Strategies for Part-Time Forex Traders
Very few individuals are available to trade Forex full time. Frequently traders make their trades at work, lunch or night. The issue with this kind of trading is that with such a fluid market, trading sporadically all through a small portion of the day creates frequently missed chances to either sell or buy. This could mean an entire loss of funds if a position is not existed before the market moves against it or a loss of opportunity to purchase at a desirable cost. These missed chances can spell disaster for the part-timer trader.
In any case, there are strategies that can work based on a part-time plan. For instance, those who trade at night may be limited to the kinds of currencies they trade based on volumes during the 24-hour cycle. These night traders ought to employ a strategy of trading particular currency pairs that are most active during the night time hours. An example would be trading the Japanese yen (JPY) / Australian dollar (AUD) pair or something a small less known like the Japanese yen (JPY)/New Zealand dollar (NZD) or Australian dollar AUD pair. It is very useful to look at the correlation between the two currencies when selecting a pair, so having a piece of time during the day to study the market and implement trades can lead to an effective strategy.
The main issue comes with true part-time traders who may pop in and out throughout the day. These traders have time constraints and may just be available to trade for an hour or two every day or even every week. Here are some strategies for the trading part time when you have an inconsistent timetable.
Know Your Markets
Expecting you work 9 to 5 in the US, you could trade before or after work. The best strategy for trading in either piece of time is to choose the most active currency pairs amid that time. Knowing what times the real currency markets are open will help in picking major pairs.
New York opens at 8:00 am to 5:00 pm EST
Sydney opens at 5:00 pm to 2:00 am EST
London opens at 3:00 am to 12:00 noon EST
Tokyo opens at 7:00 pm to 4:00 am EST
Amid the 12:00–2:00 am time, the markets in Europe and Japan (open 2:00 am — 11:00 am) are in full swing so part-time traders can pick significant currency pairs such as the JPY/EUR pair or the CHF/EUR pair for significant currencies or look to different pairs that involve the Singapore dollar (SGD) or Hong Kong dollar (HKD) for example. During the 5 pm to midnight time frame, trading the JPY/AUD pair is an available choice for this time period. Regardless to the pairs the part-time trader picks, before placing any bets, the trader needs to comprehend the market by studying the technical’s for these pairs also the essentials of every currency.
Accepting you can just trade for a minimal amount during the day, for instance, 60 minutes, the best strategy might be to let your computer be your “trading partner.” Because the Forex market is so fluid, not having the flexibility to watch the market may leave you with many missed opportunities, so employing a trading program where you can let the information technology work for you may be the best strategy. Another basic strategy is to include setting stop–loss orders such that if the market takes a sudden move against your position, your money is protected.
Assuming you pop in and out while you work (10 minutes at a time), a strategy that can be utilized during these brief but successive trading periods may be to utilize price action trading. Price action trading can be depicted as analyzing the technical’s or charts of the currency pair and trading based on what the chart lets you know. In its most essential definition, traders can analyze up bars, which are a bar that has a higher low or higher high than the past bar, and look at down bars, which is a bar with a lower low or lower high than the past. Up bars signal an uptrend while down bars signal a downtrend. Other price action indicators might be outside or inside bars. Picking the chart timeframe that best meets your calendar availability is important to success with this strategy.
Assuming you can’t even trade for a whole hour or for consistent increments during the day, you can still trade the Forex market. Since you can’t watch the market during the day, the following strategies may be executed so you can be a successful part-time forex trader:
1: Take fewer positions and hold for days.
After studying the market and narrowing down specifically picked currency pairs, you can take just a few positions and hold these positions for a longer period of time. It is important that you comprehend the drivers of your currency pairs and have taken the time to truly understand your market. Another wise strategy is to put in stop-loss orders with all your trades to minimize any losses if the market moves against you.
2: Look at long-term trends.
Rather than looking at hourly or even four-hour charts, you might want to look at the trends for a day or week. This will enable you to trade while looking at your computer just once a day.
3: Set up trading orders.
Setting limit, stop-loss or other entry/exit orders can guarantee you don’t miss chances to enter or exit positions. Most trading platforms enable you to set up these orders with no extra fees.
4: Use technology!
Set up auto alerts to your email or phone to keep you informed while you are not actively trading.
The Bottom Line
The Forex market is one of the most useful markets to trade because it is a 24-hour market that is always in flux, providing enough chances to make profits at any point in the day. In light of these elements, the Forex market lends itself to part-time traders. However, despite these good characteristics, the Forex market is exceptionally volatile, which makes it risky for all traders, especially the part-time trader, if the actual strategy is not executed. Trading particular currency pairs that are at play during the times of day you can trade, looking at longer time frames, implementing value action strategies and employing technology are all strategies that will assist you to become a successful part-time Forex trader. Different things to consider understand your level of understanding and tolerance for risk and leverage, and in addition, your time horizon (from hourly to weekly). These all features that are a critical part of any trading strategy.