Day trading is the process of buying and selling financial assets like stocks, commodities, and currencies with the goal of making a profit. It is similar to investing, with the only difference being that it has a shorter horizon. Day traders hold their positions for a few minutes or hours.
A good thing about day trading is that anyone can do it. For one, many brokers don’t have a minimum balance for you to start day trading. Also, all companies have come up with mobile applications that help you to trade from anywhere.
As such, many people, including those with 9-5 jobs can take part in the market. This article will explain how to become a profitable trader when you have a full-time job. As you will find out, trading with a full-time job is not easy. It takes time, effort, and a lot of dedication.
Asset trading times
One reason why it is possible to trade successfully when you have a full-time job is that many assets have longer trading hours. For example, forex trading is available on a 24-hour basis every Monday to Friday.
Similarly, many brokers provide commodities like crude oil, copper, lithium, and natural gas for more than 18 hours every Monday to Friday.
Cryptocurrencies like Bitcoin, Ethereum, and Ripple are provided on a 24/7 basis. Stocks, which are the most popular assets, are provided between 9 and 4 p.m. in the US. Fortunately, it is possible to trade for longer hours during the pre-market and extended hours.
Therefore, anyone, even those with long office working hours can day trade well and make money in the market.
Create a strategy that fits your schedule
The most important thing to do when you are day trading with a full-time job is to create a strategy that meets your criteria. Fortunately, there are many approaches to go about this.
First, you can decide to become a swing trader. Swing trading is a process where you buy stocks or other assets and hold them for a few days. The goal is to identify trends or reversals and hold them for a long time.
Second, you can even decide to be a position trader, where you initiate trades and hold them for a few weeks or months. The benefit of doing this is that you will not need to open many trades.
Finally, you can decide to become a scalper. Scalping is a strategy that involves opening tens or hundreds of trades every day. Its goal is to make small profits several times per day. If you can make $20 per trade 20 times a day, it will translate to $400 per day or $8,000 in a month.
Scalping is a bit difficult for people with 9-5 jobs but it is possible. For one, instead of trading in the regular hours, you can focus on extended hours. You can also focus on assets with longer hours like forex and commodities.
Time management in day trading
As you will find out, time management is an important part if you want to both day trade and be productive in your workplace. In this, you will need to find the best balance about how to maximize your productivity.
This process will start by looking at your official working hours. Some people work during the day while others operate on the night shift. Therefore, you should program your day trading based on your working hours.
For example, if you work during the day, you can craft a strategy that maximizes the extended hours session. Robinhood, the popular stock trading app has also introduced 24/5 hours trading. You can master these sessions.
Alternatively, you can focus on assets that are offered for longer hours like cryptocurrencies and stocks. As part of your strategy creation, you need to note that some of these assets have low volume and volatility during the overnight sessions.
It is also worth noting that you will need to allocate a lot of time to learn about trading and testing your strategy in the market.
In most cases, this learning process will take a few months depending on the time you dedicate to the process. A demo account will help you a great deal create and test your strategy.
Setting realistic goals
The next important thing to consider is to set realistic goals in the market. In most cases, since you are trading on a part-time basis, you will not be as profitable as people who do it full-time.
Still, it is possible for you to become so profitable that you transition from a part-time trader to a full-time one.
Related: Day Trade Part-Time vs Full-Time
In line with this, ensure that you start with funds that you can afford to lose. This is important because of the rising possibility of having a significant drawdown from your account.
Above all, we recommend that you have SMART goals. This means that your goals should be specific, measurable, achievable, relevant or realistic, and time-bound.
What to avoid when trading with a 9-5 job
There are a few things you should avoid when trading when you have a 9-5 job. Some of these things are:
This is a process where many people take short breaks to trade during their 9-5 jobs. While it is possible to make money using this approach, we recommend that you avoid it since it can interfere with your productivity at work.
Instead, we recommend you to focus your trading when you are not working. It will also allows you to manage your trades better and not have a time-line that would force you to close your positions no matter how they are doing (unless you want to keep them open for hours–but if you are a day trader, you won’t).
Related » Take Breaks, Avoid Fatigue
Chasing quick profits
Next, you should stop chasing quick profits. Or, for that matter, don’t base your business solely on these kinds of trades. Instead, you should focus on having a solid strategy and only open trades after doing a thorough analysis.
Some of the top things to avoid are following the crowd (blindly), having no strategy in place, and trading without doing enough research. As attractive as the chance to make profits fast is, this also has another side of the coin: losing money quickly!
Generally, being in a hurry when trading in the financial markets would be something that can lead to the breakdown of your account. Keep your excitement/frustration aside, be consistent, diligent and take your time to increase your profits.
Using too much leverage
Leverage is an important part of trading because it enables you to make more money. When using leverage, the broker will give you a credit that will help you maximize your trades.
While high leverage can lead to higher profits, the opposite is also true. Therefore, you should only use moderate leverage when trading. This is relatede to the point above of making money fast.
Placing large trades
Placing big trades will often lead to bigger profits when things go right. However, the reality is that it also exposes you to more losses when things go against you.
Therefore, the rule is that you should ensure that you use moderate volumes. Doing that will help to balance the risks of having very small volume and using excessive ones.
What to do as a part-time trader
In addition to avoiding those aspects, there are things that will help you succeed as a day trader with a 9-5 job. Some of the top things to have in mind are:
- Risk management – Some of the top risk management strategies to use are having a stop-loss and a take-profit, position sizing, and not leaving your trades overnight.
- Using alerts – You should select a platform that has an alert feature. Alerts will help you to place trades when the preferred levels are reached.
- Have a good trading plan – As mentioned, you should focus on having a good trading plan or strategy in the market. You should master a few strategies that will help you trade in all market conditions.
- Have a mentor – You should have a mentor, who is someone who has been in the industry for a long time. The mentor will help you create a strategy and avoid common mistakes in the market.
- Focus on a few assets – The next thing you need to do is to focus on a few assets. Focusing on more assets will lead to information overload.
This article looked at some of the best approaches to use when you want to trade while having a 9-5 job. In it, we have some of the best things to do and some of the top things to avoid.
As you will note, part-time trading is not an easy thing and it takes a lot of discipline and dedication to succeed.
External useful resources
- What should I do, stock market trading or 9 to 5 jobs? – Quora