Strategies for Part-Time Forex Traders
If you talk to successful forex traders, you’ll find that many of them are trading on a part-time basis. There are many different reasons traders give for enjoying a part-time forex trading career, but we aren’t interested in the reasons. What we want are strategies for part-time forex traders that can help us improve our own trading.
One thing that’s certain is that in forex trading the phrase “less is more” is appropriate. Even for those who are obsessed with currencies and are happy to eat, sleep and breathe forex, there needs to be some break from stressful markets. This helps to avoid hasty decisions and badly conceived trades.
Low frequency trading doesn’t have to mean missed opportunities. There are always more opportunities in the forex markets. Instead it’s best to think of part-time forex trading as a great way to exploit trading opportunities.
The Best Reason for Part-time Forex Trading
The majority of part-time forex traders made the choice to trade part-time so that they can continue to pursue their dreams of trading for a living while still handling all the other daily tasks and responsibilities life throws at us.
The part-time forex trader is able to trade at their leisure while still having time to work a job, study at school, spend time with family and friends, and take care of all life’s necessities.
Basically, being a part-time forex trader means you don’t have to give up on the rest of your life in order to trade.
What Skills do Part-Time Forex Traders Need?
There are a number of very important skills to master if you want to be a successful part-time forex trader. They include all the following:
Discipline – You’re probably aware that you need your own personal trading plan. Sticking to that trading plan is crucial if you expect to become a successful forex trader. Sticking to your trading plan also helps eliminate emotional trading.
Money Management – Any successful forex trader will tell you how important money management is to their continued profitability. You should have a clear understanding of profit targets, stop-loss levels, and risk/reward ratios.
Understand Analysis – You can use both fundamental analysis and technical analysis when planning your trades, and you should understand how to use both. Fundamental analysis can help with the big picture, while technical analysis will help you target entries and exits.
Technical Trading – It is absolutely critical that you learn how to read a price chart and how to use various technical indicators to identify market trends. There are many different indicators and taking the time to learn about them and when to use them can make all the difference in your part-time forex trading career.
Remove Emotions – The one thing that always needs to be removed when trading is your emotions. There’s no room for your greed and fear in forex trading. Learn to clear your mind and remain objective when trading. This will help with entering and exiting trades at the proper time, and with avoiding unnecessary trades.
What are your Trading Goals?
Before you begin trading forex on a part-time basis you should clearly know what your goals are, and be certain they are reasonable and realistic. This will also help when you begin to develop a strategy for part-time forex trading. With the proper strategy and trading plan you should be able to achieve a realistic goal.
Also remember that your goals should also reflect the amount of time you plan to devote to trading. Once you have a solid plan that encompasses your realistic goals and the amount of time you have available for trading it will be time to put your plan into action to actually achieve your goals.
If you can break-down your goals into easy to reach milestones you will be able to measure your progress more easily.
If you find your plan isn’t working always have a plan B ready to go.
Forex trading can be lucrative, but just like any other type of trading in financial markets it also comes with risks. There can be ups and downs to trading forex, and just because you are struggling now it doesn’t mean you can become a successful part-time forex trader. There are many things you can do to improve your performance. Improve your knowledge of the markets, find a new trading strategy, look to trading different currencies. All of these things can improve your trading.
Remember too that profits are not guaranteed. There will be losing trades and you should be ready for those. And have a plan to stop trading and reassess if your trading goes bad for an extended time.
Part-time forex trading can be profitable, but it can also lead to losses, so you must be emotionally prepared for either. Don’t let gains lead to greed or losses lead to fears. And remember that even for a part-time forex trader there will be a need to study, plan, and practice your trading.
Strategies for Part-time Forex Traders
If you are going to be a part-time forex trader you’ll be working with a limited amount of time, and you’ll need a trading style that goes along with that. Working with the right trading style will help you stick to your schedule and stick to your trading plan. Then you can take advantage of the following forex trading strategies for part-time forex traders:
- Use your trading time wisely. There are going to be times when there are no good trading opportunities at the time of day you have scheduled for your forex trading. Rather than going to do something else use this time to increase your knowledge. Review your past trades, do some back testing, look for new strategies to test. There are plenty of things you can be doing that will help your trading other than trading.
- Keep a trading journal. You might find it troublesome to keep a trading journal, but this is one thing that can pay you back many times over with knowledge and increased skills. Your journal should include your trades, why you took them, why you closed them, and how well you stuck to your trading plan at the very least.
- Always keep the right trading mindset. Understand that there are always going to be trading opportunities in the forex market and don’t get frustrated when you miss a potentially profitable trade because you aren’t always in front of your charting and trading software. Instead focus on creating a trading strategy that works perfectly with your trading schedule.
- Don’t obsess over your forex trading. Remember that your forex trading is not paying your bills and feeding your family. You need to focus on your day job, and make sure you keep your forex trading as a part-time endeavour. You might eventually move on to full-time trading, but until that day comes keep your part-time forex trading in perspective.
- Trade at the right time. That might be early in the mornings, late at night, or anytime in between. Just be sure to find a trading schedule that works with your busy lifestyle. And once you have a trading schedule make sure you stick to it in order to maximise your success.
- Choose your currencies wisely. Remember that you have limited trading time. Don’t choose to trade currencies that require an extensive amount of babysitting. Successful part-time forex traders make the best use of their time by trading those currencies that are immediately accessible during their trading window.
- Keep your trading simple and direct. There are several currencies that are easier to follow because they are the most popular. They are tried-and-tested by many traders over many decades of trading. Focus on these easily accessible currencies for your best chance at consistent profits. Even though there might be pairs that offer more profits right now, these usually require more of your time and attention to trade successfully.
- Trade the right pairs. The major pairs like the EUR/USD, GBP/USD, and USD/JPY are all excellent choices for part-time traders because they are all highly liquid. However, you’ll also want to consider the time of day that you trade when choosing pairs to trade. If the Asian markets aren’t open when you’re trading it won’t make much sense to trade JPY or AUD pairs.
- Be disciplined at all times. Discipline is required for success at nearly every endeavour, but it is particularly important for the part-time forex trader. One of the manifestations of this discipline is following your trading plan. If your plan says to take profits now then the best course is to take your profits. Don’t hold a trade in contradiction with your plan simply because you “hope” or “feel” it will keep going in your favour. That’s how gains turn to losses. Markets can turn quickly, and with limited trading time you might not see the signals of a coming reversal.
- Start small. Open a mini-account and trade small amounts until you gain some experience and skills.