If you are interested in buying and selling foreign currencies but are not in a position to commit to full-time day trading, you can still generate profits by becoming a part-time forex trader. In fact, with a targeted strategy and the right tools, you might find short bursts of trading a better fit for your financial goals and career prospects.
New traders can often be overawed by financial markets, but the key to successful trading is taking action, making intelligent decisions, and looking to achieve realistic objectives. Don’t strive for perfection when you first start. You can make mistakes and learn on the job as you buy forex. And a benefit of part-time trading is that there will be a degree of emotional attachment because you won’t be spending twelve hours a day making trades.
Find the right currency pairs
Global forex markets are open 24/7. You can use this to your advantage by picking and choosing trading hours that fit around your other commitments and that are favourable in terms of liquidity. When the market is very active, it will be easier to sell your lots. Part-time traders, therefore, often choose to trade either for a brief period when markets open in the morning or later in the day.
The ideal time to trade will also be dependent on the currency pairs you choose. The “major pairs” such as USD/GBP and USD/EUR account for the largest volume of trades and are likely to offer strong liquidity during peak periods. Part-time traders should focus on these pairs initially before mixing in other “exotic” pairs when they get more experience. Some experts believe those trading for only an hour or two a day should only opt for the USD/EUR pair as it’s the most widely traded on the market and is easier to research.
Use automated trading systems and stop orders
Trading forex while maintaining optimal work and life balance is easier now than in the past. That’s because automated trading systems allow traders to enter and exit the market at the right time, even when they are not monitoring fluctuations in currency prices every second. These trading systems have a variety of features to help part-time trades, including more advanced “set and forget” programs that rely on software to make decisions.
Stop-loss orders are also an incredibly valuable tool. A stop-loss will automatically sell a lot when a specific loss level is triggered. This prevents you from racking up huge losses when the market moves against you. On the flip side, you can also use take profit orders to get out of the market at just the right time to maximise your gains. These tools are vital for part-time traders.
Be patient, take longer positions
When trading during brief intervals, there can be a tendency to try and rush through your profit-making moves, but this can lead to rash decisions that undermine your long-term aspirations. Taking longer positions in forex might be best in this instance as you can make informed decisions on medium-term swings and movements. In contrast, “scalping” within a short time frame might be too much to handle as you will need to execute multiple trades a day. Longer trades can be held for weeks or even months.
Be disciplined and productive
One of the significant benefits of part-time trading is that it forces you to be more productive with your time. During the short trading window each day, you should try to be “active”. If you are not making trades, you should review charts, optimise your strategy, or note down all of your activity in a journal. Using your time wisely and being disciplined with the trades you make based on sound reasoning from the trends and patterns you have spotted will improve your ability to drive profits.
Again, having a set regular schedule is essential for part-timers as there can be a tendency to just dip into the forex markets whenever you get some free time. This is unlikely to be productive as you will not have a strategy or plan prepared for the time window in which you are trading. It is also easy to slip into bad habits, like trading when you cannot give forex markets your full attention. Part-time trading can be great but don’t be casual or blasé about it as that can lead to poor decisions.
By adopting a serious but flexible and open mindset, you can start trading forex and enjoy success even if you need to fit your trading time around other aspects of your personal and professional life.