Forex Trading for Part-Time Traders: 5 Strategies to Make it Work

Forex Trading for Part-Time Traders: 5 Strategies to Make it Work

Reading time: 8 minutes

Forex trading with a full-time job isn’t easy, but it’s doable. 

For many aspiring professional traders, part-time trading is a necessary evil until they switch to full-time. The biggest issue is time; after working eight hours a day, plus taking care of other commitments, little time is left to trade.

However, there are some specific strategies that part-time forex traders use to make it work. Below, we’ll dive deep into the best practices for part-time trading and highlight five strategies to help you trade currencies around a busy schedule. 

Best Practices for Part-Time Forex Trading

  • Set a Trading Schedule: Allocate specific hours for market analysis, trading and review to ensure trading doesn’t interfere with your day job or other obligations.
  • Know Your Markets: Different markets are active during different times of the day, depending on your location. Some may be suitable for evening trading, which we’ll discuss shortly.
  • Stick to Your Plan: Given that many part-time foreign exchange traders will hold trades for longer, it’s easy to fall prey to emotions—fear of missing out on trading opportunities and overthinking a position is common for beginners. When you have a trading plan, be sure to stick to it. 
  • Implement Risk Management: Taking fewer positions can lead some to take on greater risks in pursuit of faster gains. Never risk more than 1-2% on a trading position, and always use stop-loss orders and take profits to manage trades when you’re not around. 
  • Set Up Alerts: Automated alerts can inform you that an entry could be considered after work and prevent constant chart-watching as the financial markets unfold. 
  • Use a Demo Account: Before diving into live trading, practice with a demo account to test trading systems and get comfortable with your trading platform.
  • Keep Records: Maintain a trading journal to track performance, strategies used, and lessons learned. It'll be invaluable for ongoing improvement.

5 Strategies for Part-Time Forex Trading

1. Swing Trading on the 4-Hour and Daily Timeframes

Swing trading is a trading style that aims to capture the bulk of a market movement (the swings) over days and weeks, often between support and resistance levels. As opposed to an intraday style, like day trading, swing traders typically watch the 1-hour to daily charts. Using the 4-hour and daily charts, in particular, offers traders a lot of time to deploy a forex strategy.

Given the nature of trading from a support to a resistance level and vice versa, many part-time traders succeed using technical indicators. Indicators like the Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), or even a pair of moving averages can confirm a reversal at these levels. Some may go a step further and use price action trading, watching for reversal candlestick patterns, like a hammer or shooting star, to appear on the 4-hour or daily charts before entering. 

2. Fundamental Analysis with Long-Term Chart Patterns

Fundamental analysis involves evaluating economic indicators, political events, and market sentiment to predict price movements. Chart patterns, on the other hand, are repeatable patterns that can be used to confirm this bias. 

With this type of trading, one of the most powerful predictors can be interest rate differentials. If country A has a higher interest rate than country B, it’s often assumed that country A’s currency will appreciate against country B’s. Considering that, the trader could watch for triangles, wedges, head and shoulders, and so on, on the 4-hour or daily charts that align with this expectation. When the pattern is validated, they have a potential trading opportunity.

3. Scalping Sessions

Scalping is a high-frequency trading style that sees traders entering and exiting positions in minutes, usually on the 1-minute to 5-minute time frames. For part-time traders with a couple of hours to spare each night, it can be a viable strategy. 

Scalping is typically best done in high liquidity sessions like the London or New York trading hours, where currency pairs generally offer tighter spreads and greater volatility. However, the Asian session may be favoured for its lower volatility for some traders. 

The key here is understanding your time zone and the most liquid pairs at that time. For instance, if you live in Sydney and are in the AEST time zone, you’ll likely miss the close of the Sydney session at 4 pm. However, the Asian session will still be open until 8 pm, and the London session begins at 7 pm; liquidity is likely to pick up in the British pound to Japanese Yen (GBP/JPY). 

4. Trend Following Using Moving Averages

Forex trends can last days, weeks, months, and even years. For part-time traders, trend following can be one of the more straightforward forex trading strategies, especially when combined with simple technical analysis tools like the Exponential Moving Average (EMA) and Simple Moving Average (SMA). Moving averages can offer both confirmation of trending market conditions and entry signals. Price crossing or sitting above/below a moving average can indicate the market’s direction.

Many often pair two moving averages together, like a 50-period and 200-period EMA. When a crossover occurs, it can be a signal that the trend is shifting. Alternatively, prices consistently moving above or below both can indicate a strong trend, providing opportunities for entry or analysis on lower time frames. 

5. Weekend Analysis for Position Trading

For some, trading the forex markets in the evening may be too tricky. However, many successful forex traders leverage position trading, where trades unfold over several weeks or months. The forex market is closed over the weekend, allowing traders to analyse the past week’s price movements, upcoming economic events, and potential trend shifts without the pressure of live trading

In this approach, long-term charts, like the daily, weekly, and monthly time frames, are given precedence over short-term price movements. Weekends can act as a check-in, offering an opportunity to make unrushed decisions about entries and exits and observe a position unfold.

The Bottom Line

In essence, being a full-time trader isn’t the only pathway to good trading results. As we’ve seen, there are many ways to grow a trading account part-time, even for those with just the weekend to spare. The key is to develop your own unique style and strategy that suits your lifestyle and trading goals. Focus on consistency and discipline in your approach, and remember, successful trading is a marathon, not a sprint.

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