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Very few people are able to trade forex full-time. Traders who must trade at work, over lunch, or in the evening find that trading sporadically for a small part of the day in such a liquid market can miss out on buying and selling opportunities. These missed opportunities can spell disaster for the freelance trader.
Despite the risk of missing out, there are still some strategies that freelance traders can employ. For example, traders who trade overnight may be limited in the types of currencies they trade based on 24-hour period volume. The strategy that these night traders should employ is to trade the currency pairs that are most actively traded during the night. An example would be trading the AUDJPY currency pair, or the NZDJPY and NZDAUD currency pairs. When choosing a currency pair, it is important to analyze the correlation of the two currencies in the chosen currency pair because having time during the day to study the market and implement a trade can lead to a successful strategy.
As you probably guessed, as a part-time trader, the main problem is time constraints. Here are some strategies for part-time trading when your schedules don't align.
Know Your Forex Market
Assuming you have a 9-to-5 job in the US, you should trade before or after work. During these time periods, the best trading strategy is to choose the most active currency pair (the most price action). When choosing a major currency pair, it is very helpful to know when the major currency markets are open.
New York, 8:00am to 5:00pm EST
Tokyo, 7:00 p.m. to 4:00 a.m. EST
Sydney, 5:00pm to 2:00am EST
London, 3:00am to 12:00pm EST
Japanese and European markets (opening hours 2:00 am - 11:00 am) are active, so part-time traders can choose major currency pairs, including EURJPY or EURCHF, or currencies involving Hong Kong dollars or Singapore dollars right. AUDJPY is also a suitable currency pair for part-time traders who have time between 5pm and midnight. While this is crucial to knowing the best currency pairs for your time, traders need to do further analysis on these pairs and the fundamentals of each currency before placing any orders.
Stop Loss Orders in Forex Trading
Perhaps the best strategy for the part-time trader is to make your computer your "trading partner". Since the forex market is very liquid and difficult to monitor, it is very beneficial to deploy trading programs so that information technology can do the work for you. Another commonly used strategy is to place a stop loss order, which means your money is protected if the market suddenly moves against your position.
Price Movements in Forex
For part-time traders, if the trader has spare time at work (10 minutes at a time), then there is another suitable strategy. These short but frequent trading periods may allow traders to implement price action trading strategies. Price action trading means analyzing the technical factors or charts of a currency pair to form a trade. Traders can analyze upper candlesticks (higher highs or higher lows compared to the previous candlestick) and focus on lower candlesticks (lower highs or lower low point).
Upper candlesticks mark an uptrend, while lower candlesticks indicate a downtrend, while other price action indicators may be inside or outside candlesticks. With this strategy, the key to success is trading on the chart time frame that best fits your schedule.
Other Forex Trading Strategies
As a part-time foreign exchange trader, you can also adopt the following strategies:
Create fewer positions and hold them for a few days
Understanding the dynamics of a currency pair and taking the time to really understand the market is crucial. Therefore, for part-time foreign exchange traders, after researching the market and narrowing down the selection of currency pairs, it is a prudent strategy to select a few positions and hold them for a long time. Another smart strategy is to place stop loss orders on all trades to minimize losses if the market moves in the opposite direction of your bet.
Focus on long-term trends
Focusing on long-term trends (daily/weekly) rather than staring at 1-hour or 4-hour charts is a wise move and will allow you to trade by looking at charts on your computer just once a day.
Set up trade orders
Setting limit orders, stop orders, or other entry/exit orders can ensure that you never miss an entry/exit opportunity. Most trading platforms support these order types at no additional charge.
use of technology
Set up automatic alerts on your phone or email to ensure you are notified of currency price movements when you are not actively trading.
in conclusion
For the part-time trader, the forex market is worth participating as it operates 24 hours a day and is always liquid, offering ample profit opportunities at any time of the day.
However, the foreign exchange market is very volatile. This is risky for all traders, especially part-time traders, if the proper strategy is not implemented. Trading currency pairs that are actively traded during the hours you can trade, focusing on longer-term time frames, taking a price action approach, and leveraging technology are some of the strategies that will help a freelance Forex trader succeed. Risk tolerance, leverage, and time frames (from hours to weeks) must also be considered in any trader's broader strategy.
In conclusion, these factors are important components of any trading strategy, be it short-term or long-term.
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