Abstract：In general, there are two kinds of forex traders in terms of the way this activity influences their lifestyle: full-time and part-time traders.
To trade in a full-time job for the life of a day trader is very much the dream of a lot of people. However, this brand of independence isn't for everyone. Just like too much freedom can do more harm than good for some economies, not all traders are ready to trade full-time.
In this article, we will analyze the pros and cons of being part-time traders and full-time traders and help you make the decision that's right for you.
Pron And Cons of Part-Time Trading
Advantages:
1. Extra income
Thanks to the rise of online trading platforms and apps, many of the markets historic barriers to entry have been removed during the digital age. Part-time forex trading can be a successful way to supplement your income.
2. Less pressure
Because you have income from your regular job, you do not have to trade a big account in order to make a profit. You could trade with small amounts, be calm even when you lose because you have no pressure to make a profit. Since you are calm and not under pressure to make a living, you have the ability to make informed decisions, be tolerant, and learn from your trading mistakes.
3. Start with small capital
You can start with a smaller amount as investment capital. As trading is a way to make additional money, there is no need to have a more substantial amount of capital since the living expenses are paid out of the salary.
Disadvantages:
1. May miss opportunities
When you have a full-time job, you may miss quite a few opportunities in the market that are created by strong movements. These movements in the market usually happen when something unexpected happens.
2. Time-consuming
It can take a significant portion of your spare time. To be a successful trader takes time, you have to learn how to trade and gain experience, but that is still not enough. You need to develop a trading plan and learn to deal with the risks. All this will come at the expense of your family, friends, and hobbies.
3. Limited availability of trading instruments
Trading in the after-hours market can limit the trading opportunities because some of the instruments may have low volume.
Pron And Cons of Full-Time Trading
Advantages:
1. Flexible trading time
You can trade whenever you want from wherever you want. And You can trade for periods of time, you dont have to sit in front of the screen all the time and keep track of your trade. You can set stop loss and take profit In advance.
2. Full trading sessions.
When you trade full-time you can choose a working day that would include one full trading session or one full intersection of the trading sessions to trade during the most active hours in Forex.
3. Possibility for making higher profits
Because you have more time for trading higher initial capital and more time to analyse and identify profitable opportunities. You can potentially make higher profits.
A full trading day of 7-8 hours can yield much more opportunities for entering positions than some random 2–3 hours a day. You can choose to look at the lower period timeframes and find even more opportunities there.
Disadvantages:
1. Dependence on forex profit
Since you entirely rely on profits made from trading, if profitable trades are not identified, then no profit will be made and you may not have enough money to cover your expenses. If you have a daily job and trade Forex only occasionally, you do not depend on Forex earnings too much. So, if you plan to go full-time, you better be sure that you will have enough money for living and upholding the necessary account balance even after a streak of huge losses.
2. Need a higher level of initial capital
If you don't have an adequate level of funds, you can trade using the power of leverage offered by some brokers to make higher profits. Nevertheless, trading with leverage can be risky as it can enhance the amount lost from non-profitable transactions.
3. Requires more knowledge
Full-time trading requires advanced knowledge of trading processes and strategies, as this will be the primary source of income. So you have to spend more time on learning relevant knowledge and making trading strategies.
How to Conduct A Successful Part-Time or Full-Time Trade
If you decide to become a successful part-time forex trader, here are some points to hone your part-time trading skills:
1. Create Forex strategies for each session
The Forex market is tailor made for part time traders because no matter what timezone you choose to work, you‘re able to create Forex strategies for each session. As a part time Forex trader, you’re able to build a trading strategy that takes advantage of market conditions within a specific market session, such as during the Asian session or more specifically the London Open.
2. Choose the Right Currency Pair to Trade
When you are just doing part-time forex trading, select a currency pair that doesnt require round the clock monitoring. For beginners, it is recommended that you focus trading USD against other currencies. These pairs are very liquid so you can quickly find the right time to trade. For experienced part-time traders, you can try trading EUR against other currencies.
3. Set Up an Automated Trading System
Part-time traders may opt to trade on their own or choose an automated trading program to make trades for them. There's a variety of automated trading programs with a full spectrum of functions available on the market.
If you‘re committed to the idea of becoming a full time Forex trader and want to quit your job immediately, there’s a few things you need to consider:
1. Develop a trading plan and stick to it
It's vital that when you start trading that you have a clearly defined plan. This means having a trading system you are confident in, but also the focus and determination to follow it and stick to your rules.
2. Ensure Enough Capital
Trading full time means that you‘ll be quitting your job, your primary source of income. If you don’t have enough money to sustain drawdowns or pay your bills while you‘re not making money in the markets, then you’re not ready to be a full time Forex trader.
3. Risk management
The professional, full time trader knows that managing their risk is the most important element to their success. They understand that making money can be easy at times but recovering from a large draw-down of their account is very hard.
For this reason they keep their maximum risk on any trade within their personal comfort zone and focus on trading opportunities where their reward to risk ratio is high. This allows them to thrive over the long term in their day trading career.
