it’s running.
Instead we should buy the dip sell the rip. When power hour stocks are running, wait for a pullback. That may mean you don’t place a trade during power hour and that’s ok. Sometimes not trading is the best play.
CANDLESTICK PATTERNS – HOW TO TRADE CANDLESTICK PATTERNS
ROBINHOOD REVIEW – TRADE FOR FREE
STOP LOSS VS STOP LIMIT ORDER
END OF DAY TRADING
STOP LIMIT ORDERS
STOCK VOLUME – WHAT IS STOCK MARKET VOLUME AND ITS IMPORTANCE
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