HOW TO TRADE FOREX AND MAINTAIN YOUR WORK LIFE BALANCE
How To Trade Forex And Maintain Your Work-Life Balance
Forex trading is a demanding occupation, but it’s still possible (and also necessary) to maintain a good work-life balance whilst being a successful trader. In fact, the majority of forex traders do so on a part time basis and there are plenty of advantages to this approach.
Good trading is not about slogging away 24/7, but about making the most efficient use of the time you have available, no matter how short that seems to be. The forex markets are highly liquid and trading in swift short bursts can be just as profitable as devoting 12 hours per day. Therefore it’s well worth cultivating a part-time trading career. Here are some tips.
Work out your priorities
If you are juggling trading, a relationship/family commitments, and a full or part time job, then you need to think about how much trading will impact on your personal life. The answer to this question depends on many variables and it will be different for everybody; it can be a question of the life stage you are at, and your personality and natural energy levels.
When we have a lot on our plate it is important to draw boundaries between work and other aspects of life. However committed you are to forex trading, it is not worth sacrificing your relationship, friendships, health and hobbies for. What would be the point if you weren’t able to enjoy the fruits of your labour?
Work out where you can afford to make compromises and just how much of your free time you are willing to sacrifice.
Choose your trading windows
There is no centralised global forex exchange, which means that the forex markets are active around the clock. This is a major advantage when you are fitting in trading around full time work, as it is still possible to find trading opportunities even outside of the core working hours of the day.
The major geographical trading centres are in London, New York, Tokyo, and Sydney. These cities all operate in different time zones and also have periods where their trading sessions overlap. These crossover hours tend to be the most active and therefore provide the best trading conditions.
The London market trading session runs from 8am to 4pm; the Tokyo session runs from midnight to 9am, the Sydney session runs from midnight to 6am, and the New York session runs from midday to 9am (although check for daylight saving time changes).
In the UK, part time traders can make use of the hours from 5pm to 9pm to trade on the New York market, which is ideal if your currency pair includes the US dollar (USD). This brings us neatly to the next topic…
Start with USD pairings
If you are new to forex trading and will just be trading a few hours per day, it’s strongly recommended to start with the USD as one of your currency pairs. This is because the USD is the world’s most widely traded currency, and there will always be buyers and sellers to be found whatever the market conditions are like.
The pair you are trading with may depend on when your trading window is. Choose from the other major currencies to begin with, so that you will give yourself the best chance of minimising losses and maximising your opportunities to take a profit.
If you are going to be trading in the morning before work, the Japanese Yen (JPY) or the Australian dollar (AUD) are good options because you will be able to operate in the crossover windows. For evening trading, the Euro (EUR) or British Pound (GBP) are good choices.
Use stop loss orders
Stop loss orders can be set to automatically sell a lot when a pre-specified price level is achieved. This prevents you from taking a disastrous loss if the market conditions should abruptly change while you are outside of working hours.
Take longer positions
When you have limited time for trading, it can be tempting to rush the process, but this can lead to poorly thought-through decisions. Forex trading is never about chasing the money, but it is always about managing risk. This may not sound very exciting, but that is the reality of having any chance of becoming a successful trader.
One of the most important qualities a forex trader needs to cultivate is patience. It is good practice to take long term positions that are for weeks or months, so that you can get comfortable with the idea of sitting back and trusting in your strategy, rather than meddling with your trades and damaging your prospects.
This does not mean that you will be doing nothing in the meantime; it is still important to keep up to date with the economic news and geopolitical events that will affect market conditions. It is an ideal time to learn how these events specifically impact the price of your currency pairs.
Control your work environment
If you are going to be trading from home, it’s important to think about your office set up to make sure that you are working in the optimum conditions. If you are not able to have a spare room to use as an office, make sure that you work in a space that is free from distractions and has a good source of natural light.
It should be a space that you only associate with work, such as a zoned off area of the sitting room, rather than the armchair where you also put your feet up to watch TV, or even worse, your bed. This will help to put you in the right mindframe for working, and also help to preserve clear boundaries between your personal and professional life.
Avoid hunching over your laptop for hours on end, as this will eventually cause neck and back strain; conditions that can be very difficult to cure once they get a grip on you. Invest in a proper desk chair that supports your lower back, and ensure that your screen is adjusted so that the top is at eye level.
Work on discipline
The most successful traders are highly disciplined. Draw up a schedule and stick to it, rather than drift to and from your trading when the mood takes you. Trading is much more than a hobby, and you will need to show grit and determination rather than just dabble if you want to get results.
You also need the discipline to develop a strategy and stick to it even when you are tempted not to. Be realistic and very clear about how much money you can afford to lose on each trade, so that you will never be exposing yourself to a catastrophic loss even in the worst case scenario. This is known as working out your risk tolerance.
You don’t need a complex strategy as a beginner trader; it could be as simple as identifying your peak trading times and currency pairs, and using one or two technical analysis tools to work out your entry and exit points.
Over time, you should review your strategy to monitor how well it is working for you, and if there are any areas that can be refined or strengthened. It is very helpful to keep a trading journal to record your progress and to help you make effective reviews of your trading performance.
Cultivate your outside interests
Having outside interests is not just about living life to the fullest (although obviously this matters) but it also helps you to develop the necessary emotional detachment from your trading. If you devote almost all your time to trading or have no outside interests, it becomes bound up in your emotions and this is very bad news for a trader.
Trading decisions should always be objective and based on logical reasoning, which sounds obvious but in reality it is very difficult to achieve. This is because the threat of losing money or the reward of making it can trigger very powerful emotions such as fear and greed.
Along the way, all manner of other inconvenient emotions can trip us up, including excitement, anxiety, hubris, anger, disappointment…you get the picture. Good traders learn how to recognise and control their emotional responses so that they do not interfere with their decision making.
Having a well balanced life where you have other outlets for your emotions is one of the best ways you can maintain a good trading mindset. Working constantly is also detrimental to your physical health.
Studies have shown that overwork can lead to chronic stress, which makes us more prone to all kinds of unwelcome conditions, including heart disease, high blood pressure, diabetes, and depression. Good mental health means that you will find managing anxiety during stressful trades easier and have better outcomes.
Therefore maintaining a good work-life balance is not a matter of being self-indulgent or going easy on yourself. It’s about keeping your mind, body and soul in the best shape to deal with the rigours of trading.
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