- June 8, 2023
- Posted by: CoachShane
- Categories: Day Trading, Trading Article
To day trade with a full-time job, focus on finding the best trading hours that align with your schedule, such as before or after work or during lunch breaks. Using mobile apps and pending orders to manage trades can make it easier as a day trader. Consider using swing trading strategies since you can scan the charts after work and set your orders in the morning.
Times are tough and many people are looking to find ways to generate additional income. Day trading has become an increasingly popular choice for those that have a few hours during the day. However, balancing the demands of day trading with a full-time job can be a challenge.
|Identify the best trading hours that align with your schedule.|
|Consider using swing trading strategies for less time commitment.|
|Utilize mobile apps and pending orders to manage trades.|
|Prioritize well-being and maintain a healthy work-life balance.|
|Develop discipline, time management, and a solid trading plan.|
Understanding How Trading Works
How the Stock Market Works
Trading stocks is one way people make money as a part time trader. The stock market operates through exchanges, such as the New York Stock Exchange (NYSE) and the NASDAQ. It plays a vital role in the global economy, as it allows companies to raise capital through the issuance of new shares and provides liquidity to traders. Stock prices are influenced by many factors, including company performance, economic indicators, and market sentiment.
The Role of Brokers in Trading
Brokers are the “middleman” that facilitate trading between buyers and sellers in the stock market. They provide traders with access to trading platforms and execute trades on their behalf.
For this, brokers charge fees or commissions and these will vary depending on the type of trade and the brokerage firm you have chosen.
To trade stocks, you need to open an account with a brokerage firm, which will require you to provide personal information and meet certain financial requirements including minimum deposits.
The Importance of Market Analysis
There are two main types of market analysis: fundamental analysis and technical analysis.
Fundamental analysis focuses on looking at the financial health and future prospects of a company by examining its financial statements, industry trends, and economic factors. This type of analysis helps traders identify undervalued or overvalued stocks. Many traders use this as the basis for the their trading method.
Technical analysis looks at historical price movements, trading volume, and other data to identify patterns and trends. Technical traders use various tools such as chart patterns and technical indicators to analyze price data and make trading decisions.
Knowing the Market Hours
The Opening and Closing Times of the Market
Market hours are the times which stock exchanges are open for trading. In the United States, the NYSE and NASDAQ typically operate from 9:30 AM to 4:00 PM Eastern Time (ET), Monday through Friday, excluding market holidays.
There are other hours called extended-hours trading sessions, which can occur before the market opens (pre-market) and after it closes (post-market).
Importance of Timing in Day Trading
Timing is everything when it comes to day trading and not every minute of the day is a good time to trade. Identifying the best times to be involved in the market can improve your odds of success. Here are three important times of the day. Will your work schedule allow you to access the markets during these?
The Opening Hour
One of the best times to day trade is during the opening hour of the markets. This period usually experiences increased volatility, offering opportunities for quick profits as news and orders from overnight sessions are absorbed.
The midday period, between 12 PM and 2 PM, tends to be less volatile, as traders take a break and market activity slows down. This period can be good for traders who can only trade during lunch. The issue with this period is the drop of liquidity levels which may make it harder for you to enter and exit positions.
The closing hour of the market, usually between 3 PM and 4 PM, is another good time to day trade. This period often sees increased activity as traders attempt to close positions or capitalize on end-of-day market movements. Utilizing relative volume to identify high liquidity stocks during this time can lead to profitable trades.
How to Find the Best Trading Hours for Your Schedule
To day trade with a full-time job, you need to find the hours that align with your work schedule.
Some options include:
- Pre-market and post-market trading: These extended-hours sessions can provide trading opportunities before and after the regular market hours. Keep in mind that liquidity may be lower during these times, which can impact the fill prices of your trades.
- Lunch breaks: If you are able, consider using this time to monitor the market and execute trades. Ensure you are placing a stop loss in the market in case the trade goes against you.
- Trading around your work schedule: Identify periods during your workday when you can open the computer and execute trades. This may involve trading during breaks or before or after work depending on your schedule
The best case is that you have flexible hours that allows you to be at your charts during the better part of the trading day. Trading part-time requires discipline and time management but it can be done. Develop a routine that allows you to balance your trading activities with your full-time job.
Tips For Trading With A Full Time Job
The fact is that trading full time and day trading is tough for even the most experienced traders. Here are a few ideas that you may want to consider that can help keep you engaged with trading:
Swing Trading as an Alternative to Day Trading
Swing trading is a trading style that looks to profit from short-term price swings in the market. This approach is good for individuals with a full-time job, as it requires less time and attention compared to day trading.
Swing traders generally rely on technical analysis to identify entry and exit points along with stop orders that get them in and out of trades. By incorporating a this approach you can take advantage of market opportunities without the need for constant monitoring of the charts during the day.
Setting price alerts is a great idea as a swing trader. If an alert goes off during work hours, it take a few minutes to open your charts to see if there is a trading opportunity.
Using Mobile Apps to Trade On-The-Go
Mobile trading apps have changed the way traders can access the market. The ability to trade from virtually anywhere with an internet connection is a far cry from the trading pit days.
These apps offer a range of features, including real-time quotes, charting tools, and the ability to execute trades directly from your smartphone.
By utilizing mobile trading apps, you can keep an eye on the market and manage your trades during breaks, commutes, or any time you pick up your phone during the trading day. This flexibility allows you to stay connected to the market without impacting your full-time job.
Using Pending Orders
Pending orders, such as stop orders and limit orders, are an essential tool for part-time traders who cannot monitor the screen during the day. These orders allow you to set specific price levels at which you want to buy or sell a stock or other instrument. Automating your trade execution reduces the need for constant monitoring.
By using pending orders along with a profitable strategy, you can enter trades and have your take profit order executed by the time your work day ends.
Advantages of Trading the Higher Time Frame
Trading on higher time frames, such as the daily chart or weekly chart, is an effective approach for part-time traders. This focuses on capturing larger price movements over multiple days or weeks, reducing the need for constant market monitoring.
Trading on higher time frames also helps reduce the impact of market noise and short-term price fluctuations. This usually results in more stable and consistent trading results.
By incorporating higher time frame analysis into your trading routine, it is easy to balance your trading activities with your full-time job.
Why You Can’t Day Trade with a Full-Time Job
There has been many tips given for you to start trading while holding your other job but most traders will not be able to do it. Here are a few reasons why the majority who try, fail.
The Importance of Focus in Day Trading
Day trading requires a high level of focus, as traders must monitor the various market conditions continuously and make decisions based on real-time price movements. We’ve all seen the the sudden turns in price that can happen without warning.
|Balancing day trading with a full-time job can be challenging, as it is difficult to
maintain the necessary focus on both tasks simultaneously.
Also, the fast-paced nature of day trading can lead to increased stress and burnout, which can negatively impact both your trading performance and your job performance. Bad trading decisions are often made when day traders are feeling high levels of stress.
Research Demands of Day Trading
Depending on your strategy, successful day trading requires a significant amount of research and preparation, including pre-market analysis, scanning for potential trading opportunities, and developing trading plans.
This research can be time-consuming and may be difficult to fit into a busy schedule due to the priority of your other job.
The Difficulty of Trading During Work Hours
Many opportunities occur during regular work hours, which can make it difficult to participate in the market while maintaining a full-time job.
Trading during work hours can lead to conflicts with your employer and may impact your job performance. While being a full time trader is attractive, you don’t want to be forced into it as your only source of income. Full time jobs are the ones that pay the bills.
Benefits of Swing Trading Over Day Trading
Even though our topic is intra-day trading, for most people, longer term will be their path into the trading world.
|Swing Trading||Day Trading|
|Time commitment||Trading one clean swing in the market requires less time spent watching the charts, as positions usually last for several days to weeks.||Day traders must monitor the markets constantly throughout the day. This requires a significant time commitment and may not be compatible with a day job.|
|Stress levels||Swing traders are not required to make rapid trading decisions based on intraday price movements (my scanning takes place in the evening), stress levels are usually lower compared to day trading.||Day trading requires quick decision-making and understanding the price movements which can be stressful and emotionally taxing.|
|Trading costs||With fewer trades executed, swing traders have lower trading costs which can add up.||Day traders execute multiple trades per day, which can result in higher trading costs that will affect your overall gains.|
|Profit potential||Focusing on larger price swings instead of small blips (using comparable trading capital and risk) often results in larger profits compared to day trading.||Day traders focus on small price movements which may limit profit potential. However, day traders may make multiple trades per day, which add up to significant profits over time.|
Managing Your Trades with a Full-Time Job
Let’s assume you have decide that you are going to balance your day job and trading. You know it is going to be quite a challenge so consider the following:
Setting a Fixed Time for Research and Analysis
Establish a routine for conducting research and analysis outside of your work hours. This could involve dedicating time in the early morning or evening to review charts for your strategy and to learn of the market moving news for the day.
Sticking to a consistent schedule and routine can help you be well-prepared for trading opportunities when they arise during the trading day.
Monitoring Your Positions Effectively
Use tools such as mobile trading apps and alerts to monitor your positions while working. Set up notifications to inform you of significant price movements or when specific price levels are reached. This will allow you to take action on your trades without being glued to the screen.
The Impact of Transaction Costs on Your Trading Profits
Be aware of the transaction costs associated with trading, such as commissions, fees, and spreads. These costs can significantly impact your overall profitability, particularly if you engage in frequent trading. To minimize transaction costs, consider using a brokerage with low fees.
Short Trading Day
One technique you may want to use is being ready to trade the first two hours of market open. Using an opening range breakout strategy is one way to take advantage of this time frame.
The Psychological Impact
When it comes to trading, the psychological impact cannot be ignored. The pressure of making quick decisions, the fear of missing out on opportunities, and the stress of potential losses can take a massive toll on a trader’s mental health.
The Importance of Managing Stress
Trading, particularly when combined with a full-time job, can be a huge source of stress. High stress levels will negatively affect your trading performance, decision-making abilities, and your overall well-being.
To manage stress effectively:
- Establish a routine: Developing a consistent trading routine/trading plan will help create a sense of structure and control over your trading activities.
- Practice relaxation techniques: Use stress-reducing practices such as deep breathing, meditation, or yoga into your daily routine.
- Maintain a healthy lifestyle: Prioritize regular exercise, a balanced diet, a social life, and sufficient sleep to support your health and ability to handle stress.
- Set realistic expectations: Avoid setting overly ambitious trading goals that may lead to disappointment and increased stress.
Balancing Trading and Your Personal Life
Remember, we trade to live and not live to trade. Every waking hour should not be all making money. Maintaining a healthy work-life balance is essential for managing the psychological impact of trading with a full-time job.
To achieve a balanced lifestyle:
- Schedule downtime: Make time for relaxation, hobbies, and social activities to help recharge and maintain a sense of balance.
- Set boundaries: Establish clear boundaries between your trading activities and personal life. Setting specific times for trading and not allowing trading to interfere with family or leisure time is one of the most important things you can do.
- Prioritize self-care: Make time for self-care activities that promote physical and emotional well-being, such as exercise, spending time in nature, or engaging in some type of hobby.
- Seek support: Share your experiences with friends, family, or fellow traders who can offer understanding, encouragement, and advice. There is a reason we call it the Netpicks family. We understand how important it is for our traders to have someone they can reach out to.
Frequently Asked Question
Is it possible to engage in day trading while holding a full-time job?
It is possible to engage in day trading while holding a full-time job, but it requires discipline, planning, and time management skills to balance both responsibilities effectively. Day traders can utilize pre-market and after-hours trading sessions if that is the only time available to trade.
Can you swing trade while being employed full-time?
Swing trading can be done while employed full-time as it is a longer-term trading strategy that involves holding positions for days or weeks. It still requires research and analysis to identify potential trades and to monitor market conditions but much of that can be done after normal work hours.
What is the minimum capital required to become a full-time stock day trader?
The minimum capital required to become a full-time day trader varies depending on individual risk tolerance, trading strategy, lifestyle expenses and instruments traded. It is recommended to start with a minimum of $25,000 to meet the pattern day trading (PDT) rule requirements at the very least. Other instruments like crypto/FX/options are different.
Is it impossible to day trade while working a 9 to 5 job?
It is possible to day trade while working a 9 to 5 job by using pre-market and after-hours trading sessions. However, it can be challenging to manage both effectively, and traders should consider their own circumstances and tolerance to risk before pursuing day trading as a second income stream.
Is quitting a job advisable for pursuing day trading as a career?
Quitting a job to pursue day trading as a full-time career is a personal decision that depends on your financial situation, trading skills, and risk tolerance. It is recommended to have a well-defined trading plan, a proven track record of profitability, and a substantial amount of capital to sustain a consistent income stream.
On average, how many hours do day traders work per day?
On average, day traders work around 6-8 hours per day, depending on their trading strategy and market conditions. Some traders may work longer hours when you consider scanning for setups and using a watchlist.
Day trading can be a great income stream for those with a full-time job, but it requires discipline, time management, and a well-defined trading plan. You need to understand the basics of trading, identify the best trading hours for your schedule, and consider other trading approaches. Remember to maintain a healthy work-life balance to achieve sustainable success in trading.