The following article was written by Jasper Lawler, Senior Market Analyst at FCA regulated broker LCG. The post is based on a recent video webinar run by Jasper, which you can also watch in its entirety below.
How to trade while working full time
Jasper Lawler
This is something most people have to deal with; it is not often that trading is 100% of a person’s income. It may be 50/50, it may be much less, it may be most of your income but maybe some income comes from other streams. Even if you are trading full time, you still have other commitments such as family, friends, social life and other investments perhaps that need managing as well.
Day trading requires a lot of time and dedication but there are ways to fit trading around a full time job, family and friends. Trading a 24-hour market like forex or even shares can absolutely be done with a 9 to 5 job.
We are breaking it down this way:
- How often to trade is really important for a starting point, deciding the time of day.
- When you can trade.
- Choosing the markets that will be appropriate for that time of day or most beneficial to trade at that time of day.
- An overview of the daily process that both a day trader and a position trader might want to go through.
- Tools for helping organizing yourself to manage trading alongside the other activities via the LCG Trader platform.
How often to trade really breaks down to two pretty simple options, admittedly there are halfway measures between these two but this is pretty much the ultimate choice about how you are going to go about your trading.
HOW OFTEN TO TRADE
Option 1
You work 9 to 5 or full time and if you are going to day trade. That means active trading where you are buying and selling multiple times within the same day and you are closing all the trades at the end of the day. You really need to be trading in the morning before work or in the evening after work. Now that is going to vary according to everyone’s schedule. If you get into the office (or whatever your job is) at seven AM, then you already have a very early start so maybe the morning is not such a great option. However, if you finish a little bit earlier, that gives you a bit more of an evening, maybe that will be the time to explore day trading.
Now the option of trading during breaks from work depends on the kind of work you do. Some people actually have a guaranteed prolonged stretch of inactivity pretty much at the same time every day. Chefs would be one example- you go very mad during lunch and dinner but between then you have a defined break. That would be a good time to do some trading. For most people, particularly people working office jobs, trading during breaks from work is very hard to pull off consistently. The advantage of this day trading approach is that you set yourself (and that could be one hour but I would say ideally two or three hours) at the same time every day that is dedicated towards trading. That is your allotted slot for trading and that consistency of the time of day in which you trade is hugely beneficial in itself.
As tempting as it can be especially with the likes of mobile trading platforms, to be in and out of trades all day in between meetings and things it’s not a consistent approach to a trading. So how can you expect consistent profitability, consistent results if your approach is not consistent? So just allotting a particular time during the day really helps no ends. The disadvantage for this is obviously you are only there for two hours during the day, everything that happens in the other twenty-two hours of the day you are going to miss. That said you do not need to capture all the opportunities in the market to be very successful in trading.
Option 2
Option number two which is something I tend to employ and a lot of my market analysis webinars are geared towards is position trading or some people refer to it as set and forget. The two are not completely the same thing but often intertwined. This is just holding trades open for multiple days. This means you’re not opening and closing several trades in a day, you could open two or three trades within one day but you’re not looking to close them in that one day period. Some of them may run for a day or two, some of them may run for a couple of weeks depending on how the market pans out and on your profit taking strategy. This strategy involves using end of day data and so if you are familiar with a candlestick chart you are looking at daily candlestick chart and that only updates once a day obviously. So you don’t need to see what’s happened within the span of that candle stick, your decision making is purely based on that where the market closed, where the market closed the previous few days and obviously whatever market news is going as well.
Now a huge advantage of this is less time commitment required which obviously the whole idea behind this discussion. You are not trading as frequently, so you do not need to dig into those short-term trading opportunities. They are all of insignificant to you because you are just looking at the longer time picture. Another advantage is that you can actually look at more markets this way; if you are trading very short term normally, it only makes sense to trade one or two markets because you literally cannot spread your attention that thin. If you are looking at longer-term price moves, you can actually look across a few different industries, commodities, forex pairs, individual stocks without going crazy because again you are only looking at one extra candle per day.
The disadvantage is there is lots of economic news that comes out during the day, corporate announcements etc. that do provide big trading opportunities and you’re going to miss all of those. I say you are going to miss them, but if you’re trading from a longer term perspective, the profits that you can make from longer term trading obviously capture the general move of what’s happened within the day, just not all the gyrations within it.
TIME OF DAY TO TRADE
The main point here is that so far it was deciding what kind of technique you want to do either day trading or position trading. Now we have moved to deciding the time of day, so again back to whatever your job is and whatever makes sense for you, this could be different for everyone but the point is whatever time slot you think you have available, you can adapt the market you trade to that. So do not feel for example, if you have to be at work seven in the morning and you have to wake up very early anyway, do not feel you have to trade in the morning, you do not – because we do have 24-hour markets to trade with LCG. You can adapt the period to which you are trading.
Therefore, if you are a day trader trading full time and you are in London, you could just work this 8 to 4 period when it is most active time for trading in London. In the morning you can focus on perhaps some of the British Pound and European currencies and also some of these Asian currencies like the Japanese Yen or Asian stock markets like the Nikkei in Japan for example or benchmarks in Australia or China. Equally, if you are trading and if you are working during the day and then you are looking to trade in the evening, well US stock markets are still open in the evening if you are in London. Therefore, after work you could be day trading US stocks and it would be right in the active period of the day for New York. If you work nights obviously you have that whole London period to work for, if you are somehow available right in the middle of the night you know you could be trading Australian markets as they open at 10, 11, 12 at night in London. All this been geared towards London hours GMT but obviously you can just adjust this whole thinking process to wherever in the world you are based and then adjust the market. The main point being to trade the markets that are active for when you are trading, particularly if using a day trading approach. The logic being there is more movement if the market is active and spreads are tighter, so the cost of your trading is going to be lower if you are trading when these markets are active.
CHOOSING THE MARKETS TO TRADE
This is a bit of an arbitrary choice to be honest because this choice may change over time but most people have a bit of a preference and I would actually just fit them into two different categories. The way you go about these two kinds of markets require quite different approaches.
- Forex, indices and commodities (what LCG heavily specializes in).
- Stock markets (LCG offers a lot of shares CFDs from stocks from around the world).
When it comes to forex, indices and commodities- the way I would recommend going about things is that you just choose your favorite markets and you stick with them. So some guidelines to that, if you are a day trader and so again it is just hose couple of hours in the morning or the evening you only really need one or two markets. Any more than that is going to be difficult for you to follow. You could stretch it to three depending on again how frequently you are trading and your personal judgment as to how far your attention can be spread across the markets. For position traders, where you could be holding a trade open for multiple days or even weeks, you can chose obviously even up to ten markets and that can be spread across forex indices and commodities and bond markets and options and other things. Again, because you are only checking that daily price candle ten of them could be fine. If you are looking at something like 20, it is just hard for your mind to spread that far and you may end up just missing opportunities, even when you are checking a daily chart.
Keep in mind you’ve got to keep journals on everything you’re doing, keep records of all the markets your covering, when it gets up more than ten it’s very difficult to keep track. It is worth noting that a lot of the big hedge fund guys or big fund managers tend to have around ten stocks in their portfolio, so they are diversified but they have some big bets on.
For the stock market, it is normally slightly different because generally the approach is not the same as a 24-hour market. Typically, it is not just trading in and out of the same market, which sometime is trending, sometimes it is ranging, and you tend to look for shares that are going to do well. Often you will use a scanner so you can scan for shares that are breaking to a new fifty-day high or two hundred day high or scan the stocks that are trading above their fifty-day moving average or scan for stocks that are releasing earnings in the next 24 hours that kind of thing. You can just research a few companies you like, or if there is a certain story or a news event and you do a bit of research and you decide if it is a company you like and you add it to your list and then look for when you’re going to buy in.
Generally, for stock market traders, a day trader would make his daily watch list and set price alerts and position traders or stock pickers, you could call them, would more accept orders and monitor the market. At the end of the day, if you are a position trader, maybe at eight or nine o’clock at night you’re not actually trading because often times the market may not even open then but you set an order for when the market is open and if the price gets to that level then you’re into the market. During the day when you’re already at work doing something else, you’re oblivious of the trade, but you know you’ve set that order to take place and then every evening you come and monitor what’s happening with your trades.
Without digging right into the details of actually how you can write a trading journal or digging into the details of a price trading strategy but this is just a good, simple division of what you’re doing when you are day trading.
THE DAY TRADING DAILY PROCESS
Say you have decided that you are going to trade for two hours in the evening. Step number one check the news, what has been happening during the day, is there anything worth noting, some big change in interest rates or has there been some political shift etc. In essence, is there anything worth bearing in mind that may affect your trading and affect the markets you trade? And then typically for a day trader, you look at a one hour chart for judging the general market you’re in and to determine the longer term trend then you’d use a five-minute chart, sometimes fifteen-minute chart, perhaps sometimes even a one-minute chart for short term trading signals. You are just analyzing all the charts from your watch list. There might be a few different charts if you are trading stocks, only one two or three if you are just trading the forex market or some kind of futures like indices or commodities. Then you are simply placing trades. Most of your time in front of the computer is spent watching the charts, waiting for the trade set ups to materialize. Then you are placing market orders when you see your set up and then at the end of two hours you close any remaining trade still open, close down the trading platform. Maybe first you would export the history of what you have done during the day and just go through a quick review of all trades you have done, were there wins? Were there losses? Did you do what you planned to do? Yes there were little comments at the end as well saying this was a well taken trade admittedly ended up being a loss but you know that’s because x, y and z or this was not such a great trade, I probably shouldn’t have entered this for x, y and z and that’s what you need to do.
The other piece of the pie is what you do at the weekend. When you are a day trader the weekend is probably slightly less of your overall time but you would do some research on your trading method and general market analysis. You would also update your watch list for the coming week. So maybe if you are trading stocks that might be when you are doing more in depth research on what stocks look good out there and you would add those stocks to your watch list for the coming week. If you are trading some forex or futures markets consistently then obviously it is going to be the same markets remaining in your watchlist the whole time. That means you maybe spend some time looking at longer-term trends to get a broader feature feel of what you are doing on a day-to-day basis.
THE POSITION TRADING DAILY PROCESS
This is slightly different and a bit more of a reorientation towards the weekend for what position trader might do. You still have your allocated time for trading, typically from a position trader this would be the evening. A benchmark for many of the markets (typically, when LCG daily candles close) is the New York close which is 10 PM in London and 5PM in New York. Sometime around when you have seen, a daily candle is the ideal time to do it. If you doing it in the early hours it does not necessarily matter but obviously the next candle would have formed for a few hours. Ideally, you want to be reviewing the market near the time the close of that daily candlestick.
What you do is just review all your open positions because unlike your day trading you might have some trades still open, have a look at those you know are they panning out as you expected. In a set and forget trading style whatever the market’s doing you theoretically should just leave the trade open until your trading plan dictates that you should close it, or in fact often times, just if your stop loss is hit or if your take profit gets hit otherwise don’t close it early. I.e. this is the set and forget mentality. Then when it actually comes down to looking at the charts on the day-to-day basis, I used the word ‘review’. You are ‘reviewing’ the weekly and daily price charts for price setups and the idea being that you have actually done your main analysis at the weekend. What you are doing here is just looking for setups near the price levels that you think could work as turning points in the market or breakout levels. Then you might place the trades. Often times maybe, the market is not even open or maybe they are open but maybe you do not necessarily want to place the trade right at the close of the daily candle. You can do that, as a new candle opens place the trade. However, often times you can reduce your risk on the trade by using a limit or a stop order and so that order will be in place for when the price reaches that level.
In the case of ‘buy stop’ orders, it is set above the market price. In the case of ‘buy limit’ order, it is set below the market price. Now it does not necessarily have to be this way. If you do have a couple of hours in the evening every day you can obviously shift a bit more of the emphasis to the evenings from the weekend. Nevertheless, the idea being that not a lot of your time really wants to be reviewing the weekly and daily price charts for set ups. You do need a set time for analyzing those chats. So that’s why I like to break the two up, one is a period of analysis like what is the trend, what are the areas of sport resistance, are we overbought and are we oversold, what’s the economic backdrop, etc. Two is the review, such as, has it got to my price level yet? Has it shown any buy setups yet?
Then very much the same sort of thing if the weekend. You export your history statement, normally you have only placed a handful of trades during the week, so you have a look at those trades, do the same thing, review the weeks trades, make comments in the journal, do that analysis that I spoke about. Then do some research on your method of market analysis and update your watch list for the coming week. If in the case of trading stocks, you know you are again doing a bit of research on potential opportunities that you could hold a stock for a few days or weeks. In the case of the futures markets, the futures markets is again like forex indices and commodities. You have your ten markets you tend to follow, so again that watch list is probably going to be quite consistent.
TRADING PLATFORM TOOLS
These are some of the things to highlight in the LCG trader platform. These are all the things you can do which add convenience and save you a bit of time.
- Creating watch list,
- Creating one on one chart templates,
- Setting price alerts,
- Setting stop and limit orders,
- How to save your trade history.
Using and creating a Watchlist
So there is a watchlist typically on the left hand side, you can make it bigger and smaller if you want depending on how much emphasis you want to put on it, you can also get rid of the watch list. These are some default Watchlists and then you can create your own watchlist. You can call it ‘break out trades’ or ‘break out markets’ or ‘earnings coming out’ or anything you like. So for shares of Apple, in this case the earnings came last night in Apple you know can add shares of Apple there to your watch list.
Create chart templates
What you can do here is add the various indicators you want to, The logic being that you know for the different markets you follow maybe you want different indicators you don’t have to add and remove those indicators all the time you know just literally click.
Setting price alerts
Price alerts can be useful particularly if you are available to place trades during the workday. This is if you want to monitor the market itself and place a live trade rather than perhaps use a limit order. The reason you might want to use a price alert over a limit order for example, a limit order is say if you want to buy, you say “Let me buy when the market drops another fifty pips” and then automatically enter the market. You might want to use a price alert because what if the market is absolutely crashing. Say, it is gone down fifty pips but what if it looks like it is going to go another 200 pips down then you probably do not want to be buying. So maybe you set a price alert and you can monitor the conditions of the market and then say to yourself “yeah okay the market looks like it might hold this level” and maybe wait for a bit of confirmation and then place your trade.
Setting stop and limit orders
Say you have decided that a price level is the one for you, you do not need to wait for market conditions you have already done the analysis and you think that is a good place to buy the stock for example. Then you just set the limit order and you can do that in platform, for me I tend to just choose the particular market from the
Saving your trades and the history statement
The history and account statement are filled out with various trade details. You can just click, save it and then that saves as file (called account statement.csb) that you can open up within Excel and do a bit of analysis of, see how your results have done. Why is that important? Because you can actually analyse the data, look at the average risk: reward, win: loss ratios and glean a bit of information about the kind of trading you are doing. This helps you adjust over time and to improve your trading skills and technique.
I think I am going to call it a day there, thank you very much for reading and good luck trading.