Tip #1: Match your timeframe with the market
The forex market is open 24 hours a day, five days a week, which makes it one of the most appealing markets for part-time traders. Those who are committed to a standard nine-to-five working week can trade on the forex market early in the morning and into the night.
However, all currency pairs are not equally active throughout the day and night. As major currency markets open and close across the world, currencies will go through periods of greater activity. Matching your trading timeframe to market opening times is an effective way to decide on a currency pair.
Forex market times:
Forex market Opening time (GMT) Closing time (GMT) Frankfurt 06:00 14:00 London 07:00 15:00 New York 12:00 20:00 Sydney 22:00 06:00 Tokyo 23:00 07:00
This means that traders looking to trade between 17:00 and midnight GMT could choose pairs which are particularly active during the New York, Sydney and Tokyo sessions. Major currency pairs including AUDUSD, USDJPY could therefore be the most attractive for this timeframe. During lunch breaks, or breaks throughout the day, EURUSD could be an appealing option. Before committing to a currency pair, traders should ensure that they research the currency outlooks thoroughly.
Tip #2: Find the right strategy and style
Part-time traders are usually unable to monitor the markets all day and respond quickly to small movements or market events. That means that long-term strategies and wider perspectives are more appropriate; traders might follow long-term trends and concentrate on holding a few, long-term positions.
Position trading is a long-term trading strategy, where traders look at daily and monthly charts to determine trends. Once they have found a prevalent trend, they may keep a position open for weeks, months, or even years. This alleviates the pressure to continually monitor trades and allows position traders to potentially make steady gains.
Tip #3: Educate Yourself
It can be tempting for part-time traders to neglect education, and try to learn as they go along in order to save time. However, this strategy rarely proves effective on the live markets – and can have drastic financial consequences. Education is particularly important for long-term traders, since they should thoroughly research the trend before they commit to opening a long-term position.
Educational resources are easy to find online. Brokers like FXTM offer free educational material, from forex trading strategy guides, to educational videos and webinars. While attending physical workshops and seminars is time consuming, these usually offer opportunities to ask questions – saving hours of trawling through websites in search of a specific answer.
Tip #4: Use trading apps
Trading apps are useful companions for the part-time trader, allowing them to use all of their free time wisely. With trading apps, keeping track of trades on the go is simple and many come with additional market features. Economic calendars, included in the ForexTime app, give indications about what may sway market sentiment in the future.
Tip #5: Stay level-headed
Maintaining a cool head while trading applies to both full-time and part-time traders alike. However, under time constraints, it can be tempting for part-time traders to make snap decisions influenced by their emotions.
Stop-loss is a way of calming emotional responses to the markets. These orders ensure that a position is closed when it reaches a certain set price, therefore limiting a trader’s losses. While you are unable to monitor the markets, you can rest assured that your potential losses are under control.
By following the tips above, part-time traders can create a strategy which compliments the amount of time they can dedicate to trading. While using spare time wisely, trading part-time can potentially become lucrative and enjoyable in equal measure.