End-of-day trading may be a popular way of taking advantage of market movements right before close, or maybe overnight. Learn more about end-of-day trading or ‘power hour’ and the way you'll trade it.

What is end-of-day trading?

End-of-day trading is just the practice of creating decisions very on the brink of – or maybe after – markets close. Generally, end-of-day trading occurs within the last hour or two of the trading day and is restricted to the stock exchange .

While most day traders are going to be looking to shut out their positions at market close, some traders will prefer to enter into new positions to form end-of-day profits – whether only for a couple of minutes before the markets on the brink of cash in of end-of-day movements, or to carry overnight.

End of day trading is additionally referred to as power hour, because this tends to be when tons of trading happens, and therefore the high volume can create tons of opportunities. Power hour for stock markets is usually considered to be between 7pm to 8pm (UTC).

Why trade at market close?

End-of-day trading is widely employed by non-professional traders, who have day jobs or other time constraints. The concept of it's simple: the longer spent on the markets doesn’t equal more profits. By focusing all of your energy on a smaller timeframe, you wouldn’t need to spend all day watching the markets.

Another benefit is that you’ll have the entire days’ worth of trading data to use to form decisions and evaluate.

End-of-day trading strategies

For some, end-of-day trading involves opening positions within the hour approximately before the market closes to require advantage of other market participants shutting their positions or adjusting them ready for the approaching downtime.

Regardless of the very fact the market goes to shut , the strategy for trading is far an equivalent . you ought to be trying to find an equivalent signals and patterns as you'd for the other trade. Before you enter any position (whether at market close or not), you ought to have created a group methodology for when you’ll trade. this could involve what entry level you would like to ascertain and what point you’ll exit a trade.

Another end-of-day strategy is to shop for a market at close and sell it again when the market reopens to require advantage of movements that occur while the market is shut. In stocks especially – but often in other markets too – overnight returns are often significant. In fact, a study on night trading found that overnight returns tend to be above their intraday counterparts:1Opening positions when markets are closing or closed enables traders to stipulate their plans and make orders for subsequent day, when there's typically less activity on the market.