Trading foreign currency can be exciting and profitable. Forex trading is risky, so you probably don’t want to quit your day job if you are a novice. However, beginning part time Forex trading is a realistic option and can be successful provided you learn to use the tools and strategies available.
The Part-Timer’s Challenge
If you are considering trading Forex part time, it’s likely because you have a full time job. Foreign currency trades 24 hours a day. However, a part-time schedule means you can miss profit opportunities. Worse, the market can reverse direction while you are occupied elsewhere, and turn a profitable trade into a loss before you get a chance to take action. The key for beginning part time Forex trading is to craft an overall strategy that offsets the disadvantages of a restricted schedule.
Trade High Volume
Liquidity, meaning the ease with which you can sell a security, is critical in Forex. The ability to liquidate a position fast often determines the difference between profit and loss. The key to liquidity is high volume. To assure liquidity, focus your trades on one or two high-volume currency pairs like the US dollar and Euro or Japanese yen. Choose currency pairs that are at their peak volume during times you are available to get online and do some trading.
Orders that Limit Risk
You can reduce risk by placing orders with special instructions. Some examples are stop, limit and stop-limit orders. Essentially, these are Forex orders that execute automatically if a certain price is reached. Including such instructions protects profits and limits losses even when you aren’t there to respond to market changes.
Slow Your Trading Pace
Forex traders typically make transactions on an hourly or even minute to minute basis. When you are trading part time, a slower pace may work better. Look for longer-term price trends that are likely to persist for days. Plan on holding a currency for several days. This strategy reduces the need to monitor the market every minute, so it’s especially advantageous when your time is limited.
Open a Mini Account
Forex mini accounts allow you to trade relatively small amounts of currency like $10,000 instead of the usual $100,000 lot. Since trades depend heavily on margin borrowing, this means you need only a few hundred for a trade. If you are new to trading and limited to part time, this reduces risk while you gain experience.