If you are interested in currency trading, there are different ways of doing it. How you want to trade forex should be determined keeping in mind your understanding of the markets, your experience and skill levels. In that context, we can broadly divide forex trading into intraday trading and end of the day trading.
Intraday traders are those who open and close their position on a currency on the same day, and usually bank on the small fluctuations that a specific currency pair goes through during active market hours. These traders are usually more experienced. This kind of trading is complex when compared to end of the day trading, which is done after the market closes and is a lot easier to execute.
What is the Difference Between End Of The Day Trading and Intra Day Trading?
The main difference between intraday trading and end of the day trading is that in the former, you will be following the markets closely right from the opening bell to the closing bell on a given day. The idea in intraday trading is to buy and sell currencies on the same day, to make as much profit as possible in a short time. So if you buy a currency in the morning, you sell it off before the market closes while making a profit in the process.
End of day trading is about trading after the chaos in the market ends, which is after the closing bell. In this kind of trading, you may open or close a position based on the performance of the currency pair during the day, provided you find positive signals. If not, you don’t trade at all.
Time and Effort
The time and effort you need to put in for each of these trading styles is entirely different. In intraday, you have to spend your time watching the markets closely to know which currency to buy and which to sell, based on the trends. Typically, an intraday trader spends an average of 6 hours on the computer to know how the markets are moving. These traders not only have to observe but also have to act quickly, that is to buy or sell a currency, and make the most of market conditions to make a small profit on their transactions. An intraday trader needs to be alert at all times, be able to read charts and identify signals quickly to place a successful trade, all in a short span of time.
An end of day trader on the other hand, does not trade during market hours, and is therefore away from chaos and noise of the open market. If you wish to trade end of day, you just need to spend an hour after the markets close to understand the day's trends and overall market performance. This means you can simply read the intraday charts to determine which currency to invest in and which to avoid.
The currency markets are highly volatile and the intraday trader will be dealing with ever changing charts and noisy markets. In intraday trading, the focus is on opening and closing a position while the markets are active, and be able to profit from the transactions. As the end of day trading happens after the market closes, traders do not have to deal with a clutter of charts. They can also read the day's charts and analyze it for positive signals, based on which they sell or buy a currency pair. Also, end of day traders don’t have to worry about closing their position the same day, unlike intraday traders who have to open and close their position during market hours every day. When you trade end of the day, you can keep your position open for more than a day or two if you wish to see how the currency pair performs and then close it.
The returns efficiency of end of the day trading is a lot better than the returns efficiency of day or intraday trading. This is because the intraday trader spends several hours on the system trying to make a profit, which means he or she will not be able to focus on anything else. At the same time, an end of the day trader spends an hour or less and is able to generate the same kind of profit. Also, these traders can also keep their day jobs, which is why their return efficiency is much higher.