Forex trading is increasingly becoming popular among those who have to juggle other commitments. This includes students, young professionals and retirees who want to dip their toes into the markets.
With limited time, the key to success is discipline and dispassion. This means avoiding unnecessary distractions such as social gatherings, watching TV or reading the news.
Choose Your Currency Pairs Wisely
The right currency pairs are crucial to success. You should always check the liquidity and volume of a pair before making a trade. This is because a pair with large liquidity will have lower volatility than a pair with smaller liquidity.
Reviewing key economic data and news is also important. This will help you understand the micro and macroeconomic factors that affect price movement, which can help guide your trading strategy. This also allows you to filter your watch list so that you only trade pairs that have both a technical and fundamental analysis aligned with your bias.
Volatile pairs can offer a good opportunity for traders with the appropriate level of skill, risk tolerance and market/country knowledge. However, volatile pairs are prone to slippage, so you should only use them with a robust risk management strategy and a prudent amount of leverage. To learn more, click here. Tradersway broker offers the EUR/GBP, which has one of the lowest spreads and can yield 2.1% daily profit.
Focus on Setups
Successful part-time forex traders have a clear trading strategy that works with their schedule. As a result, they do not let their emotions take over when entering and exiting trades. They remove all greed and fear from their trades and keep a trading journal to record all their decisions.
Since part-time traders can only devote one hour or less to trading each day, they must select a trading strategy that suits this timeframe. Scalping is one strategy that fits the bill because it requires small holding periods of just seconds or minutes. They can also consider swing trading which involves monitoring medium-term price fluctuations over days.
In addition, if they have limited time to monitor the markets, they can look for opportunities during specific trading sessions that coincide with key news events, announcements, published reports, etc. These can create unusually large gaps in the market that offer potential trades. They should also learn how to make use of economic data and calendar events to their advantage.
Don’t Overlook Volatility
When deciding to become a part-time trader you should have a working strategy that has been proven to work under all market conditions. Traders should also set rules that guide vital risk events earnings releases which are known for high volatility levels.
Using limited trading time, it makes sense to only choose currency pairs that are easily accessible during your trading window. You should also avoid strategies that require frequent babysitting as this is often not possible when trading on a part-time basis.
Remember that volatility is not something to be feared but should be welcomed in your trades. When volatility picks up, it can be a great opportunity to capture profit on long-term trends. It is also important to keep a journal of your trades as this will help you develop your skills and improve your future trading. The journal will also make it easier to stick to your trading plan. This is one of the most essential elements to achieving success as a part-time trader.
Use Automated Trading Software
One of the best ways to reduce risk for part-time traders is to use automated trading software. This will prevent you from making emotional trades that lead to heavy losses. It will also make it easier to stay focused on the market and your trading strategy.
Since part-time traders usually spend a limited number of hours in front of their trading screens, it is important that they choose a trading system that works with their schedule. They should also avoid systems that require monitoring the markets around the clock, such as day trading or scalping strategies. Instead, focus on currencies that can be traded in the time available and rely on simple trend following systems. They can be based on moving average crossover methods or Donchian channels, for example. Then, they can set up alerts that will notify them when there is a trading opportunity. This way, they can be ready to take advantage of the price action without worrying about missing any major market movements.