Trade Successfully While Keeping Your Day Job
10/18/2012 6:00 am EST
Nial Fuller of Learn To Trade The Market explains why a slowed-down approach, trading around your day job, can help you become a more successful trader.
Many traders seem to think that they need to spend a lot of time analyzing the markets and reading economic reports each day in order to increase their chances of making money in the markets. However, trading is one profession where ‘more’ is not necessarily better; in fact, spending increasing amounts of time glued to the markets can actually back-fire on you. It can be difficult to grasp this concept because typically in most occupations more is better; more education, more time at work etc, these things almost always lead to more money in almost every occupation imaginable, except trading.
How Your Current Job Will Help Your Trading Mindset
Surprisingly, I get a lot of email inquiries from traders who tell me they need help because they “can’t lose any more money in the markets because they don’t have a job right now or that they just quit their job to be a full-time trader”.
My response is usually something along the lines of: If you’re risking real money in the markets and you’re unemployed or your putting all your ‘eggs’ in the trading basket with no other source of income, you’re basically ensuring your own failure as a trader. One of the ironic things about trading is that the more you feel like you ‘need’ to make money at it, the less likely you are to do so. People who make consistent money in the markets are those who feel little to no emotional attachment to their trades; they genuinely don’t care if they lose on any given trade. Needless to say, if you are putting all your hopes and dreams and even your own livelihood into your trading, you are putting way too much pressure on yourself right out of the gate and your making it really hard to not become emotional as you trade.
NEXT PAGE: You Don’t Need to Watch Your Charts All Day |pagebreak|
This brings me to my main point; having a full-time day-job or some other source of income other than trading is one of the best things you can do to remove that feeling of ‘needing’ your trading to workout. Now, I know a lot of people come into the markets because they are looking for a way to escape the 9-5 rat race. But, I see a lot of traders making the mistake of quitting their job before they become profitable in the markets, and this is just not the right thing to do. You need to keep your job and work hard it at while you’re learning to trade and even long after that. You need the peace of mind that having a regular and consistent source of income brings. Otherwise, I can almost tell you with 100% certainty that you will start down a slippery slope of emotional trading mistakes that cause you to lose a lot of money and (or) blow out your trading account…at a time when you really can’t afford to.
It’s ironic that many people feel the need to try their hand in the markets when they have little or no extra money to spare or shortly after losing their job. In reality, you have no business risking your hard-earned money in the markets if you aren’t currently in a solid financial situation. You are putting yourself in a very difficult hole to dig out of when you start trading the markets from a feeling of having no other options or from a feeling of ‘needing’ your trading to work out for you. When traders in this predicament hit the inevitable losing trade or string of losers, it tends to unravel the whole ball of yarn, so to speak.
You Don’t Need to Watch Your Charts All Day
Trading around your day job (or night job) provides you with yet another advantage; it helps you get into a daily routine. When people quit their jobs in hopes of later becoming a full-time trader, or when they start trading during a period of unemployment, they tend to spend WAY too much time watching their charts and reading about the markets. As I mentioned in the introduction, absorbing more market information might seem like a good idea, but in reality it’s not.
One of the things I love most about trading the markets is that it truly is a very level playing field for all market participants. Every trader in the world can get free price charts that reflect the same price data about the markets. Therefore, there isn’t any big ‘secret’ to success in the markets that you are going to discover by staying up all night studying the markets. Once you understand how to trade a high-probability trading method like (price action trading), you only need to build a trading plan around it and get into a daily routine. After that, there’s no need to spend hours upon hours studying the charts and reading about what happened in the euro-zone last night.
NEXT PAGE: Less is More in Trading |pagebreak|
For me, I spend about 30 minutes analyzing the daily chart time frames shortly after the New York close each day. I will typically check in with the markets for 5 to 10 minutes at a time maybe 2 or 3 other times throughout the trading day, especially if I have a trade on. But, I am not usually spending more than 1 hour per day on chart or market analysis, there simply is no need to. I know what my trading strategy is and I know when my edge is present on the charts and when it’s not. Therefore, I don’t feel the need to spend countless hours burning my eyeballs out searching frantically for a trade signal. I have no trouble waiting patiently and forgetting about the markets for a day if nothing worth trading is setting up that day.
Less is More in Trading
When you trade around your day job, you can simply focus on the daily chart time frame charts, and maybe the 4-hour charts too if you like. Trading off these higher time frames allows you to get a much clearer view of the market and it also provides you with higher-probability signals. Day-traders and scalpers who trade low timeframe charts like 5-minute charts and 15-minute charts, naturally have a lot more losing trades because those low time frames have a lot more random price movement and market ‘noise’ than higher time frames do. This requires them to have a very high winning percentage to make any money. In other words, it’s a very stressful, time-intensive and difficult way to trade the markets. Indeed, most people who try to trade in a scalping or day-trading manner make less money on average than longer-term swing traders, and there are university-level studies that back up that claim if you care to do some Googling about it.
When you take a slowed-down approach to your trading and trade around your day job via the higher time frame charts, you’ll be trading off the ‘bigger picture’ and the signals you’ll trade on these higher time frame charts will naturally be higher-probability than lower time frame chart signals. Just remember, you can trade successfully while holding down your day job, and creating a trading routine around your job can actually help you become a successful trader faster.
Nial Fuller is CEO and founder of Learn To Trade The Market, the Web’s foremost trading education community. Learn To Trade The Market is a global leader in forex trading education and training. The Learn To Trade The Market Forex Price Action Trading community has become a vital education resource for aspiring forex traders.