Part-time forex trading could turn out to be a lucrative way to generate passive income. Since the forex market operates round the clock, you will be able to find a sufficient number of hours in a day to trade even if you have a full-time or part-time job. In this article, we will take you through some helpful tips to help you get started. uae forex trading
Key to a successful Forex trading career
To be successful in the forex market, one has to be well-versed with the currency pairs they’re trading. The key is to not pick the strategies that need to be monitored all the time. You might want to work with an automated trading platform to be able to achieve this. New traders who are just getting started in the market would find this particularly useful.
You can sharpen your forex trading skills with the help of the following:
Finding the correct currency pairs to trade
Despite the fact that you can trade forex at any time of the day as the market is functional for 24 hours a day, it is better to trade in the hours when the trade volume is at its peak. Liquidity refers to the trader’s capacity to sell their position. It is easier to do so when the market has more activity. So if you have a nine-to-five job, it is likely that you may be able to trade either in the evening or in the early hours of the day. On the basis of the currency pairs you’re working with, the volume could be higher when the timeframes to conduct trades are about to conclude.
For small traders who have mini accounts and amateur players who may not have the required experience, trading U.S. currency against different foreign currencies is best. The massive majority of dollar volume that gets traded on forex markets are more common in the currency pairs mentioned below.
- USD/EUR
- USD/JPY
- USD/GBP
- USD/CHF
- USD/CAD
- USD/AUD
For part-time traders who have the experience and time to assess market conditions and circumstances that could affect currency prices, these pairs could also provide high liquidity:
- EUR/GPB
- EUR/JPY
- EUR/CHF
Most forex experts would suggest sticking to the USD/EUR pair if you are a part-time trader with a small trading window. It is the most highly traded pair and you would also find plenty of information about the two currencies all over the internet.
Conversely, experts discourage part-timers from trading two foreign pairs that may require more sophisticated knowledge and lack the same level of information as the USD/EUR pair.
- Automate your trading
There are a number of automated trading programs that come with an entire spectrum of market functions. There are certain programs that would be able to keep track of currency prices in real-time, carry out market orders (put a limit, market-if-touched, or stop orders), identify profitable spreads, and order the trade by default. Do remember that when a trade is ordered, nothing can guarantee that it would be fulfilled at the expected price in a volatile market.
Using a “set and forget” program could be a great way to enter the forex market as a part-time trader. This would let the software make automated decisions on your behalf.
- Make discipline a part of your routine
Discipline and focus are important for those traders who do not like to automate their trades. Part-time traders would be at an advantage if they take profit as and when they are able to rather than waiting for wider spreads and bigger profits. To be able to do this, one needs to be disciplined and calm in these fast-paced markets where the favorable spreads could keep getting wider. Taking profits as and when they come is a trait of successful traders who know that the market can change its course in no time.
- Start small
Part-time traders with negligible experience should start with smaller amounts. A great idea will be to open a mini forex account, where a smaller-than-standard cash deposit is needed to gain control of 10,000 currency units. Minimum cash deposits for a mini account could be as low as $2,000 and as high as $10,000.
Given that traders can avail the leverage offered, the impact of this could result in higher chances for both profit and loss. With leverage, traders can purchase currency lots on margin, by actually investing only a small amount of their own capital. For instance, only $1,000 is needed to be able to trade a currency lot worth $100,000 with a 1% margin.
- Take fewer positions and hold for days
It is important to know what are the key factors that steer your currency pairs. Take some time out to thoroughly understand the market you will be working in. Once you’ve done this and have identified the currency pairs you want to work with, it is best to select some positions and stick to them. Look at the bigger picture and see what will work better for you in the long term. You should also be wise and have a stop-loss in place so you know how much you will lose should the market go against you.
- Make use of technology
As you may already be aware that there are plenty of trading tools and apps that one can access today. For instance, using the MT4 or MT5 mobile trading app you can trade or keep track of your market positions in real-time. Similarly you may even find some online trading journals that could be linked to your bank account. Also, remember the wide variety of tools that are available for fundamental analysis like news apps. What is important here is finding balance. If you feel overwhelmed by market news and information, it could lead to emotion-driven impulsive decisions. As a part-time trader, time is of essence for you and you would not be able to monitor your trades all the time. Thus, it is important that you strike a balance with your trades. trading app
