The growth and widespread adoption of online trading platforms has made the foreign exchange market more accessible than ever before. Once the exclusive domain of investment banks, brokers and full-time day traders, the foreign exchange market can now be accessed by anyone with an internet connection. Because the forex market is open 24 hours a day, it provides the perfect opportunity for part-time traders to earn a supplementary income around their busy schedules. Whether it’s one hour before breakfast, during your lunch break or immediately after work, the forex market is accepting trades whenever you are ready to lay your stake.
Today, there are 4 million retail forex traders around the world,[1] many of whom access the market on a part-time basis. In fact, a large chunk of these part-time traders have no formal training in finance, economics or day-trading. Instead, they learned everything they needed to know from free online education programs.
One of the challenges with part-time trading is not knowing where to begin or expecting quick profits without devoting enough time to understanding the markets. As you’ll quickly find out, becoming consistently profitable in forex requires a clear strategy and lots of hard work. The following tips should help you get there.
- Use a trading style that aligns with your schedule
Not every trader is cut out for day trading or scalping. If you have only a few minutes to spare each day, you need to pick an approach that can maximize your productivity for the time actually spent trading. By figuring out your schedule and sticking to it consistently, you’re better able to adopt a trading style that fits your needs.
- Maximize productivity
Success in forex entails a lot of routine. Things like charting, back testing, reviewing calendars and conducting short-term technical analysis are part and parcel of being a successful forex trader. As you get in the swing of things, be sure to follow a set routine every time. This will make your job a lot easier.
- Review the financial calendar
Choosing the right trading style and maximizing productivity both entail awareness of the broader market. Is there anything coming down the pipeline that could influence your position? One of the best ways to answer that question is to review the financial calendar each day. This simple task not only helps you anticipate movements in the market, it gives you a better idea of when the most profitable trading times occur. In forex trading, preparation is key. That’s what makes the financial calendar so important.
- Analyze and scrutinize
The economic data contained in the financial calendar are just one way to analyze the market. Before you enter any position, be prepared to analyze and scrutinize dozens of charts and technical and fundamental indicators. In forex trading, sound analysis is what constitutes success. Be prepared to take an objective approach to each and every currency pair.
- Measure success
A wise man once said that insanity is doing the same thing over and over again and expecting different results. In forex trading, you’ll never know what works and what doesn’t unless you monitor your performance. How many pips are you making each week/month? How many trades are going in your favour? Be prepared to back up these answers with actual data.
- Develop the right mindset
The forex market can be incredibly exciting, but also very frustrating if you have the wrong expectations. As a part-time trader who is just starting out, be prepared to take it slow and steady for the first few months. Always be patient and trust that your analysis, if sound, will yield you positive results most of the time. Above all, don’t let a bad trade drag you down. Even the Warren Buffetts of the world have lost money in the market.
- Read and participate
One of the best things about the forex market is the sheer volume of information and activity taking place on a daily basis. As a trader, this is a goldmine of resources that can help you refine your trading strategy and learn about the factors that influence the market. Finding a good market news website is essential if you hope to truly maximize your time in the market. The great thing about the forex market is you can participate in it and become an insider more quickly than you think.
Being a part-time trader may require a lot of effort, but the potential upside is too rewarding to pass up. Knowing you can actively trade and profit around your day job and family life is very rewarding. Who knows, after a few years of being a part-timer you may be ready to make the transition to full-time day trading. More and more people are beginning to make the leap. Whatever your futures plans might be, rest assured it has never been a better time to be a forex trader.
[1] Bapi Maitra (January 2014). State of the Retail Foreign Exchange Market. CitiFX.
