How to Become a Successful Part-Time Forex Trader

How to Become a Successful Part-Time Forex Trader

Updated 18 March 2021

If you are interested in foreign exchange (forex) trading but can’t make it a full-time pursuit, you can still create a profitable venture as a part-time forex trader.

The 24-hour nature of international financial markets means that there are possibilities for earning money throughout the day and night. As one region of the world closes its doors for the day, another one opens; trading always remains active in some part of the world.

In the UTC time zone, in which the UK sits, some of the leading stock market trading times are as follows:

  • London: 08:00 hrs – 17:00 hrs
  • Tokyo: 12:00 hrs – 21:00 hrs
  • New York: 13:00 hrs – 22:00 hrs
  • Sydney: 22:00 hrs – 07:00 hrs

The technology available to assist trading in foreign currency provides new opportunities to dip in and out of the market as you choose. There even exists fully automated trading software (known as forex robots or EAs) that analyses currency fluctuations, reads the market and carries out trades on your behalf.

It’s easy to get drawn into forex trading and, for many, it can prove to be all-consuming. The fast pace and excitement of trading in this dynamic market are thrilling, but you don’t have to trade full time to benefit from it.

As long as you are committed, you can become a forex trader even with little available time, approaching it as a hobby as you learn the ropes.

Participating on a part-time basis can help to avoid emotional or obsessive trading. As a part-time forex trader, you will also have the flexibility to pursue other interests, hold down other employment and enjoy family time.

10 Ways to Successfully Trade Part-Time

1. Pick a Trading Time That Suits Your Schedule

Forex trading in a small time frame can work, but you need to have a clear strategy in place.

An example of a strategy that can potentially yield good results in a short space of time is scalping. This involves a trader holding a currency pair for just seconds or minutes and repeating this several times. These trades may only bring small gains, but these can be magnified with increased position size.

This style of trading can hold increased risk, so be sure to weigh this up before every trade.

2. Use Your Time Wisely

When you only have a small window of time, there is a chance that there won’t be suitable trades available when you log on. You can still use this time effectively though.

Backtesting is the process of reviewing historical data to see whether a particular strategy would have worked and is the ideal way to practice without risk.

Further practice opportunities are available via software that allows you to experiment with running virtual trades to see how you would have performed in a real-time scenario.

3. Keep Track With a Journal

A trade journal is a written record of all your trades and trading activity. You complete it daily, using it to plan, reflect and refine your trading strategy. This may seem a bit basic but to become a forex trader you need to be methodical and thorough.

You can track gains as well as losses and analyse what happened and why. Taking these lessons into your trading will give you a good grounding for success as a part-time forex trader.

4. Focus on Currency Pairs That Are Active When You Want to Trade

A currency pair is the price quote associated with the exchange rate of the two currencies that you are going to trade. Every trade is based on a currency pair.

Common currency pairs are the USD/EUR (US Dollar/Euro), USD/JPY (US Dollar /Japanese Yen) or the EUR/GBP (Euro/Pound Sterling).

The time of day that you are available to trade dictates which international markets are active at that moment and, therefore, which currency pairs are best to focus on.

As a part-time forex trader, you may find that morning is the best time to trade before you start your working day. This ties in very nicely with the London, Tokyo and Sydney stock markets, which are all open simultaneously at 8 a.m. UTC.

5. Focus on Beginning and End-of-Day Trading

It's possible to become a forex trader alongside working a full-time job, but it takes careful planning and time management. The obviously available times are at the beginning of the day and the end of the day, to fit around working hours.

You can trade during morning hours while some of the world’s biggest stock markets are active, then catch up with the end of day analysis and charts to review the day. You may also decide to trade in the evenings if you find that currency pairs that appeal to you are active at that time.

6. Make Quick Decisions

When you only have limited time, every minute counts and taking your time to deliberate over every decision just isn’t possible. By doing your homework, spending time watching the charts, journaling and backtesting, you can have your strategy in place to act quickly.

As you don’t have the luxury of time, you could set a strategy of ending your trade as soon as a profit is gained, without holding on to wait for longer-term fluctuations.

7. Set Realistic Goals

Trading can be a highly emotional endeavour. As a part-time forex trader, you need to be cautious about moving too fast, too soon. Be realistic about what you can achieve in the limited amount of time you have available.

If you set unrealistic goals and then inevitably fail to meet them, this may result in an emotional response that can lead to unwise trades that incur heavy losses. Building up slowly and watching market changes over a length of time are the best ways to ensure success.

If you set achievable goals, you can plan a strategy to reach each one, reviewing it and moving on to the next small goal after that.

8. Use Automation and Stop-Loss Orders

There are plenty of software programmes and online tools available to help you automate your trading. For a beginner, a fully automated trading programme can monitor charts, decide when conditions are favourable and actually run your trades for you.

Other tools allow you to automate parts of the forex process that you need help with, such as keeping abreast of news, finding currency pairs and calculating pips.

A particularly valuable tool is a stop loss. This is an automatic stop that is activated when an order reaches a specified loss level. So, for example, if you specify a stop loss of 20 pips, when a trade drops to 20 pips lower than the entry price, your trade automatically stops.

The stop loss process prevents traders from making heavy losses due to the need to end the trade manually. As a part-time forex trader, using automation in this way can help you manage your risk.

9. Use Forums and Online Communities

The best way to become a good part-time forex trader is to learn from those who have gone before you. There are plenty of people who have tried and tested all the possible strategies, tools and methods and are happy to share their findings online.

Online forums provide opportunities to search for and read about any aspect of forex trading. If you have a particular query, you can start conversations yourself asking for direct advice.

There are both free and paid options and opinion is divided on which are better. Although free forums contain an abundance of information on all sorts of aspects of forex trading, not all information is correct or valuable. As it is impossible to know the skill level or experience of a particular poster, there is a limit as to how much you can rely on that input to be factually correct and reliable.

Of course, contributors to paid forums are also anonymous, but the commitment of registering and paying to participate in a private forum indicates some level of seriousness and dedication to learning and sharing genuine information.

10. Take Longer Positions

There are various trading strategies you will need to understand, even as a part-time forex trader. Scalping, as mentioned above, is just one of them. As an independent trader, it’s entirely up to you how long you hold your trade for.

An alternative strategy is taking a longer position to hold the trade for days rather than minutes. This is known as swing trading as you are monitoring medium-term swings to try to determine when best to trade. It suits a part-time forex trader perfectly, as it requires just enough time each day to keep an eye on what the markets are doing.

This strategy requires patience as in the short term, the rates will fluctuate and you have to hold your nerve until they come back up. Stop losses will also have to be larger to allow for a greater swing than you would tolerate in a short-term trade.

Final Thoughts

Deciding to become a part-time forex trader is a viable option if you have the patience and commitment to research the markets and watch closely before going all-in.

A time restriction isn’t always a bad thing. It can force you to focus and use the spare time in your day to be productive, whether that be by reviewing charts, journaling or trading. Successful forex traders recognise that there is a strong emotional element to trading, and dipping in and out can help to counteract that.

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