3 Reasons Why YOU Should Consider Part-time Trading
The idea of day trading can be alluring. Who wouldn’t want a flexible job with the option to work from anywhere in the world?
Here’s the reality:
The lives of most day traders aren’t exactly glamorous, cash-filled movie montages. Day trading often means countless, endless, sometimes monotonous hours in front of a screen. It also means lots of detailed and painstaking research.
And this isn’t necessarily a steady source of income. It can difficult to predict how much you’ll make — or if you’ll make anything at all.
Because trading isn’t really a ‘sure thing’ kind of profession, most newbie day traders start out part-time. That’s not such a bad thing: You can have the flexibility to educate yourself in the markets while hanging onto the security of a steady income.
The next few issues are your guide to trading on a part-time basis. Here’s everything part-time day traders need to know.
What Is Part-Time Trading?
Defining the difference between a full-time trader and a part-time trader can be tricky.
The reason is that trading doesn’t always follow the traditional trajectory of part-time or full-time employment. Even so-called full-time traders aren’t executing trades one after the other from 9–5 all day every day.
Trading is about quality, not quantity.
For me, that can mean that if I don’t find suitable trades, I may not actively trade for days or even weeks at a time. But just because I’m not trading, that doesn’t mean I’m not working. I work constantly, educating myself on potential plays, honing my watchlist, doing research, and generally preparing myself for when opportunities arise.
So, to say that someone is a part-time trader doesn’t necessarily refer to how much time they devote to actively executing trades. Rather, part-time trading refers to trading when you have other obligations, say, a full-time job.
Part-time trading isn’t a bad thing. Most traders start out part-time, and some will stay part-time for their entire careers.
Since I’m both a trader and a teacher, you could even argue that I’m a part-timer — though my entire career is devoted to trading in one way or another.
Benefits of Part-Time Trading
What are some of the specific benefits of part-time trading?
Here are just a few:
1. Diversify your career.
In traditional long-term investing, diversity is seen as the key to a healthy portfolio. It falls into the “don’t put all your eggs in one basket” territory. An ideal portfolio will likely include a variety of securities in different sectors so that they can act as a series of checks and balances.
Diversity is a great thing to embrace not just in trading but also in life. Part-time trading is a great way to diversify your career.
By maintaining a job while you try your hand at trading, you can use each endeavor to support the other. Your regular job likely offers consistent income, and that can offer security when you need to pay for stuff … like that mortgage thing and your bills.
This can take some of the urgency out of trading so you can approach trades in a calculated way, not out of motivation to get rich quick.
Since trading has no guarantees, it may be unwise to pursue it full-time, especially at the beginning of your career. You can’t count on the market, and you can’t count on winning trades. So, if have a secure backup, use it to your advantage.
2. Explore different trading styles.
Part-time trading can also give the freedom to experiment with different types of trading. You want to find the style that works best with your time availability, schedule, and lifestyle, then focus on trading strategy.
For example, some traders love the excitement of day trading and can devote lots of off-hours time to studying. They also make time during market hours to execute or use automatic order types.
Other traders might find that slower-paced swing trading better suits their hours. Others are drawn to forex trading and its 24/7 availability.
It rewards routine. Don’t buy into any pressure that you have to be a full-time trader to be legitimate. Here’s what you need to do: Commit to researching stocks on a regular basis. If you can set up a steady trading routine, you can potentially reach your trading goals even if you have limited time.
Consistency may be even more important than time when it comes to trading. If you devote a few hours a day to detailed stock research, you’re more likely to be ready when the right trade comes along.
This approach is better than jumping into trades you know nothing about just because you can.
3. You can walk away.
If there are no trades… you can close your laptop or shut down your computer and just walk away for a while.
If you work in an office with a boss breathing down your neck, you probably don’t have the luxury of walking away or taking a nap when things are slow or if you’re uninspired.
As a part-time trader, you can step away if it gets to be too much or you just need a break.
Let’s pause here for today.
Tomorrow we’ll touch on my five tips for you to be successful as a part time trader.
— Tim Sykes
Editor, Penny Stock Millionaires