This article on 6 Tips for Part Time Traders is the opinion of Optimus Futures.
In the pursuit of success at trading, traders often require full time jobs and other professional commitments to pay bills, support their learning phase and possibly take some stress and pressure off their trading. However, in doing so, it is not uncommon to find traders struggling to juggle between their work and trading commitments, often resulting in jeopardized performance at both endeavors.
Balancing full time work while striving to learn and improve as a trader simultaneously is indeed an art, but when approached thoughtfully, is a lot more achievable than many traders believe or experience. Below we outline some of the factors that can get you started at handing your long work days alongside noticeable success in the trading business.
Switch to Higher Time Frames
The first factor comes as a no-brainer. One of the most important aspects of trading part time requires the trader to have the ability to move away from the markets without getting struck with panic attacks. It may be a bad idea to try and day trade specific market sessions at or after work (depending on your work schedule). A tired or distracted mind can be detrimental to your trading success.
Instead, we recommend you benefit from the fact that market action – or price action more specifically – is easily replicable on all time frames. Switching to higher time frames allow for more time in making decisions, enabling lesser screen time and providing lower trading frequency which bodes well with a busy schedule.
Your favorite pin bar setups, wedge pattern breakouts, MA crossovers etc are likely to still play out just as effectively on higher time frames as on lower time frames – if not more effectively. There is the argument among traders that higher time frames cancel out much of the ‘intraday noise’ and volatility, allowing for smoother and more predictable price action. But as a trader also bound to long work days, the switch from lower to higher time frames can be a smart move for part time traders.
Alter Your Trading Style
In some cases, switching to higher time frames alone does not provide a fool-proof workable solution for part time traders. For these traders, the mismatch is rooted deep into their trading style, which perhaps aims at short term quick price movements as opposed to riding longer term market swings, or deals with ad-hoc trade management ideas that may require ‘baby-sitting’ trades.
As the title of the section suggests, it may be time to alter your trading style to better suit your tight schedule and time and energy constraints. Ideally, your trading system should rely on lower number of high probability trade setups potentially indicating longer term price movements. Examples would include taking setups only in the direction of the trend, or taking reversal setups at very obvious locations lining up with ample evidence of support or resistance. Systems that rely on short-term price movements may allow for more time to the trader on higher time frames relative to lower time frames, but still may not be the optimum solution when it comes to trading part time with as little stress as possible.
Use Trading Automation and Notifications
It is uncommon to see traders taking full advantage of all the features their platforms provide. Most modern platforms allow you to set notification alarms for certain price levels that may be important to you from a trade management perspective. Mot platforms also allow you to set automatic trailing stops that adjust your stop placements in line with real-time price movements. These features usually don’t appeal to traders who actively watch markets as and when needed. But for traders with other non-related commitments, these features can be very useful.
For traders using a method that relies on concrete and highly objective rules for entry and exit, there is also the possibility of having to fully automate your trading method with the help of a developer who can code your system into a plug-and-play program that may require little to no time from you in terms of taking and managing trades. An alternate approach could be to explore if your broker already provides per-programmed automated trading methods that you can use. Optimus Futures for example has a host of automated trading systems that traders can choose from.
Build a Wall between your Work and Trading Activities
For part time traders, this may perhaps be the most difficult feat to achieve: keeping their work and trading endeavors separate. If you have set up your trading activities around your work schedule, you shouldn’t have to be constantly fretting, thinking or acting upon your trading while at work. Similarly, when you are within your time frame dedicated to trading, you should be focused on trading and trading related decisions and actions only – not your upcoming presentation or the important meeting with the board group tomorrow.
Trading is a serious business, and traders who see it as just a past time activity rarely ever succeed at it. A casual, distracted approach will certainly not help you in the long term. And we will assume that the same should hold true with your regular day job as well – for the most part. Most people work at places that require a 100% dedication, focus and optimum performance. Constantly switching tabs between your Google spreadsheets and your platform’s web based application can be an annoyance for both activities and can lead to potentially compromised performance.
We are certainly not against checking the markets occasionally during the day when and if you can, but what we are preaching against is the simultaneous and constant thought and attention to both your trading and work commitments at the same time.
Be Selective of your Trades
This is a big one. It is often very tempting for part time traders to try and make up the lost screen time owing to job commitments by trying to squeeze in as many trading opportunities as they can in the limited time in which they do follow live market action. Technically speaking, you only make money in this business when you enter trades, and these traders can erroneously compromise on the other important factor in the equation: you can also save a lot of your capital by avoiding mediocre trading opportunities.
Being selective as a part time trader is perhaps the most important factor to consider for your success. With limited access to markets, you do not want to be engaging in difficult trade setups and environments that may require your constant attention and perhaps prompt actions to attain a positive outcome for that particular trade. You also don’t want to be caught in a losing streak resulting from impatient trading actions. This is because unlike a full time trader, your limited access to the markets can increase the pressure and stress of having to recoup the losses incurred, thereby causing greater anxiety and possibly the need to trade more resulting in a vicious spiral of bad trading habits.
Manage Your Money Well
One of the primary benefits that trading with a full time job brings (or ideally should bring) is the freedom that the trader has to invest in his trading education and learning without stressing over the “making money for living” aspect of the trading business.
It is not hard to fathom that some of the most notorious psychological bottlenecks that traders face usually result from the money aspect of the business. Losing money on bad trades and making money on good trades can trigger a wide range of emotions in traders, most of which can be detrimental to your trading success. The problem compounds when the trader is relying – at least to a major extent – on income generated from trading to meet bills and put food on the table.
On the contrary, a full time job that takes care of all or most of your necessary expenses can be drastically liberating and a blessing for a trader, as it can alleviate monetary stress and allow the trader to patiently work on improving his or her trading skills without having any stringent income requirements from the business yet.
The Bottom Line
As you may have noticed by now, trading part time is not always an unfortunate circumstance. Depending on how you look at it, it may actually present the ideal environment for a trader to practice discipline, multi-tasking, and careful execution of trading actions, all of which can contribute handsomely to the trader’s long term success.
It is in fact not uncommon for successful traders to never transition toward full time trading simply because of the benefits that trading part time offers. Many traders like to diversify their income sources, while others like to limit their exposure to the markets as a way to maintain discipline and observe a conservative approach to their trading which they attest is often at the core of their trading success.
There is a substantial risk of loss in Futures trading. Past performance is not indicative of future results.