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How Do I Become a Successful Part-Time Forex Trader?

Part-time forex trading can be an incredible way to complement your earning potential. If you have been looking for a suitable way to trade intermittently throughout a small portion of the day and still grasp all opportunities, the great news is that there are several actionable strategies.

Aside from honing your skills and implementing the strategies of dexterous traders, sometimes what sets apart dexterous traders from novices is the time constraints. Forex markets run around the clock, and most traders do not always have the manpower and time to keep their eyes on the market.

As a part-time forex trader, it is not uncommon to face the dilemma of balancing time and cost. Inarguably, grabbing opportunities requires an ideal blend of strategic trading and understanding the market rhythm that we will expound on in this article.

At a glance, getting used to the aspects of part-time trading to make profit include the following:

  • Pick a trading time that fits your schedule
  • Make informed decisions
  • Use automation and stop-loss orders
  • Take long-term positions
  • Set realistic goals
  • Learn continuously

Pick A Trading Time That Fits Your Schedule

A common question asked by traders, especially those new to the forex market, is whether there is the best time frame to trade. Inarguably, traders utilize different time frames to speculate the forex market, which all depends on their style and trading strategy.

Assuming you work nine to five in New Zealand, for instance, your best part-time trading time could be before or immediately after work. Given that the forex market runs seamlessly such that one market opens on one side of the globe when another closes, the best trading time is with the most active currency pairs.

The table below shows some selected markets and their closing time to illustrate an ideal strategy for choosing the best trading time.

MarketTrading time
New York8.00 AM to 5.00 PM UTC
Tokyo7.00 AM to 4.00 AM UTC
Sydney5.00 PM to 2.00 AM UTC
London3.00 AM to 12.00 PM UTC

The markets in Europe and Japan enter “full throttle” between 2.00 AM and 11.00 AM, so you can choose these currency pairs within that time frame. If your schedule allows you to trade between 5.00 PM and midnight, you might want to select the AUD/JPY pair.

Although forex trading occurs seamlessly throughout the year, it’s best to trade during the peak hour volume hours to enable you to have liquidity. It is much easier to change a position when the market is most active than in a low position. For beginners who trade part-time, trading USD – denominated currency pairs is recommended as a significant portion of trades is done using this currency. At the same time, currency pairs like EUR/GBP, EUR/JPY and EUR/CHF offer high liquidity coupled with an abundance of readily available information.

Make Informed Decisions

One of the key pillars to successful forex trading is thinking in abstract and using data to make informed decisions. Given that forex trading has several highs and lows that may demand an enormous level of emotional intelligence, successfully trading part-time means viewing the market holistically.

Dexterous traders recommend taking profits when they materialize instead of waiting for bigger spreads to make astronomical profits. In fast-trending markets that rely on a mammoth of economic and geopolitical elements, favorable spreads can widen and make you anticipate wide profit margins. This also means that the trend can turn around immediately due to unexpected events, leading to colossal losses.

While stop market orders and trailing can be of significant help in protecting you against sudden market swings, there’s no assurance that an order will be filed at the posted price. As a part-time trader, this also means that the offered leverage can compound potential losses and benefits. If you are offered a leverage margin that allows you to put up a fraction of money represented in the currency lot, only an informed decision will prevent you from imminent risks associated with leverage.

In other words, taking in too much leverage, which can run as high as 400 to 1, comes with a considerable risk that you shouldn’t take as a part-time forex trader.

Use Automation and Stop-Loss Orders

There are several automation software and trading tools available to make part-time trading easier. A fully automated program can monitor charts, identify favorable conditions and run the trades for you. While this may look like the perfect strategy to “make money with arms folded,” automation programs should only help you minimize losses to maximize profits – and not entirely replace your trading strategy. At the same time, the tools might help you stay updated with news, calculate pips and find the most active currency pairs.

One of the most prominent tools is a stop-loss order that can make a world of difference. At a glance, it is designed to limit your loss when a security position makes an unfavorable move. If, for instance, you set up a stop-loss order of 20 pips below the price at which you bought the currency, the order will limit your loss to 20 pips. Suppose you enter a trade that drops 20 pips lower than the entry position; your trade will automatically stop.

Inarguably, decision making when it comes to part-time forex trading can be clouded with a cloud of emotion, but the great news is that a stop-loss order might be an ideal way to help you stay abreast. While a stop-loss order does not guarantee you’ll make money in the forex market, it will help you lose money at a much slower rate in the event of a loss.

Take Long-Term Positions

Maintaining a steady strategy when trading applies to both full-time and part-time forex traders. With limited time – which applies to most part-time forex traders, it can be daunting to make snap decisions following a market swing.

As a part-time trader, staying ahead of the curve means you have to respond to market movements instantaneously, regardless of how small the movements can be. Given that you probably won’t have the time to monitor all these swings, long-term strategies coupled with a holistic perspective would be most appropriate. 

Swing trading is an ideal example of taking smaller gains in the short terms trends and minimizing losses faster. The profits might be minuscule initially, but they can compound into astronomically high annual returns if done consistently over time.

If, for instance, you set a modest profit goal of 5% to 10%, rather than the usual 25% to 30%, you will be assured of small wins over time. On average, the swing trading period is not in weeks or months but ranges between 5 to 10 days. With this limited profit goal staggered across several days, your small profits can significantly increase overall returns.

Without a doubt, you will still have to factor in losses, which should be kept minimum to produce growth. Rather than the usual 8% to 9% stop-loss, cap the losses at a maximum of 3% to 5%. With a profit goal of 10% and a 3% stop-loss, you will have a profit-to-loss ratio of 3 to 1.

Set Realistic Goals

Forex trading can be an emotional endeavour that can take a toll on you. Realistic goals give a sense of direction and achievement each time you hit a target.

From having risk control, an effort to reward ratio, reviewing how the trades turned out, and setting profit goals, a report by CMC Markets outlines that having a realistic goal will reinforce your approach of implementing a viable strategy for part-time forex trading. Given that forex trading relies on patience and consistency for success, knowing how to make smart, small trades every day is the best option.

According to research done in South Africa, approximately 80 to 90% of forex traders lose money due to unrealistic goals. In an unpredictable and dynamic market, making smart and small trades means avoiding high leverages – one of the surest ways to make huge losses while trading part-time.

Part-time forex trading might be an excellent way to make easy and large profits, but a decent amount of capital coupled with a calculated approach will always be a win for you. $1000 is an ideal amount to use to trade with micro-lots. If you are still saving to raise the amount, you might hone your skills with a demo account until you are equipped to begin live trading.

Learn Continuously

Success while trading forex part-time entails understanding the methods of forex trading and the markets. Aside from getting a forex education to reading up on how the market works, there are tons of books, websites and resources you can use to learn more about trading.

Without a doubt, however, nothing beats the experience of implementing what you have learnt. If you have just started, you can open a demo account and try some trading to get a good technical foundation and the mechanics of working with specific trading platforms.

Traders often think that the market will come back and favor them if they make a trading mistake. Often, many traders fall prey to this trap and get frustrated upon realizing that the market only progresses further against the direction of their original trade.

The statement from John Maynard that the market can stay irrational longer than you can stay solvent is enough assertion that several dynamics determine the direction of the forex market. Overall, learning continuously will expose you to mistakes and help you select an entirely new angle to help keep losses minimum.

Final Thoughts

It’s easy to get drawn in to forex trading with the market’s dynamics and excitement of trading. However, if you don’t have the time to keep your eyes on the markets, it might be hard to benefit.

Thankfully, it is possible to secure the income of your daily engagements along with the thrill of trading forex part-time. From this review, we can confidently assert that the strategies outlined have been hand-picked after fruitful trials by experienced part-time traders. Overall, success boils down to concentration, discipline and working smart.

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Disclaimer

The information provided is of a general nature and is not intended to be personalised financial advice. The information provided is not intended to be a substitute for professional advice. You may seek appropriate personalised financial advice from a qualified professional to suit your individual circumstances.

Trading in Rockfort Markets derivative products may not be suitable for everyone as derivative products may be considered as high risk. Please ensure that you understand the risks involved. A Product Disclosure Statement can be obtained here and should be considered before trading with us.
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