5 Trading Tips for Part-time Traders
There is plenty of information available online on full time trading and how to do it effectively, but what about those who want to start as part time traders first?
Well, this article is for them.
The way trading is discussed it seems that the ultimate mark of success as a trader is to be doing it full time and quit everything else.
Truth is that there is really no rule about these things. And one should never really do things for the approval of others.
Consider your own lifestyle for a second. What are your income requirements and what are your revenue streams? Are you earning your livelihood from multiple
sources or are you relying on one only?
Maybe it is this very diversification of your income that you are trying to achieve through forex.
Whatever the reason part time currency trading also has its perks and many are interested in it only as a source of side income.
Let’s take a look at some of the benefits of part time trading.
Benefits of part-time trading
Freedom to expand your revenue streams
As mentioned above, smart businessmen usually have more than one place of income. Having multiple sources of income including passive income are a great way to secure yourself financially.
With part time trading this becomes possible as you have more time on your hands. You can look into other businesses and set things up that will continue to generate income for you passively.
This will not only strengthen your financial position but also offer a sense of security because should one fail you will have back up.
Full time trading can either be incredibly thrilling or incredibly stressful. This is because when that’s all you are relying on to make a living, a few poor trades or strokes of bad luck can create really stressful situations.
Furthermore, a lot of retail traders are day traders essentially. This means that they close all their trades before the work day ends.
This can cause a lot of stress as short term trading requires a trader to keep an eye on the charts constantly.
Watching the market fluctuate and jeopardize your investment causes a lot of anxiety. When you are not relying on trading completely and doing it part time, a lot of this stress and anxiety is relieved.
Full time or part time is one part of it, the other question is how long do you want to do it for?
If you want to keep at it for a longer period of time then it is important that you form habits that are sustainable.
The type of trading that requires less time per day and causes less stress in return is one that is sustainable.
Now that we’ve briefly discussed the merits of part time trading, it is also important to state that all the above points do not mean that everyone should only participate in the market in this way.
A lot of traders all over the world do it full time and make great returns. It all depends on your skill level, your requirements, availability, and personal preference.
However, if you do want to pursue forex trading as a part time job or business venture then below are some tips that should help you figure this exciting albeit tricky terrain.
Tips for Part-time Traders
1. Take fewer trades
Since your plan is to minimize the time you are required to spend looking at charts, taking fewer trades is step one.
It is common sense that the more you have going on in your account, the more time you will spend behind the screen.
To do it sustainably, pick a few pairs that suit your profit requirements and which you understand. Then stick to these.
2. Rely on price action
Instead of spending too much time on technical indicators and other markers, rely on price action.
The market takes its time falling into solid trends but if you have done your research and understand the financial world well then hopefully by the end of the day your required pattern will have formed.
As a part time trader, small price fluctuations shouldn’t mean much to you.
The best of traders are able to be consistently profitable because they can manage their impulses to take control of the trade. You have to relinquish this urge to try to stay on top of things too.
Impulsive moves usually do a lot more harm than good. So instead of thinking that it is your complicated strategy that will make you profits, rely on fundamental analysis of the pair and let the natural price action do its thing.
3. Use higher time frame charts
As stated above, smaller price fluctuations are irrelevant to you. Focus on higher time frames such as the day charts or the four hour charts.
It will help you stay focused on the prize and not get deterred by worrisome but temporary movements in the market.
This is a good way to stay on the price action strategy too.
4. Look for good medium to long term opportunities
Finding opportunities for medium to long term trades would mean that you have to worry less about the charts.
Staying clear of interest is a smart move, but that applies more to people who can afford to keep an eye on the charts and find a good time to leave before the day ends.
When you are trading for limited hours you might lose the smaller fluctuations that could have served as good exit points. When that happens, your options at the end of the day are limited.
So, if you want to limit your screen time, finding feasible long term trades is a good way to go about it.
5. Create safe conditions
Trusting the market price action and your fundamental analysis, while good strategies do still require that you put some risk management measures in place.
Make sure that you are using stop loss and other orders that can help you minimize potential losses. So make usre that even if the market goes against you behind your back, you will still find yourself safe from any major losses.