‘But out of limitations comes creativity’. Debbie Allen.
Every endeavour has its own set of difficulties, with trading being no different! Trading the markets, even if only on a part-time basis, is incredibly challenging, and will, despite what your favourite guru may claim, take time and require a great deal of dedication.
However, the good news is that trading part time is possible!
Once you have a strategy in place as well as a written trading plan, all one then needs is a little creative planning and the discipline to follow your schedule and rules or engagement. Unfortunately, research shows that a lot of traders enter the markets with unrealistic expectations and little preparation.
Don’t confuse part-time trading with ‘hobby’ trading!
A lot of traders, particularly those who are new to the business, mistakenly view trading as a hobby. Trading is a serious business and should always be treated as such, be it as a part-time venture or as one’s day job. If you intend on using the markets as a place for amusement or somewhere to have a bet every now and then, you may as well chuck whatever funds you have in your account in the garbage. Better still, send it to a noteworthy charity!
Part-time trading, in our humble view, is not so different to many other businesses in terms of the preparation and planning required. If we think about it rationally for a minute, can you imagine a part-time doctor, lawyer or businessman approaching their business as a hobby? Highly unlikely! So, why should it be any different for trading?
How do I approach part-time trading?
For those with limited time and resources due to work or life commitments, you’re going to need to develop a trading schedule that fits your lifestyle. Obviously, each trader has different time constraints, so we felt it’d be best to look at three individual traders to help illustrate how one could look to schedule their trading days:
Trader A has a full-time job and absolutely despises the lower timeframes. He believes, rightly or wrongly, that the lower timeframes are nothing more than noise and should be avoided at all costs.
His job involves him being away from the screen for most of the day (8am-6pm). Thus, he focuses his efforts on the H4 charts and above. An hour before work, he sits down and analyses his chosen markets, altering any positions he may have on, and placing new orders. Upon returning home, he’ll scan the market once again for any developments for an hour or so before dinner, and then call it a day. So, all in all, he spends approximately two hours a day behind the screens.
Trader B also has a full-time job, but is lucky enough to be an I.T engineer. This enables him to have the trading platform running in the background. Although he is not at his desk all of the time, he is able to comfortably watch the H1 timeframes (and above) regularly throughout the day.
However, his schedule involves him analysing the charts an hour before work, as well. The reason being is that he likes peace and quiet when exploring the markets for opportunities. Once his levels are marked for the day, he can simply monitor the market using trade alerts from his work station.
Trader C works a part-time job and favours the M15 charts and lower i.e. the lower timeframes. She lives in Asia and finishes her morning shift two hours prior to the London open. Fortunately, she is able to be at the screen for the entire London segment and usually finishes trading by London’s lunchtime.
As you can see from the above examples, it’s important to select which timeframe(s) to trade and organise a time to analyse the markets when trading part time. You may have also noticed that all three traders use a manual trading methodology, but there are some that focus on automated trading. As far as we’re aware, there’s a variety of automated trading programs with a full spectrum of functions available on the market. Some may be able to monitor currency prices in real time, place market orders, recognize spreads and automatically place the trade. So, this could be an avenue you may want to investigate if automation is what you’re seeking.
Finding the right markets to trade
In addition to arranging a time to be at the screens and choosing the timeframes to base your trades from, appointing which markets to focus on is just as important.
For instance, Trader C only trades the GBP/USD and the EUR/USD pairs as they not only have tight spreads, but also tend to be most active during the London segment. Trader A on the other hand, watches ten currency pairs and also the US dollar index for correlation purposes. Given that he trades much slower timeframes, this enables him to watch more markets. Trader B, nevertheless, chooses to focus on only four currency pairs. He could watch more pairs, but prefers it this way as he also likes to keep up with the fundamental influences surrounding the currencies he trades.
Having a full or part-time job, we believe, helps alleviate the stresses that come with trading full time. Not having to rely on your trading profits lessens the psychological impact which is an aspect a great deal of traders struggle with. So, with that being said, does trading part time, with the safety net of a full-time salary, give one a greater chance of success? Certainly something to think about!