Time Crunch Trading

As we have established, the starting point for any good part-time trader is to form a strategy. The first step to forming a winning strategy is to pick a timeframe that will be most suitable for you to trade within. You need to be sure to select a timeframe that you can work in productively on a consistent basis.

There are two main parts to this equation.

The first is determining how often you can put a given amount of time in to developing your trading strategy. That means doing whatever market analysis is required for you to make position entry and risk management decisions.

The second part of the timeframe decision is determining how much time you will have, if any, between the analysis periods to do your position maintenance work. That includes things like adjusting your stops and target points, and quick check-up work for on-going trades.

Most likely you fall in to one of two categories.

The first group we’ll call the swing trade group. Those are people who can do some kind of strategy work each day – putting in an hour or two each morning or evening, perhaps – and periodically check their positions throughout the day.

The second group we’ll call the position trade group. These folks do not have time on a daily basis that they can dedicate to the markets. They can do the maintenance work each day – maybe taking a few minutes while they are checking email or paying bills – but for the most part they only have any significant amounts of time available on the weekends.

Both the swing trade and position trade timeframe approaches are very doable. Chances are, you can find a way to make one or the other work for you. Of course, one would expect that if you have the time available to operate using the swing trade approach, you likely would have no problem using the position trading approach.

It is also possible to work within a longer-term time frame – for example a monthly strategy with weekly monitoring – but it can be  difficult. The trades are relatively infrequent, which can cause problems for some people.

Which timeframe you choose to settle on is entirely a personal decision. The key is to make sure that you are honest with yourself about what your schedule and life demands will truly allow. Do not push your limits, it is much better to be in a position where you realize that you could be more active than to find out that you cannot be involved in the markets as much as you thought you could be. That sort of thing can be devastating to both your portfolio and to your trading psyche.

If you are fairly new to trading, you would probably be best served to work in the position trading timeframe. The reason we say this is because of the choppiness of activity in the swing trading timeframe due to things like data releases and important speakers. Things are a little smoother in the longer-term.

Actually, working in the longer term timeframe is probably the best choice for part-time trading, even for more experienced traders. The market’s reactions to news events can lead to a lot of difficult action for those who are swing trading, made harder by the fact that one’s schedule on any given day may not allow for immediate market monitoring. Position traders can generally ride that stuff out without too much hassle.

Bookmark to: