End of Day Trading

End of Day Trading Strategy Explained

End of day trading takes place the last hour or two of the trading day. Trading end of day is a lot of fun! End-of-day trading is also known as “the power hour.” The best time of day to trade is at the open and near the close. Why? Because that tends to be when the most volume of trading is happening. Power hour stocks have the potential to be lucrative when traded correctly.

End-of-day trading takes place between 2:30 pm EST and 4:00 pm EST. Power hour is considered between 3:00 pm EST to 4:00 pm EST. These hours are when traders return from lunch and try to make end of day profits and enter new positions. From 9:30 to 11:30, the market has a lot of liquidity. Then it slows down until the last hour of the day.  Sometimes, around 2:30, traders return to the market to get set up for the end of day moves.

When trading, less is more. Over-trading is a thing you should avoid. The same goes for boredom trades. The best trading typically happens in 2-3 hours instead of spending the entire day trying to trade.

End of Day Trading Setups

End-of-day trading stocks have the most volume and the best setups the hour before close. The stock market slows after the first hour and a half of trading.

Traders take a lunch and leave the trading to computers. The volume goes way down at that time. You need to understand what volume means in stocks to understand its importance truly.

Specific hours provide the best trading opportunities. As traders, the goal is to make a profit. 

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 painful to be a part of.

You can follow many day trading tips, but the time of the day isn’t a part of those. If you day trades for a living, 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 the last hour of the day. End of day trading has good setups for whatever trading style you excel in. 

Ending of Day Trading Without Positions

Unless you’re swing trading stocks, you’ll 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, you will want to close it out before the end of the day.

That means come 3 pm, 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 overnight.

Hence, the buying and selling that picks up during the last hour of the trading day. Volatility is important to trading. Without it, you don’t get price action. End of day trading can help to grow your brokerage account. 

End of Day Swing Trading

Swing trading is a technique in which you buy a stock to hold overnight for up to a few 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 four-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 enter 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. You do it correctly if you have a good entry and set support and resistance alerts.

If you’re new to trading, open a Thinkorswim paper trading account with TD Ameritrade. Then, you can practice swing trading in the last hour of the day.

End of Day Trading Limit Order

This is an example of a limit order on $AAPL.

Limit Orders vs Market Orders

Being disciplined in your trading is extremely important. One way to do that is by using limit orders. Many traders use market orders if they think the bid/ask spread is close enough and the stock will move very quickly in a direction.

Ensure you know and understand the difference between market and limit orders. 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. 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. A plan must always be in place.

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How Do You Trade Stocks End of Dar?

  1. Here’s how you trade stocks in the last hour:
  2. Map out intraday support and resistance levels
  3. Look at price action compared to VWAP
  4. See if the price is above or below VWAP and moving average lines
  5. Determine whether you’re looking to make end of day scalp on breakouts
  6. Look to enter new swing trade positions if setups are good
  7. Be aware of breaking news
  8. Make sure you’re aware of FED decisions
  9. Track the overall market using $SPY $SPX or /ES
  10. Be careful holding into the weekends

Volatility During End of Day Trading

End of day trading 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 are still as important with end-of-day trading as in the morning. Look for patterns as well as moving average crossovers.

The stock market is a battle between buyers and sellers. They fight in the open, take a break, and regroup, then come back to end the day with another battle. Watching price action on a chart will tell you a lot. Sometimes, it’s best to sit and observe.

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.

Final Thoughts

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 your trade. We often want to jump into a stock when it’s running. For example, if a stock is trading at or near highs going into the close, I see that as a bullish signal that my swing trade is strong and that we are more likely to have a continuation the following day.

With day trading or swing trading, I generally prefer to buy the dip and sell the rip. When it’s towards the end of the day, and stocks are running, wait for a pullback to enter. At the very least, wait for consolidation and for the lower range of the consolidation to present itself.

That may mean you don’t place a trade during the last hour, and that’s OK. Sometimes, not trading is the best play, and sitting out until a clear entry presents itself. Ideally, all trades should be confirmed by high volume.

My favorite end of day trading stocks are $ROKU $TSLA $SPY $AMD $AAPL – these stocks I use to TRADE and NOT INVEST! They have great volume, price action, and typically an ATR (average true range) that allows me to profit.

Frequently Asked Questions

End of day trading can be good for day trading quick scalps and getting good entries for swing trade setups. The last 15 minutes before the close can be risky due to volatility.

Day traders typically end their day without holding any positions. They may take a position at the end of the day, looking to sell it at the open the following day for short-term profits.

If a trending security makes a new high of day between 11:15-11:30 am EST, there's a 75% probability of closing within 1% of the HOD.

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