When you are monitoring your watch list for a potential entry signal regardless of which setup you used, there's a possibility that you will enter at a price other than the end-of-day price or EOD price, even if the trading setup or the system or the strategy's rule is to enter at EOD. If you use the MAMA strategy, why the heck you entered before EOD?
This happens most of the time when you are opening your broker account before 2:45 PM. You click the enter button when you are so afraid that the price might go up without you on board, especially if the buy signals already showed up on the chart. You are just waiting for the closing price, but why can't resist you entering before EOD which is a violation of your strategy rule.
Then after entering, you are so happy because the price started going up and moments thereafter you start celebrating and starting believing how brilliant you are for entering early. But at the end of the day, the price went down a few points below your entry point. Then you start banging your head because you are setting on a 3 percent loss already while waiting for the next trading day.
During the night you are already restless, thinking about your position and bias started to cloud your mind. You are telling yourself to wake up early and I should monitor this trade because once it goes down another few points then it will hit my 5% risk tolerance so, I need to get out of the trade.
This feeling of restlessness could have been avoided if you waited for the EOD for your entry. You could have peace of mind thinking that a full 5% drop will get you out of the trade whereas entering early a 2 percent drop will hit your stop loss.
Even if we flip the scenario, let's say you entered early and the EOD price was 3% above your entry point. Then you sleep that night thinking very positively about your position. This is also dangerous because you are already biased even before the market opens for the next trading day. What a trader must attain is to have a neutral mind while monitoring your open position during market hours.
That's one of the advantages of entering or buying at EOD.
That answers the question as to why you should enter or buy at EOD.
But the next interesting question would be how you enter at EOD?
Most newbies find it difficult to enter EOD. They end up entering their bids but were not filled because they don't understand how the closing price works.
Well, I will try to show you also how to do that, but before that, if find this video helpful give it a thumbs up, by hitting the like button, share this video with your friends, and if you are new here, consider subscribing if you haven't already, for more videos like this.
How to enter EOD? Please click the video below:
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