March 14, 2023
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Read time:
13 minutes
Trading part-time while holding down a full-time job can seem like a daunting task. However, with the right approach and strategic planning, it's possible to successfully manage both. This comprehensive guide will provide the insights you need to effectively trade part-time without compromising your career or financial goals. In this article, we will cover the following topics:
- Choosing the right market and trading style.
- Developing a trading plan based on a structured weekly routine.
- Transitioning from work to trading mode.
- Leveraging technology and automation.
- Continuously educating yourself and improving your trading skills.
- Tracking your progress and evaluating your performance.
- Maintaining a healthy work-life balance.
By implementing the strategies and tips outlined in this guide, you can effectively balance your part-time trading activities with your full-time job, ensuring success in both aspects of your life.
1. Choose the right market and trading style
Selecting the appropriate market, trading style, and time horizon is crucial for successfully managing part-time trading alongside a full-time job. If you make the wrong choice, it can lead to negative outcomes for your trading performance, mental health and work performance. Consider the following aspects when making your choice:
Market accessibility and trading hours:
There are many financial markets available to you. You just need to choose one that aligns with your schedule and preferences. For example, Forex trading offers 24-hour market access, making it ideal for those with limited time or non-traditional working hours. Alternatively, stock and commodity markets typically operate during standard working hours, which may suit traders who can dedicate time while working during the day. Of course, your time zone will also be a major factor in this decision.
Trading style, time commitment, and time horizon:
The trading style and time horizon you choose should match your availability and the level of involvement you can commit to your trading activities. Swing trading and position trading require less time compared to day trading, as they involve holding positions for days or weeks, as opposed to hours. These styles are generally more suitable for part-time traders, as they allow for flexibility in managing trades around a full-time work schedule. Additionally, consider your trade management approach, ensuring it fits your work schedule. For example, if a one-hour period can be make or break for your trade, this won't be suitable if you're working. On the other hand, trading based on structure over a longer time horizon, where a context change may take many hours, may be more suitable if you can only check the charts every few hours or only a couple of times per day.
Market familiarity and interest:
It is essential to choose a market and trading style that you are genuinely interested in and have some knowledge about. This will help you stay engaged and motivated to learn more about the market and its underlying mechanisms. Additionally, familiarity with the market can provide you with a better understanding of market trends, allowing you to make more informed trading decisions. Some markets are more complex than others, so if you're struggling to understand something about a market it's probably better to avoid it.
By finding the perfect balance between your work schedule and trading preferences, you can create a tailored trading approach that not only complements your lifestyle but also maximises your potential for consistent returns. Remember, the key to successful part-time trading lies in adapting your strategy to fit your unique circumstances, ensuring that you can effectively navigate both your full-time career and your trading aspirations. And the way to do that is to...
2. Develop a trading plan based on a structured weekly routine
Creating a structured weekly routine will help you effectively manage your part-time trading activities. Break your trading system down into manageable chunks that can be tackled throughout the week, similar to a division of labour. Here's a sample weekly plan to help you maintain a balance between your trading activities and full-time job. This is similar to what I've used over the years, including over a decade ago when I traded alongside a demanding full-time career:
Weekly Preparation Session (once per week, on the weekend when markets are closed):
During this session, select the market or markets you plan to trade in the coming week, and review any significant upcoming economic events or news. Evaluate your previous week's trades and adjust your strategies, if necessary. Do any analysis or work that takes a longer amount of time and may not need to be readjusted for a while.
Update Sessions (every weekday evening):
Allocate time each evening to update your analysis, review your open positions, make any necessary adjustments, and assess potential opportunities. Set alerts and alarms for key areas/moments, and provide detailed actions for what to do during your check-in sessions when those alerts go off.
Check-in Sessions (based on alerts and alarms):
The alerts in your trading platform will notify you of significant market movements, price targets being hit, or other essential events. When alerted, conduct check-in sessions to assess the situation and make appropriate decisions based on the actions you assigned in your update sessions. These sessions will help you stay informed about your trades without the need for constant monitoring.
The update sessions each evening can be taxing, especially if you've had a stressful or tiring day at work. The best way to deal with this is to...
3. Have a transition from work to trading mode
Effectively managing your emotions and transitioning from a full-time job to trading activities is crucial for part-time traders. Here are some tips to help you manage emotions better and switch off after a stressful or tiring day of work, ready to focus on trading:
Create a designated trading space:
Set up a separate area in your home specifically for trading activities. This space should be free from distractions and work-related items, allowing you to mentally separate your full-time job from your trading activities.
Develop a pre-trading routine:
Establish a routine to help you transition from work to trading mode. This might involve taking a short walk, engaging in a brief meditation session, or simply enjoying a cup of tea. The goal is to create a mental break between your job and your trading activities.
Set realistic expectations:
Understand that losses are a part of trading and that not every trade will be successful. By setting realistic expectations and accepting the risks involved, you can better manage your emotions and remain level-headed during trading sessions.
Use stress-reduction techniques:
Incorporate relaxation techniques, such as deep breathing exercises or mindfulness, to help manage stress and anxiety related to trading. Practising these techniques regularly can improve your emotional resilience and overall well-being. A recent favourite of mine are Wim Hof breathing practices, and you can find video guides on YouTube.
Establish trading boundaries:
Set clear boundaries for your trading activities, such as a maximum loss limit or a maximum number of trades per day. By having these limits in place, you can prevent excessive emotional involvement and maintain a healthier balance between work and trading.
Reflect on your emotions:
Keep a trading journal to document not only your trades but also your emotions and thoughts during trading sessions. Regularly review this journal to identify emotional patterns, allowing you to better understand and manage your emotions in the future.
4. Leverage technology and automation
Utilising technology and automation can help you manage your part-time trading more efficiently, allowing you to focus on your full-time job without compromising your trading success. Here are some tools and techniques that can streamline your trading activities:
Economic calendars and market news:
Staying informed about economic events and news is essential for part-time traders. Use economic calendars to keep track of important events that could impact your trades, and subscribe to market news updates to stay up-to-date with relevant information. During your preparation sessions, look for key events in the economic calendar and add them to your main calendar (e.g. Google calendar) so you can receive the alerts to your device ahead of time.
Chart alerts:
Set up chart alerts on your trading platform to notify you when specific price levels or technical indicators are reached. These alerts can help you react quickly to market changes, even when you're not actively monitoring your trades.
Automated trading tools:
Consider using automated trading tools to execute aspects of your trades on your behalf. Of course, ideally you'd be able to build an algorithmic trading system, but that takes a lot of technical expertise. I can tell you from my experience having worked on one with my team for nearly two years, it's no easy feat! Instead, use automated risk management tools for managing trades you're already in. For example, there are tools that will automatically set partial take profit levels or adjust your stop loss to break-even (or beyond) based on particular criteria being achieved once you're in a trade. This is a step up from a standard or trailing stop loss.
Mobile trading apps:
I don't agree with using your mobile as your main trading device. If you're using it for analysis and important decisions, it's a mistake. However, if you're using it to check on what's happening and to execute pre-planned actions, which you decided at your computer during your update sessions, that can be extremely effective.
By incorporating technology and automation into your part-time trading routine, you can streamline your market analysis, stay informed about relevant events, and better manage your trading activities without constant monitoring. This can ultimately help you achieve greater success in your part-time trading endeavours. But don't get distracted by technology and make the mistake most traders make...
5. Don't neglect education and continuous improvement:
Balancing trading alongside a full-time job can be challenging, often leading traders to neglect their ongoing development. To overcome this challenge and enhance your part-time trading performance, it is essential to prioritise continuous education and improvement:
Allocate time for learning:
Set aside dedicated time for learning, even if it is just a few hours a week. Trading is just like any other skill, if you stop developing it, you'll go into decline.
Focus on deliberate practice:
Create a clear list of areas for improvement and dedicate time to working on these through deliberate practice sessions. By addressing specific weaknesses, you can enhance your overall trading performance.
Review your performance and gain feedback:
Regularly assess your trading performance and seek feedback from others, such as mentors or fellow traders. This will help you identify areas for improvement and ensure you are making progress in your trading journey.
Set regular milestone goals:
Establish measurable targets for your development by setting milestone goals. Break these down into smaller, weekly objectives that provide a clear roadmap for improvement. By consistently working towards these goals, you can ensure steady progress in your trading performance.
Many traders will end up failing at trading and think it's because they tried to do it part-time. They'll claim it's not possible to trade around a full-time job. However, the reality is more likely to be that they neglected their development and got carried away in the live markets. It doesn't matter what skill you're developing, if you stop working on it you'll fail. So it's critical that you make a big effort to...
6. Track your progress and evaluate your performance
Consistently monitoring your progress and evaluating your trading performance is crucial for identifying areas for improvement and ensuring you stay accountable to your trading goals. To effectively track your progress, consider implementing the following action points:
Maintain a trading journal:
Document your trades, strategies, emotions, and thought processes in a trading journal. This practice will help you understand your decision-making patterns, recognise any biases, and keep track of your progress over time.
Set performance metrics:
Establish key performance indicators (KPIs) to measure your trading success, such as risk-reward ratio, average holding period, and probability estimate accuracy. These metrics will provide a quantitative assessment of your performance and help you gauge your progress towards your trading goals.
Regularly review your journal:
Set aside time to periodically review your trading journal, analysing your trades and identifying patterns or trends. Use this information to pinpoint areas for improvement and refine your trading strategies.
Adjust your trading plan:
Based on your journal analysis, make necessary adjustments to your trading plan to address any weaknesses or capitalise on your strengths. Continuously updating your plan will help you stay adaptive and responsive to changing market conditions and your own performance levels.
Monitor your emotional state:
Pay attention to your emotions and their impact on your trading decisions. By understanding the role of emotions in your trading, you can work on developing strategies to manage them more effectively.
As you can see, it's a lot of work to make sure you can trade at a high level around a full-time job. But that's because, trading is another job. You shouldn't view it as a hobby; this is a mistake traders make who end up failing, as they never take it seriously enough.
However, if trading is a job rather than a hobby, and you're taking it seriously, you need to act like a professional and...
7. Maintain a healthy work-life balance
Balancing your full-time job with part-time trading can be challenging. It is crucial to maintain a healthy work-life balance to ensure that neither aspect suffers and you can still maintain good mental health. Here are some tips for achieving and maintaining balance between your professional life and trading activities:
Prioritise your time:
Make a conscious effort to allocate time for yourself, alongside both your full-time job and trading activities. Establish a routine that ensures you can dedicate adequate attention to each, without neglecting your personal life or other commitments.
Set boundaries:
Establish clear boundaries between your full-time job and part-time trading. Avoid trading during working hours, and refrain from discussing your trading activities with colleagues or clients. Keep your trading space separate from your workspace to help maintain a clear distinction between the two.
Take breaks:
Regular breaks are essential to prevent burnout and maintain focus. Schedule short breaks during your trading sessions, and take time off from both work and trading when needed. This will help you stay refreshed and more engaged in both areas of your life.
Foster healthy habits:
A healthy lifestyle can greatly impact your overall well-being and performance in both your full-time job and part-time trading. Prioritise regular exercise, a balanced diet, and adequate sleep to maintain your physical and mental health.
Seek support:
Rather than bottling up how you feel, try talking to people close to you. If you don't feel comfortable talking with friends or family, try professional therapy sessions. You don't have to talk about trading, but you should talk about the pressure you feel and how you're coping with things.
Review and adjust:
Periodically assess your work-life balance and make any necessary adjustments. If you find that your trading activities are interfering with your full-time job, or vice versa, consider revising your trading strategy or schedule to better accommodate both aspects of your life.
By maintaining a healthy work-life balance, you can effectively manage your part-time trading activities while continuing to excel in your full-time job. This balance will ultimately contribute to your overall success and satisfaction in both areas of your life.
Trading part-time alongside a full-time career takes a lot of dedication, hard work, and mental energy. However, it is possible to succeed at - I'm the living proof of that! Before I left my career to focus on my trading full-time (back in 2012) I was already earning more from my part-time trading than I was from a well-paid banking job in London. It just depends on how much you want to make it work and what sacrifices you're willing to make to achieve that.
