The majority of retail traders are part-time, and we could put forward an argument that even the majority of experienced and successful traders are also part-time. In truth the actual ‘work’ we do on a day to day basis, once you’ve developed a trading plan that you can trade in a disciplined and emotionless manner, is relatively small. So much so that many institutional traders actually have to devise cunning methods to make themselves look busy on a day to day basis. Face time using an iPhone being one of the favourite methods of looking busy in London, or ‘Skyping’ with colleagues or contacts, whilst being very careful to stay on the subject of trading, in all its facets.
In other articles we’ve discussed how and when to make the move from finding the industry, to trading part time, to then eventually making the leap to retail trading as a full time career. However, in this article we want to concentrate on staying part time, trading part time whilst giving yourself the best chance of success without compromising your commitment and dedication to your full time job as without it (the full time job) you won’t have the freedom and opportunity to trade the markets part time.
One of the first (and obvious) pieces of advice is to move up the time frames. Instead of trading off the hourly time frames our trader should look to trade off the daily and or the weekly charts. They could look for a type of ‘three ducks in a row’ system. Typically this is where a pattern develops on the 4hr chart, the 8hr chart and finally develops on the daily. Often this continuous ‘linked’ movement proves that there is some overall momentum to the movement we’re witnessing on our charts. Moreover, our trader could also look to the daily to ascertain if the longer term trend is viable. In order to take advantage of the developing opportunities our trader could use the alert functions available on many of the widely used trading platforms and packages.
Naturally our trader, who can’t follow price throughout the day, must develop a system of alerts based on either price reaching a certain level, or for some of the indicators selected to alert to a smartphone should our trader’s high probability ‘set-up’ occur. In this instance our trader is somewhat fortunate as the inventors and creators of the most popular indicators designed their indicators to work on stock (equity) prices over the medium to long term, often by print and not modern day trading platform and charting packages, therefore our trader is regressing back to the purity and origins of the indicators.
Whilst working off larger time frames our trader will become more reliant on news events and ironically whilst taking a wider perspective our trader may notice a pattern that often escapes those who trade off lower time frames; the daily time frames are ideally suited to the swing trader. And that swing trader, if part time, has far more opportunity to enjoy success if swing trading than trading as a day trader or ‘scalper’.
There are other (ironic) coincidences that part time swing traders are able to enjoy and use to good effect that often escape those who trade more actively off lower time frames, fundamental analysis being one. Swing traders have the opportunity of watching their trading slow down, in many ways they’re forced into a routine that will actually benefit their trading. They can afford to take a wider view of the market and digest market news and its effect throughout the day; they can then begin to observe how policy decisions and high impact news events affect the market. Whereas lower time frame traders often tend to ignore high impact news events, believing that all news will eventually bleed onto their charts. The latter claim, of information eventually efficiently bleeding onto the charts, is a claim that’s hard to rebut as if markets are to behave efficiently all that fundamental information will eventually affect price.
As we can clearly see our part time trader is far more in tune with the pace of the markets and their movements than the casual observer would believe; indicators were created to work of daily time frames, daily fundamental swing changing news can be clearly observed on the higher time frame charts, operating from an ‘end of day’ perspective is entirely functional and our trader will develop more self-control, better money management and is far more likely to succeed than if obsessionally engaged in ‘chart-staring’ hour after hour. Full time worker part time trader, other than working on the other side of the industry, it doesn’t get any better.