End-of-day trading: what is it and how does it work?
End-of-day trading can be a flexible way to trade on a limited timeframe. Read on to discover how you can use an end-of-day trading strategy on our platform, including through stop, limit and market orders.
What is end-of-day trading?
End-of-day (EOD) trading refers to an order made by a trader to execute a position by the time markets close.
EOD trading involves trading a stock or another security that floats during a specified trading period. That trading period depends on the security and the market in which it trades.
Traders can place several types of EOD orders, which can either constitute a buy order or a sell order. They can either be market orders, limit orders or stop orders. Unlike good-'til-cancelled (GTC) orders, EOD trades typically execute by the close of markets and don't carry on into the next trading session.
A limit order specifies the price at which a trader is willing to buy or sell a security, regardless of the time, while market orders are the best available price for a security at the time of execution. Stop orders are instructions to your broker to enter or exit a trade if the market price rises or falls to a specified level to mitigate possible losses.
For example, imagine you want to trade shares in a company with a market price of £30. You can place an EOD limit order with a price target of £34. You can also place an EOD stop at £28 to mitigate substantial losses.
If the stock's price doesn't hit its limit or stop prices by the end of the day, the trade will execute at its closing price.
What time does end-of-day trading start?
You can engage in EOD trading at any time, but you need to be aware of the trading hours of the market that you want to operate in to do so.
For example, the stock market operates at different times to forex and commodities markets, and markets operate at different hours depending on time zones.
Forex markets and commodities markets are typically open 24 hours a day on weekdays, making EOD orders more complex.
The following are trading times for the UK market:
- UK stock market hours: 8am to 4.30pm GMT
- UK forex market hours: 9pm Sunday to 10.15pm Friday GMT
- UK commodities market hours: 11pm Sunday to 10pm Friday GMT
These are other popular times for stock trading in other countries:
- New York Stock Exchange (NYSE): 9.30am to 4pm ET (2.30pm to 9pm GMT)
- Frankfurt Stock Exchange: 9am to 5.30pm CEST (8am to 4.30pm GMT)
- Shanghai Stock Exchange (SSE): 9.30am to 11.30am and 1pm to 3pm (2.30am to 4.30am and 6am to 8am GMT)
- Tokyo Stock Exchange: 9am to 11.30am and 12.30pm to 3pm JST (1am to 3.30pm GMT and 4.30am to 7am GMT)
What are the benefits of end-of-day trading?
More accurate analysis
EOD trading involves taking a view of the entire trading day to establish patterns in an asset's price movement. This can give a trader more information about the stock (as opposed to day trading) based on short-term supports and resistances.
Better risk management
Because EOD orders typically involve limit or stop orders, your risk is likely to be reduced to your own boundaries.
More flexibility
EOD orders can be used to enter or exit positions at specific prices, which can provide more flexibility in trading strategies. For example, traders can use limit orders to buy or sell at specific prices, or they can use market orders to execute trades at the best available price.
Lower transaction costs
Because EOD trading typically only involves one order, it has fewer transactions than a regular day trading strategy. This can cut back on commission fees and act as a more affordable alternative.
Less time commitment
An EOD strategy allows a trader to pick stocks based on a predetermined price or its price at the end of the day, which gives you more trading flexibility in a limited timeframe.
What are the risks of end-of-day trading?
Missed opportunities
While EOD trading can help protect you from risk when executed correctly, it can also be a barrier to bigger gains. For example, news about a stock could send its price much higher than the limit order you placed on it. A day trader may be able to react to this news and be left in a better position than an EOD trader.
Incomplete information
EOD trading relies on making trading decisions with incomplete information about how the day will proceed. While you might take a position based on technical analysis, surprise news or wider volatility may affect your position. This could result in you missing out on bigger returns or suffering big losses.
Reduced potential profits
Because EOD trading involves holding onto a position for longer, it can diminish the potential for profits. This is because the longer the position is held, the more the price of the financial instrument needs to move in the trader's favour to generate a profit.
Potential for reduced liquidity
EOD trading can bring with it the potential for reduced liquidity. Fewer people tend to operate outside core trading hours, which can complicate a trader's position when the markets close. This may increase bid-ask spreads and make it harder to execute an order at your desired price.
How to get started with end-of-day trading
We offer a variety of markets to help you start your trading journey using the EOD strategy.
Spread betting and CFD trading are means of trading assets on a leveraged basis.
Spread betting enables you to put up a certain amount of capital per point of movement, and your profits and losses are determined by the extent of the market movement multiplied by this bet. Spread bets are popular with traders because all your profits are tax-free – there's no stamp duty or capital gains tax payable.* All spread bets are leveraged, which means you only pay an initial deposit to open the position. However, overall profits or losses are based on the full position size.
When trading using CFDs, you'll enter a contract to exchange the difference in price from the point at which the contract is opened to when it is closed.
However, it's important to remember that trading with spread bets or CFDs comes with added risk attached to leverage. Your position will be opened at a fraction of the value of the total position size – but you can gain or lose money much faster than you might expect.
It's also good to keep in mind that past performance is not an indicator of future returns.
Here's how to create a trading account with us:
1. Create a trading plan
2. Choose your preferred market and identify your opportunity
3. Create an account or practise on a demo account
4. Set your trade size and manage your risk
5. Close your position or attach a stop loss to automate your exit
*Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
End-of-day trading summed-up
- An end-of-day (EOD) order involves taking a position on an asset that will close by the end of the trading day
- EOD trading usually involves placing stops and limit orders that expire at the end of the day unless filled
- The time for EOD trading depends on the market you operate in
- EOD orders are popular because they require less time commitment and remove the market noise that occurs in intra-day trading
- EOD trading may result in missing out on big swings in prices based on news that affects an asset's price
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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