Forex trading strategies for part-time traders
Trading techniques for part-time traders
Part-time forex traders can feel left out
as they do not have the time to dedicate enough trading hours during the day.
Although forex trading is sought-after as a
cost effective way to trade/speculate, not many traders can afford to trade
One of the biggest issues with part-time
traders in forex is the fact that the currency markets are dynamic. With the
markets being so fluid, there is always a fear of missing out or FOMO
as it is commonly known.
The fear of missing out builds upon the
psychological concept of day traders. Traders often feel that they may miss a
large market movement. Most often, this manifests as lost trading
The FOMO aspect as a result can make
part-time traders being left out.
One may start to believe that trading forex
part-time may lead to lower profit levels. This is further accentuated by the
A part-time day trader located in Europe
may be able to trade before or after the day’s business hours. This leaves them
open to trading during the late Asian session or during the late US session.
On the other hand, a part-time day trader
from Tokyo, can access the markets pre-session opening.
This would provide fewer trading
opportunities. This is because it is only the late US session or the early
Asian activity taking place.
On top of this, many trading strategies one
gets to see, is usually suited for traders who can spare “more than a few
hours” during the day.
Consequently, due to the limitations, there
are not many trading strategies that part-time traders could find. And even if
they do, there comes a question about swing trading.
Finding the markets that you want to trade
The first step toward a successful part-time
forex trading strategy begins with the markets.
Firstly, part-time forex traders do not
have the luxury of picking currency pairs of their choice.
Of the many reasons, liquidity in the forex
currency pairs matters. Therefore, cross currencies and exotic currencies are
out of question. Lower liquidity leads to wider spreads.
This can be detrimental for part-time forex
traders. Hence, depending on your geographical location, it is advisable to
stick to the major currency pairs.
These include currency pairs such as
EURUSD, USDJPY, GBPUSD.
We only list out three instead of seven for
the currency pairs. This is because other major currencies such as USDCAD,
USDCHF, AUDUSD, NZDUSD also drop in liquidity.
It can lead to wider spreads that may not
be suitable for trading.
The three major currency pairs we mention
are one of the most traded currency pairs. As a result, the ample liquidity
takes care of having the spreads in moderation.
Besides the liquidity factor, part-time
forex traders should also be able to understand the instruments they trade.
For those who wish to trade other
instruments beyond forex (such as commodity CFDs or index CFDs) you should be
As part-time forex traders, it is possible
that you will be spending few hours a day. Hence, it is important to learn
about the characteristics and behavior of the instruments you are trading.
Unique characteristics of part-time forex trading
With part-time forex trading (which is
spending just an hour or two a day), the approach requires to be unique as
But that does not mean that the trading
strategies are limited.
Here are some ways traders can overcome the
shortcomings of not being able to spend time in front of their trading
Using automated trading strategies
Automated trading strategies are ideal for
part-time traders. This can help you especially if you have developed your own
An automated trading system, when back
tested can help you to reap steady profits. Of course, there is no guarantee
that automated trading strategies will make you steady returns.
Therefore, to be able to use automated
trading systems, part-time forex traders should spend a considerable amount of
time testing the markets.
Implementing an automated trading solution
will require time and patience.
Most importantly, back testing and forward
testing will play an important role to assess its effectiveness.
Many traders often make the mistake of
purchasing an automated forex trading strategy off-the-shelf.
Quite often, traders fall prey to the
returns that are usually advertised. While there is nothing wrong in purchasing
an off-the-shelf or a blackbox trading strategy, it needs to be assessed first.
This means applying both backtesting and
forward testing methods on the instrument that you are interested to trade in.
Hurrying this process and implementing a
blackbox forex trading system could lead to adverse market returns.
You may get lucky and make profits, or
things may go downhill leading you to lose your investment.
Trend following systems
Trend following systems in the forex
markets is beneficial for part-time traders. However, part-time traders will be
able to trade based off the daily charts.
Due to the timeframe involved, the daily
charts are more suitable for timing of trades for part-time traders.
There are many different trend following
systems. These include the regular moving average crossover methods, to
Donchian channels and many more.
At the end, it is up to the trader to
understand and be familiar with the trading system that they wish to use.
But remember that it is not just picking a
trend following system but also risk management that plays a role. This is even
more important for part-time forex traders.
Since you are not available to monitor your
trades all the time, it is important to make use of stop loss levels.
This will ensure that your investment is
protected against any adverse market movements.
Price action plays an important role in part-time forex
When you trade forex part-time, the price
action for the instrument you are monitoring is important.
While day-traders can get away by using a
trading system that involves technical indicators, this is not the case for
Although one can use indicators and build a
trading strategy, part-time forex traders need to pay attention to the charts.
Especially, one would need to look at the daily and the weekly charts to gain
While short term charts are useful for
timing the entry of your trades, you cannot monitor the short term timeframes
all the time.
While one could make use of MT4 mobile
trading apps, it still requires a lot of focus. You can tend to get impulsive,
and this may lead to premature trade entry or closure.
As a result, following the trends on the
daily and weekly charts, and learning about price action will go a long way.
Preparing a trading plan
Part-time forex traders should strictly
follow a trading plan.
A trading plan can be derived by following
a weekly research routine. The forex markets are closed on the weekend.
Therefore, there are not much of distractions for part-time traders.
Looking at the charts on a weekly basis one
can pick potential trading opportunities for…
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