ForEx is simply an amazing domain but very few people are available to trade ForEx full time. Traders who have to make their trades at work, dinner or night time find that with such a fluid market, trading sporadically throughout a small portion of the day creates missed opportunities to buy or sell.(Investopedia)
These missed opportunities can spell disaster for the part-timer trader.
The risk of missed opportunities notwithstanding, there are strategies that can work based on a part-time schedule. For example, those who trade at night might be limited to the types of currencies they trade based on volumes during the 24-hour cycle. These night traders should employ a strategy of trading specific currency pairs that are most active overnight. It’s important to analyze the correlation between currencies when choosing a pair, as having time during the day to study the market and implement trades can lead to a successful strategy.
The main problem as a part-time trader is time constraints. Here are some strategies for trading part time when you have an inconsistent schedule.
Know Your Forex Markets
Assuming you work nine to five in the U.S., you could trade before or after work. The best trading strategy in those time blocks is to pick the most active currency pairs (those with the most price action). Knowing what times the major currency markets are open will aid in choosing major pairs.
The markets in Japan and Europe (open 2:00 a.m. – 11:00 a.m.) are in full swing so part-time traders can choose major currency pairs. While it is crucial to understand the best currency pairs that fit your schedule, before placing any bets the trader needs to conduct further analysis on these pairs and the fundamentals of each currency.
Stop-Loss Orders in ForEx Trading
The best strategy for part-time traders may be to let your computer be your “trading partner.” The ability to employ a trading program where you can let the information technology work for you could be beneficial, as the ForEx Market is so fluid and difficult to monitor. Another common strategy is to implement Stop-Loss orders, which means that if the market takes a sudden move against your position, your money is protected.
There is also a strategy for part-time traders who pop in and out of work (10 minutes at a time). These brief but frequent trading periods may lend themselves to implementing a price action trading strategy. Price action trading means analyzing the technicals or charts of the currency pair to inform trades. Traders can analyze up bars (a bar that has a higher high or higher low than the previous bar) and look at down bars (a bar with a lower high or lower low than the previous).
Up bars signal an uptrend while down bars signal a down trend, while other price action indicators may be inside or outside bars. The key to success with this strategy is trading off of a chart timeframe that best meets your schedule.
Other ForEx Trading Strategies
These strategies may also serve you well as a part-time ForEx trader:
It is critical that you understand the drivers of your currency pairs and have taken the time to really understand your market. Therefore, after studying the market and narrowing down particular chosen currency pairs, selecting a few positions and holding them for a longer period of time is a prudent strategy for part-timers. Another wise strategy is to put in stop-loss orders with all your trades to minimize any losses if the market moves against you.
Look at long-term trends.
There is value in looking at longer-term trends (daily/weekly) instead of looking at hourly or even four-hour charts. This will allow you to trade while looking at your computer only once a day.
Set up trading orders.
Setting limit, stop-loss or other entry/exit orders can ensure you do not miss opportunities to enter or exit positions. Most trading platforms allow for these orders with no additional fees.
Set up automated alerts to your mobile phone or email to keep you informed of currency price movements while you are not actively trading.
The Bottom Line
The ForEx Market is desirable for part-time traders because it runs for 24 hours and is constantly in flux, providing ample opportunities to make profits at any point in the day.