A part-time day trader refers to a person who allocates a small portion of their time to trading the financial market. Most of these people are usually in other forms of employment or entrepreneurship. Others are students who want to earn an extra income.
In recent years, millions of people are juggling between these occupations and day trading. In the United States, the gamification of trading by platforms like Robinhood and TastyWorks has drawn more people into the industry. In this article, we will look at some of the best strategies to use to become a successful part-time day trader.
Education is important
Trading is a relatively complicated activity. Indeed, some form of day trading is only recommended to professionally certified individuals. At the same time, it is well-known that most people who venture into day trading lose their money.
Therefore, if you are new to the industry, we recommend that you dedicate a substantial amount of your time to education. Learning will give you substantial knowledge on the financial assets that are available and some of the core concepts. Some of the skills you need to learn are:
- Technical analysis. The discipline will help you to interpret various chart patterns like triangles, flags, and pennants when analyzing assets. You will also learn to combine indicators like the Average Directional Index (ADX) and the Donchian Channels to the market.
- Fundamentals. The analysis will give you in-depth knowledge of core factors that move assets like currencies, stocks, and cryptocurrencies. These factors include news and macroeconomic data like retail sales and inflation.
- Risk management. You will learn how to manage your risk as a day trader.
- Robots. It will enlighten you on how to incorporate robots and other signals into your day trading.
Fortunately, you don’t need to pay thousands of dollars and attend college to get this education. There are many free education platforms that will give you all the knowledge that you need. Some of the most popular resources to use are:
- YouTube. There are many YouTubers who focus on forex trading education. Some, like TraderTV, give you access to traders who are live trading.
- Coursera. Coursera is a giant e-learning platform where you can learn anything. It has some exciting trading education courses.
- Udemy. This is a platform similar to Coursera. In it, you can access hundreds of day trading courses.
- BabyPips. This is a free platform that coaches you on day trading with easy examples.
- Amazon. Amazon has thousands of books on trading that will help you be a better trader.
Time of trading
A good thing about trading is that you can practice it at any time of the day.
For one, some assets are usually live at all times every day. Cryptocurrencies like Dogecoin and Tron can be traded every day at any time. Currencies like EUR/CHF and USD/NOK can be traded every weekday at any time. For stock traders, it is possible to trade them at most times of the day if your broker provides stocks from various jurisdictions.
Therefore, it is important that you find the most appropriate time to day trade. Ideally, if you have a day job, we recommend that you allocate your evenings or early mornings to trading. This is because you don’t want the trading to disrupt you from your regular job.
Fortunately, there are some strategies that will allow you to do this well. For example, as a day trader, you can easily identify patterns and trading opportunities in the morning and implement them. Also, if you are a stock trader, you can easily set limit orders during the pre-market session. These orders will be implemented once the market opens.
Trade setups are important
There are numerous trading approaches that are ideal for part-time traders. One of the most common is to use limit orders and stops. This is a process where you conduct analysis on a financial asset and then set a take-profit and stop-loss based on your risk and reward ratio.
For example, in the early morning, you find that the EUR/NOK pair is trading at 1.1500. This price is between a range of 1.1480 and 1.1530. Therefore, since the Norges Bank is about to make an interest rate decision, you assume that it will lead to a breakout in either direction. Since you will be at work, you will not be able to monitor these events.
Therefore, you decide to set a buy-stop at 1.1535 and a sell-stop at 1.1475. At the same time, you set take-profits at 1.1600 and 1.1480. In this case, if the breakout happens, you will make money. You can then review your trades afterward or monitor the performance using their mobile apps.
Copy trading as a strategy
Another strategy you can embrace as a part-time trader is copy-trading. This is a situation where you decide to copy trades of the most successful traders offered by your broker. Most brokers have created tools that make this possible.
All you need to do is to sign-up, read some of the terms and conditions, and sign up. You should then select some of the best available traders on the platform and copy their strategies. Finally, you will share some of the profits with the trader.
Copy trading is a perfect trading strategy for all types of traders. This is because the professionals doing the trading are incentivized to keep performing because they make money from the copiers’ profits.
Being a part-time day trader is an excellent way to make money and supplement your regular income. But it requires a lot of work to perfect. It also requires a lot of discipline to make it work. In this article, we have looked at some of the best strategies you should use and how to ensure that you are productive in your day job and as a day trader.