The forex market is the world’s most liquid market, with multiple trillion dollars changing hands every day. Traders do not have to worry about liquidity when it comes to trading any of the big economy currencies which include the US Dollar, the Great Britain pound and others. This is especially true for cases where these currencies are pegged with the US dollar, as it accounts for at least 80% of foreign exchange transactions. The market, which was the exclusive playground of the big players, namely banks, institutional investors and hedge funds have rapidly transformed to allow newer players and individual traders to join in. With the availability of online trading platforms, forex trading has become as simple as a few mouse clicks. All you need is an internet connection which is stable.
However, this wide availability of sophisticated technology also has its drawbacks if the trader doesn’t know what he or she is doing. For example, traders can lose a fortune because of one wrong trading decision, either due to overconfidence, greed, fear or even plain ignorance. The worst affected are usually novice or part-time traders who take ill-informed decisions without understanding the dynamics of the market. Luckily, there are some forex trading guides that can easily change the fortunes of many and help them achieve a profit.
Strategy #1: Gather information about Forex market timings
The global forex market operates non-stop for five and a half days a week. Every day it moves along with the sun as it begins in Sydney, to Tokyo, Singapore, through the Asian afternoon when London and other European centers open. The heaviest trading volume of the day is usually seen during the European open. This is different from the stock market where one has to access an electronic communication network for pre-market trading. Forex traders who are part-timers should thus be aware of the timings of each market, as they do not have the full day to invest into forex trading. Some of the important timings that need to be remembered include:
- New York: 8:00 am to 5:00 pm EST
- Sydney: 5:00 pm to 2:00 EST
- Tokyo: 7:00 pm to 4:00 am EST
- London: 3:00 am to 12:00 noon EST
Strategy #2: Take fewer positions
Every trader must understand what drives currency pairs. This should be the primary focus when studying the market and shortlisting certain currency pairs. Part-time traders can select certain positions and hold them for a long period. They can also employ stop-loss orders with all their trades to tackle losses which are common when the market moves against them.
Strategy #3 Using stop-loss orders
Forex trading is all about consistency which stop-orders achieve. They can help part-time traders pick a price at which it will make sense for them to buy or sell regardless of their emotional state when the target price is reached. When it comes to part-time traders, this translates as letting the computer or software be their trading partner, which protects their funds against any sudden move in the market.
Strategy #4: Using Price Action
Certain trading periods occur frequently, allowing traders to implement a price action trading strategy. This is especially true for traders who do this part-time and infrequently trade, sometimes spending no more than ten minutes at a time.
Strategy #5: Maintain a Forex trading journal
It may seem like a daunting and tedious task to maintain a trading journal, but it can aid in achieving a part-time trader’s goals. You should input everything from the most profitable trades you’ve done to any mistakes you’ve made that has cost you dearly. This record of the past will help you to further draw conclusions, review strategies and outcomes.
The forex market is a land of opportunity for some but can be dangerous if you have half-knowledge or expertise. This is a part where most part-time traders get wrong. As a result, there has been a popular misconception spread among traders that no one can be successful as a part-timer. However, following some of the above rules and strategies can help part-timers achieve a better success rate. There are many platforms which provide quality forex services for both part-timers as well as full-timers.