This is possibly the best and most comprehensive trading philosophy and methodology article about how
to become a profitable trader from our friends at Tradeciety, they rock and have a really grounded attitude
and approach to trading that everyone starting out should read and follow to the letter. You will find
other posts from these guys under the Research section, check out their site here;
How To Become A Profitable Trader With A 9 To 5 Job
- 1. Find a trading style that fits you and your daily life
- 2. Don’t ride the learning curve
- 3. The most important day for a part time trader with a job is…
- 4. Active improvement as a trader
- 5. Get your priorities straight
- 6. Don’t focus on the when and the how much. Asking the wrong questions at the wrong time…
- 7. Spending vs. Income
- 8. The dangers of demo trading
- 9. 4 tips for growing a trading account
If you still have a 9 to 5 job, becoming a professional trader in your spare time can be quite a challenge. Pursuing the goal of quitting your day job and trading full time often seems like an unrealistic task for most people, but there are certain steps that can help you improve your trading while working 9-5 and finding time for hobbies and your family at the same time.
Here are our top 13 steps and tips that will help you improve your trading while still working in your regular 9 to 5 job:
1. Find a trading style that fits you and your daily life
It’s so important to have a trading style that fits your personality AND your schedule. The two broad categories and trading styles traders have to choose from are swing-trading vs. day-trading. Usually, swing-trading is better suited for traders who have limited time and restricted access to charts throughout the day. As a swing-trader, you do your chart analyses during the weekends and before/after work and you manage and execute your trades when you get back from work. Swing traders also don’t need to observe the markets all day long which can free up even more time. The downside, swing traders often have fewer trades and more patience is necessary.
However, if you are a Forex trader, you could easily fit in a few hours of real day-trading in the evenings since you’ll usually always find some active currency markets at any given time – but make sure that you can remain focused after an 8 hours working day. Or, depending on your time zone, even stock traders may be able to day trade a few hours in their evenings if an exchange is open at that time.
ForexFactory offers a great tool that helps you understand which markets are active during different times and it also shows how liquidity changes during the day so that you can find the best currency pairs based on your schedule:
Tip 1: Decide whether you want to be a swing trader or a day trader. Audit your weekly schedule and your personality to see which style suits you best. Then, choose the markets and instruments accordingly.
2. Don’t ride the learning curve
This is the cardinal sin of trading; “system-hopping” refers to traders who frequently change their trading method every few weeks or months. Those traders usually never see any real improvements in their trading and profitable trading is impossible if you don’t fully commit to making one thing work.
The truth is, “plug and play” is not how trading strategies work and no system will just generate profits right from the beginning. I urge you to stop system hopping and choose your one method that you fully commit to and focus on making it work. You’ll probably say “but what if it doesn’t work?” and that’s a normal reaction, but you have to push through this phase and become the expert at your chosen field and not hope to get lucky and stumble over a Holy Grail system.
Tip 2: For the next 12 months, pick one system and make a contract with yourself that you will not change your method again. No matter what.
3. The most important day for a part time trader with a job is…
Your Sunday should be your most important day of the week. I personally do 80% of all my trading work over the weekends and then do very little throughout the week. Every Sunday, I sit down and go through all the markets that I consider trading and perform a detailed chart analysis. I adjust and re-draw my support/resistance levels, I study my indicators, review the last trading week and cross-check with my previous Sunday analysis. I then create potential trade scenarios in the so-called “if-then” format where I come up with scenarios that would trigger trade entries based on my strategy and I place price alerts at the levels that I identified.
Then, throughout the week, I just wait for my price alerts to get triggered and I update my “if-then” scenarios based on what happens during the day. This approach takes up a few hours of time during the weekend, but it frees up so much time during the week and it is ideal if you have a day job. It helps you stay on top of things, while being totally organized and creating a professional routine for yourself.
Tip 3: Price alerts are the ultimate time-saver and the most overlooked trading tool. Use them after you have done your weekend analysis
4. Active improvement as a trader
We mentioned that you should avoid system-hopping at all costs, but the question that then naturally comes up is: “how do I turn my current (losing) trading method into a winning one?” Here are 2 tips and things you should focus on to improve as a trader:
#1 Identify your biggest problems and take responsibility
Traders often mistakenly believe that their lack of trading success is caused by their trading method which then usually leads to system-hopping. However, failure typically comes down to undisciplined trading, a lack of professionalism and a pure gambling mentality.
Thus, the first step for you should be to identify your greatest problems and your most commonly made mistakes. Audit your trading and take a good look at your past trades and find your 2-3 greatest mistakes that cost you the most money and work on them. You’ll see that those problems are usually always of personal nature and not a flaw in your method. Traders who always try to blame their system avoid taking responsibility and look for excuses instead of doing the work that is necessary.
Tip 4: Over the next weekend, review your past 30/40 trades and see what caused your losses. Then come up with a top 3 list with your most commonly made mistakes.
#2 Process-oriented thinking
This ties in with the previous point. Most people act from a goal-oriented mindset where they automatically connect winning trades with good trades and see losses as failures. Such a way of thinking shows an amateur mindset. The professionals, on the other hand, act from a process-oriented mindset where they look at how well they have executed their trades and how disciplined they perform. Thus, for a process-oriented trader, a loss does not necessarily equal a bad trade if they have done everything they could. Professionals accept the randomness of the results and understand that over the long-term, things will work out.
Tip 5: Avoid monetary goals and for the next 2 months, stop looking at your P/L. This will be tough but the impact will be huge.
5. Get your priorities straight
There is an interesting survey I came across and it shows how people structure their day. The average employed American spends 7:45 hours at work on a regular work day. At the same time, the average American watches 2 hours and 9 minutes TV each day and only invest 25 minutes per day in education. Also, the average sleep time is at 8 hours and 48 minutes which exceeds the recommended 8 hours per day by almost 1 hour.
When you are working towards becoming a full-time trader, you have to be clear about your priorities and make sure that your actions align with your goals. Are you willing to wake up one hour ahead of schedule every day, stop binge-watching random TV series, skip a night out with friends every now and then and re-invest that time back into your trading? Granted, those are tough calls to make and you might say that “you still need to live a little”, but putting in the work now to reap the benefits in a few years will take your life to new heights.
“The ability to discipline yourself to delay gratification in the short term in order to enjoy greater rewards in the long term, is the indispensable prerequisite for success.”
― Brian Tracy
6. Don’t focus on the when and the how much. Asking the wrong questions at the wrong time…
I often get the question of how much you can make and how big your trading account needs to be to live off your trading profits. When I then counter with the question how much those people are currently making as traders, it becomes obvious very fast that they are focusing on the wrong things at the right time and they are not even profitable yet.
Especially at the beginning of your trading journey you should not worry about how big your annual return can be and how much capital you need to save before making the transition to trading full-time. Focusing on those things will get you off track and keep you from making progress – it can also demotivate you when you see how much work is ahead of you. Instead, focus on your problems and struggles that you have RIGHT NOW. How can you stop losing money consistently, how can you stop repeating the same mistakes, what was the major cause for your past 30 losses, what does it take to become a break-even trader, how do you manage your risk and size your positions and so on…
Tip 7: Focus on the immediate task ahead and work on your current problems. Small improvements over time add up.
7. Spending vs. Income
This is another very overlooked aspect when it comes to full time trading. Most people only focus on making more money, whereas there are two sides to the equation of being able to live off your trading:
The regular view – focusing on making more money: Income > Spending = Enough
The opposite view – controlling your expenditures: Spending < Income = Enough!
I sometimes get critiqued for this point, but mainly because traders have a completely wrong perception of full time trading and they believe that all full time traders live on yachts, drive the latest sports cars and go Rolex shopping each weekend.
When I started out, I decided to move to a country with lower costs of living because this allowed me to significantly reduce the amount of money I “had to make” and it eliminated the need to trade. I understand this is not for everyone, but I feel it’s an important thing to keep in mind. You can read more about my story here.
Tip 8: Controlling expenditures can often help people make a transition sooner.
8. The dangers of demo trading
There is a place for demo trading, but most people stay on demo too long. What I have seen in my own trading and from the traders that I helped is that demo trading often lets people adopt negative behavioral patterns that are then very hard to unlearn. When your actions don’t have any real consequences, you are more likely to repeat mistakes and engage in bad trading behavior. This also holds true for trading with too small trading accounts and we wrote about those dangers earlier.
I typically suggest staying on demo for the first 6 – 12 months until you have a good understanding of the nuts and bolts and then take your trading to the next level. Be prepared, you’ll very likely lose your first few live trading accounts and it’s important to make sure that (1) you trade with money you can afford to lose, (2) your trading account is not too small at the same time, (3) you HAVE TO learn the right lesson to make the losses worth it and (4) become self-aware of your problems and shortcomings.
Tip 9: The pecking order is:
Demo > small live account > decent live account > an account where your winners are impactful||
And make sure that you learn your lessons from the first trading account(s) you lose!
9. 4 tips for growing a trading account
If you are like most traders (and that’s also how I started), you probably don’t have the capital to start with a trading account that allows you to generate a decent income right away and that’s totally fine. But you have to make sure that you follow the right path. Here are our top 4 tips that will help you grow your account and enjoy the process:
#1 Patience and expectations
Let’s start with the most important point. Having unrealistic expectations very quickly lead to frustration when those expectations aren’t met. Always keep in mind that what you are doing is creating a new life and a new career for you. You have to get away from the get rich quick mentality and accept that this is a long-term play. Don’t expect to quit your job in a 1 or 2 year, but acknowledge that trading is just a different career path which requires time and effort.
Tip 10: Adopt realistic expectations and avoid monetary goals.
#2 Recognize your true edge as a part time trader
This is often your greatest advantage over full-time traders and it’s also the reason why I also engage in other business activities besides trading. When trading is not your only source of income, you can eliminate a lot of the pressure that often causes traders to make mistakes. Also, when you are not glued to your screen all day long, you are less likely to make bad trading decisions just because you are bored or haven’t taken a trade in a while.
I have talked to many traders who enjoy their day job and pursue their trading as a side business where they find an additional challenge to their regular routine, while earning some complimentary income. Maybe you don’t even have to become a full-time trader and just trade a few hours every day?
Tip 11: Understand your motives and become self-aware about how you perform best while achieving your life goals.
#3 Honesty with yourself
The cold, harsh truth is that, in the end, no one cares if you make it as a trader. That’s why it so important to be honest with yourself and with your current situation. Analyze your approach to trading realistically, your level of professionalism and whether you are serious enough about it, or whether you are just trying to get lucky and find a Holy Grail system.
The failure rate in trading is somewhere around 99%, but it’s not necessarily that high because trading is so damn hard, but because most don’t give it their full attention and just see it as a quick way out. However, many people have done it and realized their goal of becoming full-time traders and if one can do it, there is no reason why you can’t do it too.
Tip 12: Are you serious enough about trading? Be honest with yourself and evaluate your current approach to trading.