End-of-day trading on Fridays and Sundays

Trading Discussion Risk Management Practices
1

Here’s one point I’m struggling with as a new trader: when using an end-of-day trading strategy and an ATR-based risk-management system, how do you act on Fridays and Sundays?

I’m in the UK, so candle close is typically midnight, but of course that means a 22-hour candle on Friday followed by a 2-hour candle on Sunday. If the Friday candle close indicates an entry, that indication could easily be falsified by weekend developments, so I’m thinking I should delay my entry until Sunday at around 11.30, and use the ATR from the Friday candle in my risk-management calculation. Of course, any significant change in price will negate the trade, since it will either invalidate the entry signals if price moves against or put me at a disadvantage if it moves in favour, so I could enter only if price remains relatively static on Sunday opening.

Is there a better way?

2

This shows the risk of using an EOD strategy on a D1 chart. I also use D1 and have to face the “Sunday” risk. Its very annoying as you point out but I don’t think it can be eliminated entirely.

One factor which is on my side is that my entries are never live and need action at the close. I set entry orders using either the high or the low of the daily bar just closed. This builds in a “cushion” between the closing price and my entry point. As I said, this reduces the risk of a false entry but doesn’t eliminate it.

Does your system absolutely demand you have to enter manually at the close?

3

So, if I understand you correctly, you’ll set a limit order before the market opens based on the Friday close? That seems sensible. Maybe enter a few pips above/below the close, to avoid an immediate stopout if there’s a big move against on opening?

My system is to enter just before the close – at least on Monday to Thursday :slightly_smiling_face:

4

Not exactly - my entry levels are based on the day’s high or low, not the day’s close.

5

Oh, OK, I see what you mean. I think my idea might work for me, though. Thanks for the inspiration.

6

I was thinking the same thing. Those movements can be annoying. Best to be cautious and widen SL a little.

7

The best way is the one you understand and can keep under control. Choose that one and you will have real stability.

1 Like
8

It depends, of course, on the amount of capital and volatility of the chosen assets.
You can act as you feel comfortable.
In the end, try different approaches on the demo and see what works for you.
I don’t see any other option to build a competent action plan.

9

The best way is 2 fold. 1… Keep to your weekly schedule for closing trades. For me that is 19:00 and I close no matter what the result. 2… It is risky in any reality to open trades so early in the week as a Sunday or even Monday morning. Sometimes market corrections over a weekend is slow to reveal themselves and only happen very late morning. So as a rule I never open a trade on a Monday before 13:00 if the setting is right.

I must mention that I only trade 5 AUD pairs, so maybe others found that my method is invalid.

10

It is risky to trade at the end of the day as well as after a holiday. Monday and fridays are generally more volatile.

11

If you are afraid of risk, then choose longer-term positions.
Also, if you allocate capital well, everything will be fine anyway, the price will level out after a drawdown.