When you first start off as a part-time Forex trader, it may seem like a monumental task. Since part-time trading involves time restrictions, traders are often under pressure to decipher Forex terminology and trading strategies properly. However, if you formulate a solid plan and have a clear goal in mind, you can make profits this way.
Why engage in part-time forex trading?
In the world of Forex trading, less is often more. While you may be tempted to place a lot of trades throughout the day, it can lead to emotional decision making and frustration. You may feel like placing more trades after suffering one or two losses and end up exhausting your account.
Many Forex experts would tell you that you should only dedicate a particular portion of your day to trading and diversify your portfolio. While many traders equate low-frequency trading with missed opportunities, others think of it as an opportunity worth exploiting.
However, the principal reason why individuals engage in part-time Forex trading is that their busy schedule doesn’t allow them to monitor the trading situations throughout the day. With part-time Forex trading, you can manage your schedule better and take care of your daily jobs.
It allows you to trade in currency pairs as per your convenience and still have time left to socialize, study, and take care of your daily obligations. So, in order to be successful in the Forex market, you don’t need to quit your job and only focus on trading.
Finding your trading style
When you engage in part-time forex trading, it is not possible to keep an eye on the market throughout the day. Hence, you cannot respond readily to small changes in the market. Adopting a wider perspective and using strategies that are suited for the long-term are therefore more viable.
Position trading is something a part-time Forex trader should consider. Here, you can find out trends by observing monthly and daily charts, and on finding one, you should keep the position open for a long period of time. This way, you don’t have to check on your trades every now and then and earn profits at a steady rate.
Choosing the right pair
The Forex market is open 24*7, but in order to guarantee liquidity, you should trade during the period when the trading volume is the highest. When the market is active, it becomes much easier to sell your position. If you work during regular working hours, the best time to trade in the Forex market is either early in the day or late at night.
You may find high trading volumes during both of these timeframes, although it depends largely on the pair you are trading. If you are a newcomer in the Forex market and do not have much experience, you should trade the USD against smaller currencies. The pairs mentioned below have strong liquidity, and a part-time trader should limit themselves to these.
- USD/AUD
- USD/CAD
- USD/JPY
- USD/GBP
- USD/EUR
- USD/CHF
If you have enough time to conduct some market research and if you’ve been trading in the Forex market for some time now, you may also consider trading in currency pairs like EUR/GPB, EUR/CHF, and EUR/JPY.
As per experts, part-time traders should only focus on the USD/EUR pair. This is a popular pair and you will be able to find enough information on it from various sources. Exotic currency pairs should be avoided altogether.
Disciplined decision making
While discipline is something that every Forex trader requires, it is especially true for a part-time trader. An example of disciplined decision making is taking the profits you have made once they are generated instead of waiting for bigger profits and wider spreads.
Although you may feel like widening the spread, keep in mind that a trend can reverse in a blink of an eye, and it can be hard to track. Since you will be trading for a limited period of time, it can be difficult to keep an eye on all the signals. Additionally, if you are trading in Forex on a part-time basis, you should use a mini account and use a small amount of capital.
Part-time forex trading advantages
Regardless of the type of trading you engage in, you need a lot of practice in order to master it. When you understand how the market operates and why it changes when it does, you will be able to read between the lines and accurately predict the direction in which it will move in the future.
The main objective of any part-time Forex trader is to grab every opportunity they get. Apart from placing your trades, your time will also be spent studying the market and learning about new developments and techniques. Unless you devote time to doing all these things, you stand the risk of trading too much to the point of addiction.
If you feel like you are spending too much time monitoring trades, you can opt for part-time trading. Many Forex traders fall prey to emotional trading, thus suffering from huge and unprecedented losses. When you place your orders less often and monitor the charts a few times every day, you eliminate these risks.
However, you should remember that part-time Forex trading requires you to observe the market movements and find out the reasons for them occurring. You also need quality education on the Forex market and must gather enough experience to trade confidently.
Conclusion
An expert part-time Forex trader knows which currency to trade and at what time. If you are new to the Forex market, it is advisable that you use an automated system for placing your trades until you get comfortable with the procedure. Remember to keep your expectations realistic and not to risk too much on one trade.