Forex Trading For A Living – Part Time
Last Updated on 4th July 2017: A few weeks back I did an article on forex trading full time. The response was generally positive so instead of creating a technical forex based article I thought I’d talk about how you can make a living through only part time trading (initially). Before we get started I do not advocate quitting your job as soon as you see your first few profitable trades! You should only “quit your day job” when you are in the position where your system earns you the same amount per month as your job does (more on the stages later). One of the mistakes I made was quitting too early. This puts a ton of pressure on trades and also makes you make more trades than you should! Remember keep your system simple and it will likely stay profitable!
You should be able to remember your strategy off the top of your head. If X happens and Y follows then I will trade when the market reaches point Z. This is the most profitable and easiest strategy as you don’t need to have emotional emphasis on the market. Be disciplined and keep track of the market movements and you can profit.
Table of Contents
Before even making your first trade you should know all the basics. I advocate learning through doing, that includes signing up with a broker, making a few test trades to learn the platform and then depositing a small amount into the account. Once you’ve done this the next step is creating a system or strategy you can develop, follow and refine to give you profitable trades as often as possible. But I’ve yet to meet anyone who has made an 75% successful trade ratio. Yet I know a handful of people who earn over 7 figures a year in profit directly from the fx markets. The reason? They have a strategy they know works and they stick to it!
But building a strategy is something you have to do on your own. In this article I’m going to outline some of the steps you need to take to generate a full time living through trading part time.
A quick note on “full time living/income” in 2012 I made ?21,000 income approximately (about $33,000 at the time.) Which in the forex monster markets is considered very low. Anything under 6 figures is considered low! But I’m going to explain why that was actually a huge sum of money at the time, and not just because I was pretty young.
1.) I had the lifestyle I wanted
I was very young at the time and didn’t want to read or learn 10 hours a day. So I didn’t and committed to expanding my knowledge for 2 hours per day. I then committed to trading (or watching the pairs) for 3 hours per day, mainly focusing on the Pound & dollar markets. The result was a nice profit but nothing major. But this meant I only “worked” about 5 hours a day. But I had something that I’d always wanted, and that was the freedom associated with being a trader. I owned a couple of small businesses on the side that helped pay for the start-up capital, but those were very time intensive and I sold them off to make the initial capital required for trading. Instead I could now I could work 5 hours a day and be with my family, girlfriend or go travelling whenever I wanted. I had the lifestyle I wanted and that is what I appreciated the most above any additional income I could create.
2.) I lived where I wanted
The second element why ?21k seems more like ?100k was that I was living in Eastern Europe at the time. It was so incredibly cheap for just under ?2k a month I could have anything I wanted. I went out for drinks and dinner most nights and had a nice apartment. I didn’t need a car at the time and I lived seriously well as the cost of living was so low!
Essentially what I’m saying here is you have to have the aims you personally desire. Why do we quit our steady salaried day jobs? Is it because they are boring and don’t pay us enough?… Yes but that’s not the major reason if you ask me. Instead I think its because we want the lifestyle we’ve dreamed about. If my income were to ever take a huge hit, I could go back to living on ?25,000 a year, on a beach, with my dog and my family and we’d be happy. Where you live has a big impact on how far money goes. As forex traders we already know this, but I don’t think you realise it so much until you go travelling.
The place I lived for a few months back in 2012 looked like the below images (note this is an image from airbnb) but it cost me ?500 / month to live there at the time, including all bills and utilities!
What I’m trying to say is you might want to make 6 figures in your first year of trading, but instead you should be thinking about what you can do with the freedom of earning 25,000…. Travel, work when you want, in my opinion that’s more valuable than 100,000 a year from year 1. If you want this lifestyle you HAVE to start here.
3 Steps to become a part time trader & Still Quit your Job in 12 months
Stage 1: Learn & Fund – Month 1-6
Before you even make your first trade, as mentioned above, you should learn everything about the markets. You can realistically do this in about 100-200 hours if you already have the basic knowledge. If not then you are probably looking at closer to 500 hours, but that’s not that long in relation to a year!
The second part of stage 1 is funding. To make money in the forex markets you have to have some sort of capital to invest. I’d recommend putting together ?20,000 by the end of month 6. I know this will be difficult for some people that have lower paying day jobs, but I recommend a higher figure for 2 reasons. The first is it is a lot easier to make “decent” money without having to have crazy leverage ratios. With 20k you can have a leverage of 5:1 giving you ?100,000 to trade with. And reason 2 is you will be more committed to the cause if you have a good chunk of money on the line. You will never be trading more than 1% in any one trade, but if you only get together a few k then in the big of your head you have the “if this fails it doesn’t really matter” thought process.
Stage 2: Implementation & System Refining – Month 6-9
This stage is all about implementing what you have learnt. Chances are you will be a bit slow at first and need to tweak your systems to make them exactly what you need. In this stage you also want to continue learning and finding experts to follow. Tweak the strategy with the guidance of others, but always keep your underlying system in place. Refine the system so you know it off by heart, you know what to look for in a markets. If X happens then Y should happen and if Y happens I will short for XX amount of movement and so on. This should all be second nature by month 9. Forex trading is not fun! Making money is fun!
Stage 3: Weekly Goals, Scaling and Quitting the day job – Month 9-12
I always say if you work extremely hard for an entire year you can make money in forex. The issue is people don’t understand that means literally working everyday for a year . Work hard in your day job to give you enough money to invest in capital. Go home and learn, read and absorb all the information in your evenings instead of watching TV. Then implement these and put your hard earned cash on the line. All of which is just extremely time consuming and well, hard to do! But stage 3 is when you begin to see the results.
You want to also set weekly earning goals. For example I wanted to make ?100 profit per week as my first goal. Sometimes I made this in a day, and if so I would usually make fewer trades through the week. This is not the ideal situation, as you should view every new trade opportunity independently of the last, but it’s human nature.
Scaling, once you’ve hit your weekly goal 3 times in a row (some people say 5, others 10 which I think is crazy) you should increase the goal. So in my case this might be ?120 a week. Do this continuous and don’t worry if you have negative days, weeks or even months! Although this might take a long time you are slowly building your earnings (you should NOT be withdrawing any of this capital, it should all stay in the amount making it easier to scale!)
Now to probably the most important point in the whole article.
You should quit your day job when you make the same amount of money per month as you did in your salaried position! Why? Because your income won’t take a hit! Meaning your lifestyle won’t change (although it does.)
Continue to trade as frequently as you did before but also look into new opportunities with a similar system. If you only traded 4 hours a day previously because of your job, now you can trade 8 hours a day and make twice as much! (Obviously not that simple, but possible)
Hope you enjoyed the post and let me know what you think.
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Can You Really Make A Living Trading Forex?
Aspiring traders often ask me whether or not it’s really possible to make a living trading the Forex market. The short answer is yes. The longer answer is, yes you can make a living trading the Forex market but you have to consistently do a lot of things right. Most traders simply do not yet possess the necessary trading skill, discipline, patience, or realistic attitude to succeed long-term in the markets.
However, this does not mean that it is impossible. You simply have to learn what you need to do to become a consistently profitable trader, and then do it. Easier said than done, I know. But, I am living proof that you can make a living trading the Forex market, and I personally know other people who make consistent money in the markets. So, it can be done. My story has ultimately led me down the path of helping other traders, so let me give you some valuable insight into what it takes to be able to trade Forex for a living…
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How much money do you need to make a living as a Forex trader?
The first thing you need if you want to make a living trading the Forex market is enough starting capital; if you are under-funded you will have to accept that you will not be making a living from trading Forex any time soon. The exact amount of disposable money that you will need in order trade full-time will be different for everyone. But, generally speaking, if you plan on effectively managing your risk on every trade, you will need a decent amount of money at your disposal in order to trade a large enough position size to make enough money to support yourself while at the same not risking too much of your account on any one trade.
Part Time trading for extra income is more easy to achieve in the early stages of you trading career. You can obviously still trade and make consistent money each month even if you don’t have enough money to allow you to trade for a living just yet. However, instead of putting pressure on yourself to make a lot of money really fast, focus on building a consistently profitable track record and self confidence and the money will follow. Even if you have a lot of money to trade with, if you do not focus on the mechanics of successful Forex trading, you will lose regardless. When I started trading, I started small, and when I became good, I approached people for money to trade, I built up my own capital and then went out on my own. People need to focus on becoming good traders and not focus on how much money they are trading, because let me tell you, if you are good, people will throw money at you to trade for them, and you will be fine in the long run (there are funds and private investors looking for good traders to trade for them, but you need to be good). My most sincere advice in the early stages of your trading pursuits is to aim to be a part time trader and a good one ! Big things will follow for you in the future if you can get this first part right.
So, yes, you do need a relatively large amount of money in order to trade full-time and be a player, but you still must be able to be a consistently profitable trader regardless. If you cannot make consistent profits on a small or medium size trading account you will not make them on a large account either, in the end it’s just Zeros .. $1, $100, $1000 per pip means nothing, it’s all the same.
Learn to trade the daily charts:
I trade mainly off the daily charts, and I teach my students to do the same. If you want to have a realistic chance at making a living as a Forex trader, you need to master trading the daily charts before all else. This is one of the most important pieces of the puzzle of being able to trade for a living.
The daily chart gives us the best combination of accuracy and frequency of price action trading setups. Meaning, you will get a much clearer, accurate, and more relevant view of a market’s price action on the daily chart than you will on any time frame below it. The weekly and monthly charts also provide a good clear view of a market’s overall movement, but they do not provide enough trade setups to be practical enough for the short to mid-term retail Forex trader. The daily chart gives us enough trade-worthy setups each month to be able to make consistent money, while at the same time filtering out a lot of the “random” and less reliable trade signals of the lower time frames. So, the daily chart should be your primary or “core” price action trading chart.
Trading full-time is not about over-analyzing and over-trading, it’s about being a “sniper”; making sure everything is as “perfect” as it can be before risking your money. Combining this high-reward / low-risk “sniper” mentality with a high-probability trading strategy like price action, is your edge in the market, and you must learn to trade the price action setups that I teach on the daily chart first. Focusing your efforts on trading higher time frames will give you a much better perspective on the markets and will greatly reduce the amount of trading mistakes you make.
Trading Forex for a living is the result of doing a lot of things right…
Trading the Forex market for a living does not only depend on being sufficiently funded and trading the daily charts. These two components are important, but there are a lot of other things you have to do too. Including the following:
• Learn and master a truly effective Forex trading strategy like price action.
• After learning and mastering an effective trading strategy, design a tangible and “working” Forex trading plan around it. Refer to this trading plan every day and tweak or update it as you learn and grow as a trader.
• Record your trades in a Forex trading journal and start creating a track record. This is important for keeping you accountable and helping you maintain discipline.
• Identify a logical and tolerable risk amount for every trade you take, do not ever risk more than you are comfortable with losing on any one trade. Practice proper Forex money management.
• Do not over-trade. Doing everything else discussed in this article will help you to not over-trade. But you really have to be consciously aware of this huge trading mistake. Most Forex traders trade too much and in my opinion this is the number one reason most of them fail to make a living in the market.
If you are properly funded, have mastered the daily charts, are consistently and perfectly executing your edge, are following your trading plan, are recording your trades, and not over-trading or over-leveraging, you have a very good shot at eventually making a living from the market. The trick is that you must do ALL these things right. You can’t just do one, you have to be on top of your game all the time to make a living as a trader; it’s not easy or get rich quick.
Learning to trade from a successful trader can help you achieve your goals faster…
Just like any other profession or skill in life is easier to learn from a mentor, learning to trade Forex from a skilled trading mentor is arguable the most efficient and effective way to achieve your trading goals. ( No this is not some marketing pitch lol, I am serious, you need to educate yourself and be around others with the same goals, that is the entire reasons I started my trading community in the first place, ie; to share ideas, to be around other traders who have similar goals and to continue my own learning journey).
For almost 4 years, I have shared all my technical price action trading strategies with the public in my trading course and members’ community. I provide aspiring traders with the necessary pieces of the puzzle, but it is up to them to put them all together, I cannot do this for you. There are many “human” elements to trading that will require much effort on your part to master. If you can master the technical aspects that I teach along with the human elements, trading for a living is a realistically achievable goal for you.