It is fair to say that when most people think of forex traders doing business, they imagine them being glued to their monitors watching every single market move but does it have to be this way?
Obviously some traders do work this way, especially if they are partial to a bit of day trading where the short time frames involved mean fluctuations in exchange rates can have a dramatic impact on potential profits and the accompanying graphs are erratic.
While this ‘blink and you miss it’ approach to trading isn’t for everyone, many traders like this way of working and relish the opportunity to scalp a pip every now and again to make their money even if it can be extremely stressful watching the market move throughout the day.
An Alternative Approach
But what if you don’t have time to sit glued to your screen all day; are you still able to make money from forex? The answer is that with a little bit of planning and trading discipline, it is highly possible to make money while only trading part time.
Once a new forex trader becomes accustomed to placing trades, it is possible to set them up so that they don’t have to be present to finalise them. After analysing a currency pair and deciding how you think the exchange rate will move, you can use what are known as entry orders, limit orders and stop losses to control your trades.
The scenario is probably best explained by way of example. Let us imagine that, after looking at the relevant graphs and news, you decide that the GBP-USD rate will find support at 1.4855 (which basically means that you don’t think the rate will drop much below this throughout the day).
You might decide to put your entry order as a buy at 1.4855 which means that should the rate fall to this level, you will open a buy position.
Let’s say that you wanted to profit by 30 pips (a pip being the fourth decimal of the quoted price), you would have setup your limit order to sell at 1.4885 beforehand to come into effect after the initial buy order.
If you wanted to limit your losses to just 15 pips should the market move against you then you can set a stop loss which would act by putting in a sell order at 1.4840 and thus cancelling out your initial buy order before your losses get any bigger.
The ability to plan and execute trades without taking up most or all of your day is something that the forex trading markets can offer. However, you clearly have to know what you are doing first and it isn’t advisable to jump straight in without first making some dummy trades with the assistance of a spreadsheet or a pen and paper if you’d prefer. Simply write down what your trades would have been and then watch the market to see if you would have been right or wrong.
Once you have a good grasp of how the system works, the bulk of your time will be spent analysing charts and making informed decisions about where you think the markets are heading. Then it is just a case of placing those orders and, if you have done your homework correctly, getting on with the rest of your day while any trades are made automatically in the background.
It really pays to look at the larger picture rather than worrying about smaller minute charts and if you can plan your trades and execute them in advance using future orders, then you will soon realise just how profitable part time forex trading can be.