Why wait for the close and ignore the intraday market

For me, trading is part of my life but its not my entire life.

My personal life, work, family, sports, and hobbies take up most of my day, and I'd like to keep it that way. There is more to life than trading. There is absolutely no way I would be able to day trade and sit behind my desk all day watching charts, because that would simply mean I'd get fired from my job.

Now, I'm not saying a trader can't do this full-time, but you need a pretty big pile of money to trade with and you must be incredibly consistent to survive. I would actually argue that having a job next to your trading is the best risk management you can have. It provides steady cash flow and a psychological foothold.

A daily chart takes a full day to form

As a position trader and trend follower, the main things I look at are daily charts (and sometimes weekly charts for extra confirmation). When you are looking at a daily chart, you want the data to be final. You don't want a chart pattern to look like a massive breakout at 16:00, only to completely fade a few hours later.

If you trade intraday, you have to look at every chart again and again. Doing this will drive you crazy because an unfinished daily candle can be all over the place. Combined with the simple fact that I don't have the time to stare at screens all day, I needed a plan. And I’ve been using this plan with success for quite a while now.

The end-of-day solution

What I do—and what I see many other successful traders do—is wait until the market is about to close before doing my daily analysis and putting in orders for the next day.

This is perfect because the dust has settled. Waiting for a follow-through day (FTD)? There it is, or it isn't. Spotting a breakout? Yep, it’s confirmed. After your analysis, the price action won't magically change anymore. It also gives you all the time in the world to think. Does the breakout really look good? Do you want to dive a little deeper into the fundamentals? No problem. This is a very relaxed way to operate and, in my opinion, leads to the best, emotionless decisions.

I live in The Netherlands, where US markets close at 22:00 in the evening. It's a bit late, but it gives me time to do things around the house, play sports, and spend time with my family up until the close. The beautiful thing is that the market only opens at 15:30 the next afternoon. This means you could even do your analysis and position management in the morning before work. Which I sometimes do.

Execution on open and close
That sounds great in theory, but reality requires a bit more nuance. The most important moments of the trading day are the open and the close. Here is how I handle both:

Open (15:30 NL time)
This is a moment you do want to watch. If possible, just check your phone for a minute.

• Why? A position might gap down through your stop-loss right at the open. If that happens, you need to step in and turn your stop-loss into a market sell order immediately to protect your capital.
• My day job leaves me with enough flexibility to do this, but if yours doesn't: a short toilet break at 15:30 might be appropriate (lol).

Close (21:30 - 22:00 NL time)
Markets seem to be done with most of their daily movement about half an hour before the close, though volume can sometimes come rushing in during the final 10 minutes.

• My Routine: I do my analysis 30 to 45 minutes before the close. If I find a new setup or if a sell rule is triggered on an open position, I calculate my position size and wait for the final minutes. If the chart still looks good, I execute.
• Selling at the close: If you sell a stock right before the close, you protect yourself. If that stock gaps down pre-market the next day, you are already safely out with your profits.

Be careful with buying before the close

While selling right before the close is a great tactic, buying requires extra caution. If you buy a breakout 5 minutes before the close, that breakout might actually fade in the final minute, leaving you holding the bag on a failed setup.

Here is where the nuance comes in:

• Obvious breakouts: Some breakouts are absolutely massive in price and volume. You can see them from a mile away. I tend to trust those and buy them just before the close. If they gap up the next day, I am already in.
• Doubtful breakouts: Sometimes the volume just isn't there yet, or the breakout is weak. In that case, wait until after the close. Did it break out? Fine, put in a buy order for tomorrow. Did it fail? Also fine, you're not in it.

Sometimes you might get a worse entry the next day. In my opinion, that is not a big deal. Put your orders in and see what happens tomorrow; it's out of your control at that point.

A crucial note on risk: If a breakout works and you put in a buy order for the next day, it might open higher. This means the depth between your entry and your stop-loss has widened. If you get a more expensive fill, always recalculate your risk afterwards. You might need to trim your position slightly to stay within your x% risk per trade rule.

Some traders hate this and refuse to use anything but limit orders. To that I say: you do you. But what if that stock launches into space for a 150% rally? Are you still happy you didn't fill your buy order over a few cents? Of course not. It is better to be in it.

As a trend follower, you can definitely ignore the intraday noise. There is no point in staring at the screen. Some traders use intraday charts for precision entries, which can leave you with a bit of a better entry, but what is the real value of that if the stock is going to Mars anyway? I simply don't have the lifestyle that fits looking at it all day. I find peace and control in looking at the market after the dust has settled while also controlling my risk at the open.

Disclaimer: The content of this blog is for educational and informational purposes only and does not constitute financial advice. The author is not a certified financial advisor. All analysis is based on historical market data and technical methodologies. Trading stocks and cryptocurrencies involves significant risk. Always do your own due diligence and consult with a professional financial advisor before making investment decisions.