As forex trading has become extremely popular recently, many newbie traders have the dream of quitting their 9-5’s and becoming full time traders. This does come with a whole host of benefits and drawbacks that need to be carefully considered. But is it even necessary? Is forex trading actually a full time job?
Forex trading can be a full time job for experienced traders with large amounts of trading capital. You would need a years of track record and profitability to justify trading with no other income sources. Being a full time forex trader is not necessary.
Can Forex Trading Be A Full Time Job?
Forex trading can be a full time job, if you’re experienced and have a large amount of trading capital. Although, there are benefits and drawbacks to this lifestyle. This is not necessary for most traders, as the majority of traders would be better off working a full time job at their current skill level due to lack of consistent profitability.
Forex trading can be profitable on some months, but it can also be very difficult to make money consistently over time. Also, there are always some months that you will lose money if you’re trading full time. Trading is the ultimate form of gambling. The house will beat the majority of forex traders in the long run…
Trading Forex Full Time – The Pros And Cons
There are a lot of pros and cons when it comes to trading forex as your primary source of income. These need to be carefully considered as they play a huge factor on your success in the markets.
The Pros –
More Time To Dedicate To Trading
Having more time to dedicate to forex trading is always a good thing – the more time you have to learn from experience, the faster you will probably progress. Initially however, it may take a little extra time to dedicate a full day’s work in order to fast track your learning curve in forex trading and allow you to focus on building up your profits.
By having more time in the charts, you can spend more time learning about the markets and currency pairs. This will help you to build your own watch lists according to your own trading style, which are normally sub-divided into currency groups – eg crosses , majors etc. Forex trading is an endless pursuit of knowledge – the more you know, the better trader you’ll become.
Full time forex traders often have more strategies and more of an idea of the market sentiment than traders that just trade part time.
Never Missing A Trade
If you’re full time forex trading, you’re at your charts for 10 hours a day and more! This means you don’t have to worry about missing any major news events or late breaking market developments. This is crucial as even a few hours can be the difference between success and failure in trading markets.
Missing good trading setups can make a huge difference to your monthly returns .
Less Time Worrying About Daily Life
As you’re no longer tied down to a 9-5 job, you can dedicate more time towards your trading. This means working on your strategies and watching the markets more closely. You will be able to spend less time worrying about day to day life so long as you have enough money saved up to pay for your expenses.
The Cons –
Accumulating Trading Capital Can Be Slow And Tedious
If you are coming from an office job, it can take months or years to build up enough trading capital to live off profits. You need to be sure that you have enough money saved up in order to cover the costs of your expenses for as long as it may take to accumulate such a capital base.
Trading capital can be accumulated relatively quickly, or slowly and painfully – depending entirely on the individual trader and how much money they are prepared to ‘lose’ in order to learn their craft.
The influx of online prop firms in the industry has made obtaining trading capital much easier and you can get funded with literally over $100,000 in a few hours! However, only profitable traders can sustain funded accounts.
The Stress Of Trading Full Time
One of the main drawbacks of trading forex full time is the fact you have no other income, which is incredibly stressful when bills need to be paid. Traders can lose everything they have earned in the markets if they don’t manage their risk profiles well.
This is why it is important to trade with money you can afford to lose, as losing forex trades are part of the game. The stress of not knowing whether your next rent cheque will be paid or not is enough to drive many away from trading full time.
Many traders have families or partners that rely on their income, so the idea of pursuing forex trading as a full time job would put additional financial pressure on them.
Sometimes it’s not even about managing risk, there are just good months in the markets and bad months in the markets. I know very profitable traders that are down for whole quarters, can you sustain that?
Full Time Traders Cannot Compound Profits
Forex traders with no other source of income cannot compound their profits, as they need to take withdrawals from their trading capital to live off. If they were to reinvest into their own trading accounts, this would be considered ‘compounding‘ profits and would only make them liable for tax.
Not compounding can dramatically slow down the capital growth process and limit your potential over the next few years.
Trading Forex Is Very Lonely
Forex trading is a very lonely game, especially if you are doing it full time.
You’re not going to have a chance to speak with your workmates about currency pairs you’re invested in or anything else related. You also can’t meet any of your friends for a drink after work, as all you will be doing is sleeping and trading.
This can become very stale very quickly and most people choose a career in forex trading because they are looking to escape the office or work with other people.
Trading Forex Part Time – The Pros And Cons
Whilst there is a lot to think about when looking to trade forex full time, there is also a lot to think about when trading forex part time. Let’s break it down…
The Pros –
Part Time Forex Trading Is Much Less Stressful
If you have another job on the side of forex trading, you never need to worry about profits paying bills.
You also don’t need to worry about the market conditions because you’re not trading full time. Your trading can be much more relaxed and this will generally lead to better decision making ability.
You will have more time to explore new and different strategies. Part time traders have far more freedom than full time traders, as they are still free to experiment without having to worry about bills being paid.
You’re Less Desperate For Trades
When you’re less desperate for trading setups, you’ll make better trading decisions.
You will be more likely to wait for a better trading opportunity and you won’t be as desperate for entries. This can lead to much more profitable trades overall and in all honesty, most of the profitable forex traders I’ve met over the years are trading part time.
Forex Can Still Be Fun!
If you enjoy trading forex, that’s probably because you aren’t a full time trading, staring at the charts for 10 hours per day.
Part time trading can be a great opportunity to have a social life and give yourself a chance to destress after each day at work. You’ll have plenty of free time to meet friends or travel, things that become hard once you’ve been full time in the forex markets for a while.
The Cons –
You Can Miss Trading Setups
The main drawback of only trading forex part time is that you may miss trading setups.
When you are only trading part time, you could miss out on some great opportunities. Remember that even experienced traders will miss setups at times, so you need to be able to live with this.
Another drawback of forex part time trading is that you may miss big profits. If there is a major upward movement in the markets, you may end up missing out on some great trades. For instance, when major news releases like NFP happen, there is the potential to take very large trades and your job or other commitments may hold you back from this.
Your Trading Development Can Be Slower As A Part Time Forex Trader
If you are only looking at the forex markets for a few hours per day, the time taken to learn the skill will increase.
Many forex traders make the mistake of thinking they can be a full time trader with a few hours of study each day. This is wrong of course and it’s a lot better to focus on a particular skill for 10-20 hours per week, rather than 2-3 hours per week. The more you invest in forex, the more you will get out of it.
I’m not saying that part time traders can’t become profitable, as many people do this. However, there is much less potential for growth and unless you actually just enjoy the trading itself and don’t want to grow your skillset, then forex part time could be a poor choice for you.
The Conclusion – Is Forex Trading A Full Time Job?
In summary, forex trading can be a full time job, but it shouldn’t be for most traders.
Forex trading can be a difficult job, particularly if you want to trade full time. This is because the markets are so volatile and it isn’t easy to find reliable entries into the market.
The best plan is still to have a part time forex trading strategy that you follow as closely as possible. Building a solid strategy is key and you should be looking to develop your own personal strategy, not copying someone else’s. Swing trading and higher time frame strategies will suit part time traders much more than scalping.
If forex trading is something you are interested in pursuing, then I recommend that you take a trial run of at least two years before committing fully. This way you will have time to experiment with your system and determine if this is the right career for you…
Do you trade forex full time? Let me know in the comments below.