Financial trading, either on the stock market, in currency exchange or in cryptocurrencies like bitcoin, can seem like an easy way to make a profit. After all, thousands of people all around the world do so and, from the outside, it can seem like there are big rewards to be made for very little effort. But although this is true to some extent, it’s important to know what you’re doing. As with anything else, to make money from financial trading, you have to work hard and put the effort in.
Financial trading is not a get-rich-quick scheme. The first thing you should be aware of is that it’s far easier to lose money on the markets than it is to turn a profit. Self-discipline, solid research and a structured approach will hugely increase your chances of making money rather than losing it. Always remember though that the value of your assets can go down as well as up and that a level of risk is inevitable.
That said, there are many advantages to part-time trading. It’s entirely possible to make decent profits working just two to three hours a day, or only trading in the evenings or at weekends. This allows you to fit it in around a full-time regular job, or other chores like childcare and housekeeping. All you need to get started is a decent computer with a high-speed internet connection. You can even trade profitably on your phone.
Types of trading
The first thing you should think about is what style of trading best suits your lifestyle and personality. The most common form of trading for part-time traders who want to see regular profits is day trading. This involves buying and then selling assets over the course of a single day, hopefully at a profit. Although it only really requires a couple of hours of trading each day, at the opening and closing of your chosen market, it is actually the most labour-intensive form of trading, especially if you factor in the research and analysis you’ll be doing as well.
An alternative is automated trading, where you essentially let trading robots and algorithms do the work for you. Get started using the apps listed here. You’ll still need to set the parameters that you want to trade in, but this is a great way to start making money without having to personally monitor the markets and make snap decisions yourself. You can also go for a combination of manual and automated trading. Because these days successful trading has to be done so quickly, all trades will be automated to some extent.
Another option worth looking at here is long-term trading, where you hold on to your assets for long periods of time. This is only really doable as an investment in your future, or as a way to pass on money to your children. It is usually safer and more profitable than day trading, but it’s no good if you want a regular income from your trading time.
Not everyone is prepared to wait, but if you are, put together a balanced portfolio made up of different asset classes from different countries and business sectors, and re-balance from time to time as the markets shift. Again, this is a lot less labour-intensive than day trading, but you also have to wait a lot longer to see a return.
Part-time, not casual
Part-time trading is very different to casual trading. Part-time traders treat their trading as a business, even if they’re only working at it a few hours per week. They keep regular hours and stay focused. Casual traders treat it as a hobby and have more of a gamblers’ mentality. They trade haphazardly when they feel like it and, as such, never develop an effective strategy or learn from their mistakes. Part-time traders make money because they get good at it. Casual traders only make money when they’re lucky (and usually lose it again a few days later).
Treat it as a business
The most important piece of advice is to take your trading seriously and to treat it as a business. Choose the hours that work best for you and stick to them. Have a business plan that includes a budget of how much you can afford to invest in trading each week. Rigorously analyse your results and refine your technique. Set price alerts, and be prepared to sit tight until the price is right.
Whatever style of trading you go for, stick with it and focus on the process rather than the results. Learn from your mistakes and get to understand the markets. Once you know what you’re doing, you can make as much profit through part-time trading as you can through doing it as a full-time job.