Its not easy to concentrate on you are trading around your day job. Furthermore, if you are looking to become a full-time trader, the transition phase is another nightmare too. I really don’t mean to put you off first up, with such flattering statements. But as traders, we have to look at facts as they are. On the bright side though, in this post I will provide you with some tips on how to trade as a part-timer effectively so you can master the art of trading around your day job.
Get rid of hindsight analysis
Most part time traders get strangled around the things that they can’t do. I guess its human nature, to think what we don’t have instead of using what we have to our advantage. In this case, following the markets at day time for example. Yes its sometimes annoying to see how many trade setups you had missed during the day. But that goes the same with the bad trades you would have taken during the day too. So I would say, hindsight analysis is not worth a darn penny. You cannot assume how the day would have gone, if you actively participated in the markets during the day or session you are assuming for.
Let me give you a simple example. When I first saw the moving average crossovers on the chart and learned how they work, I said to myself – holy cow, I am going to be a millionaire. I bet 99% of traders have felt the same way. That is the illusion of hindsight analysis. So get rid of it. Now that you know for a fact that you can’t get in front of a terminal during working hours, why not spend sometime during the evenings looking at the charts analyzing how could the markets move the following day and use pending orders to trade?
Chose the right timeframe
This is an important step. Scalping and day trading on shorter timeframes is not an option, so they are out of the equation. So you are left with a choice of timeframes – I would say 1H and upwards. You might think this is a bad thing that you don’t have the choice of shorter timeframes. In fact its a real advantage even to grasp the fact that you have to be specific about timeframes. Too many timeframes is too much information and is the main reason behind information paralysis, that most traders suffer from. Don’t you think its better to have a limited choice when it comes to chart analysis, specially given the amount of information you would have to process otherwise?
Besides, have you heard the phrase “the market is fractal in nature.” So most of the strategies and trade setups work across all timeframes. The only difference in my opinion is the number of trade signals you would get during a day. On higher timeframes, it could get really dry and might drag for days or weeks without a trade setup (depending on the type of strategy.) But when you do get a signal, its really solid compared to lower timeframes – where you would get plenty of false signals.
Price action setups
Here’s the bargain. If you want to do trading around your day job there are some sacrifices you have to make. One of them is – not being able to trade with confirmation entries or specific candle setups. Yes, if you are trading any time frame above 4H, there is a possibility to catch candle formation setups. Because an 8 hour working shift only counts for 2 candles (it would count as 3 with the current candle.) Nevertheless, market entries with a pin-point precision is not an option.
In short, you will have to make do with market structures (e.g. support and resistance levels,) patterns and pending orders. This is where it becomes a bit tricky. Because, trying to catch market orders and candle formations while trading part-time based upon previous days analysis is a recipe for disaster. Basic concept of market orders is that you do the analysis then and there. Even if you have access to the trading terminal for few minutes during work (while your boss is busy talking to his secretary or is out for a coffee break) it could rush things and you would probably end up with wrong trading decisions.
As I already mentioned, your best bet is to avoid trading while at work. Include specific times for analysis and order placement in your trade plan and stick to it religiously.
Trading is really an Art…
Trading around your day job is really an art, just like trading itself. There are no playbooks. Every person has different circumstances, jobs, time schedules, personality and so-forth. But the one thing all part time traders have in common is limited chart time during working hours. In order to master the art of part-time trading, you must think of the things that you don’t have as an advantage, perhaps as a tool to improve on certain qualities that a successful trader must have such as discipline, patience and an eye for detail.