Part Time V Full Time Forex Trading
Many people dream of earning their living solely through forex trading, being their own boss, keeping their own hours…but how easy is it really to be a full time trader? On the other hand, some people wonder if it is really possible or worth the effort to fit forex trading around a full time job.
So is forex trading really an all or nothing choice? Here’s a look at both sides of the coin.
The pros of part time forex trading
The fact is, most people who are new to trading start off part time, combining it with their main job. This allows them to build up the skills and experience they need to become successful, without the pressure of trying to make a living from it.
There is a low barrier to entry, with instant forex funding available through broker accounts. This means that anyone with a small amount of investment capital can start trading straight away, with no high stakes involved.
For many people, this is a safe way to learn the ropes, because they are not risking their life savings and can continue to cover living expenses with the salary from their full time job. You will get to enjoy the benefits of an extra income source, without the need to make enough to cover your essential costs.
The forex markets are active almost 24/7, so even if you can only devote a few hours before 9am or after 5pm, there are still plenty of opportunities to make good trades. As a part time trader with a separate income, you will be free to experiment with your trading strategies, and learn what works best for you without the pressure of always being right.
The cons of part time forex trading
Fitting trading in around your full time job is a big commitment, and it can end up taking over your life. You may find that you have to make some compromises, such as having less time for hobbies, exercise, and seeing family and friends. Therefore you do need to be good at time management to maintain a reasonable work life balance.
The time constraints will limit the amount of trading windows you have, and in the fast moving forex markets this will inevitably lead to some missed opportunities to make profitable trades. You will also have less time available to carry out the technical and market analysis that are essential for developing a sound trading strategy.
The pros of full time forex trading
Full time forex trading allows you to throw yourself into the game 100%. Successful traders need mental and emotional discipline, and the will to learn as much as possible about how the markets operate. This is an ongoing process, and you will have more time available to devote to technical and fundamental analysis.
Ultimately, this will make you better at identifying the most profitable trading strategies and opportunities. As a full time trader, you will have access to the markets 24/7, giving you much greater scope to take advantage of periods of volatility, which can be a gift to the well prepared and skillful forex trader.
As well as more scope to hone your skills, full time trading brings you the freedom and independence of being your own boss. You get to decide which hours you work, and the location that you work from. There are potentially no limits on the amount you can earn, unlike a routine job where you are on a fixed income.
The cons of full time forex trading
The decision to become a full time trader needs some careful consideration, especially if you intend to rely on it as your sole income source to meet essential living expenses. It takes some very careful financial planning to ensure that you will have enough capital to cover your losses if you go through an unfruitful trading period.
You also need to question whether you really have the skills and experience necessary to make consistent profits that are enough to support your lifestyle. Do you have a financial safety net, such as a passive income source from property or investments, or a partner who is willing to support you through leaner patches?
Forex trading can be a high pressure career, which takes up deep reserves of mental and emotional energy. This might not seem like a major consideration when you are new and fired up with enthusiasm, but over the long haul it takes discipline to guard against burnout.
It is important to learn how to remain objective and analytical at all times, no matter how much stress you are under. Once you begin to let emotions such as fear and greed influence your trading decisions, it can soon turn into a downward spiral.
How can you decide what is best for you?
Ultimately, successful forex trading requires a lot of hard work and discipline whether you are going into it full time or part time. Some people might decide to ‘go hard or go home’, while others might prefer a more cautious approach. Part time trading is not always the easier option, because it will put major demands on your spare time.
However, it really depends on your attitude to risk and your personal circumstances. If you have the financial security to cover your living expenses and a safety net to fall back on, then you may decide to take the plunge and go full time.
How to make part time forex trading work for you
For many people, complementing their salary with the profits from a part time forex trading career is the most attractive and practical option. Thanks to the global nature of the forex markets, there are always opportunities available for fitting trading in around your main occupation.
In fact, the major markets of London, Tokyo and Sydney are at their most active when they open at 8am, so if you work a regular 9-5 job, you are ideally placed to take advantage of the most lucrative trading opportunities. The New York markets are also active at the end of the day between 5pm and 9pm, so evening trading is well worth your time too.
The key is to pick the currency pairs that are most active during the times of day you are available to trade. Fortunately, for UK based traders who work daytime hours, this leaves plenty of options from the major currencies, such as the Euro/US Dollar, and the British Pound/Japanese Yen.
The particular trading strategy you pick will depend on your level of knowledge and experience, as well as your personality type. If you have strong technical analysis skills, then price action trading may be your best option. This allows you to execute trades within a brief trading window, by closely monitoring upward or downward market movements.
To be able to use price action techniques effectively, you will need to be able to quickly and accurately interpret line charts and bar charts to read which way the market is trending. You will also need to have the mental sharpness to enter or exit your trade at the right point in order to take the maximum profit.
Price action trading suits people who have quick minds but not a great deal of patience, because it allows you to make a series of several short trades within a limited timeframe. Although you will only potentially make a small profit from each one, the amount of trades means that profits can soon accumulate.
If you dislike making decisions under pressure, and prefer to take a long view of a situation, then making fewer trades and holding them for days or even weeks may suit you better. This is also a good strategy for part time traders, because you can check up on your positions when you are available, without the need for constant monitoring.
The importance of a trading routine
Whether you decide to give full time or part time trading a go, both approaches will only work if you follow a structured routine. This is especially important if you are going full time, and have never been self-employed before.
It can be tempting to pick and choose what you do and when you work, but this is unlikely to lead to a productive trading career. Being your own boss has its perks, but you need to be disciplined enough to put in the hours and hard work. Contrary to popular belief, full time forex traders don’t spend all their time actually making trades.
Instead, they may spend some time at the beginning of each day getting into the right mindset, maybe with meditation or exercise. This can help you clear your mind and mentally prepare you for the rigours of the day. Some traders find it helps them to think more clearly in times of stress, which ultimately leads to better trading decisions.
The next portion of the day may be spent reviewing the economic calendar and checking up on current market conditions. Only then will the trader begin to identify potential trading setups.