Last Updated on 13th Jan 2017: A few weeks back I did an article on forex trading full time. The response was generally positive so instead of creating a technical forex based article I though I’d talk about how you can make a living through only part time trading (initially). Please note before we get started I do not advocate quitting your job as soon as you see your first few profitable trades! You should only “quit your day job” when you are in the position where your system earns you the same amount per month as your job does (more on the stages later). One of the mistakes I made was quitting too early, and it put a ton of pressure on trades, it also makes you make more trades than you should! Remember keep your system simple and it will likely stay profitable!
You should be able to remember your strategy off the top of your head. If X happens and Y follows then I will trade when the market reaches point Z, this is the most profitable and easiest type of trading to do as you don’t need to have emotional emphasis on the market. All you need to do is keep track of the market movements and you can profit as long as you are disciplined.
Table of Contents
Before even making your first trade you should know all the basics. I advocate learning through doing, that includes signing up with a broker, making a few test trades to learn the platform and then depositing a small amount into the account. Once you’ve done this the next step is creating a system or strategy you can develop, follow and refine to give you profitable trades as often as possible. But I’ve yet to meet anyone who has made an 75% successful trade ratio. Yet I know a handful of people who earn over 7 figures a year in profit directly from the fx markets. The reason? They have a strategy they know works and they stick to it!
But building a strategy is something you have to do on your own. In this article I’m going to outline some of the steps you need to take to generate a full time living through trading part time.
A quick note on “full time living/income” in 2012 I made £21,000 income approximately (about $33,000 at the time.) Which in the forex monster markets is considered very low. Anything under 6 figures is considered low! But I’m going to explain why that was actually a huge sum of money at the time, and not just because I was pretty young.
1.) I had the lifestyle I wanted – I was very young at the time and didn’t want to read or learn 10 hours a day. So I didn’t. I committed to expanding my knowledge for 2 hours per day. I then committed to trading (or watching the pairs) for 3 hours per day. Focusing on the Pound & dollar markets mainly. The result was a nice profit but nothing major. But this meant I only “worked” about 5 hours a day. But I had something that I’d always wanted, and that was the freedom associated with being a trader. I owned a couple of small businesses on the side that helped pay for the start-up capital, but those were very time intensive and I sold them off to make the initial capital required for trading. Instead I could now I could work 5 hours a day and be with my family, girlfriend or go travelling whenever I wanted. I had the lifestyle I wanted and that is what I appreciated the most above any additional income I could create.
2.) I lived where I wanted – The second element why £21k seems more like £100k was that I was living in Eastern Europe at the time, it was so incredibly cheap for just under £2k a month I could have anything I wanted. I went out for drinks and dinner most nights and had a nice apartment, I didn’t need a car at the time and I lived seriously well as the cost of living was so low!
Essentially what I’m saying here is you have to have the aims you personally desire. Why do we quit our steady salaried day jobs? Is it because they are boring and don’t pay us enough?… Yes but that’s not the major reason if you ask me. Instead I think its because we want the lifestyle we’ve dreamed about. If my income were to ever take a huge hit, I could go back to living on £25,000 a year, on a beach, with my dog and my family and we’d be happy. Where you live has a big impact on how far money goes, as forex traders we already know this, but I don’t think you realise it so much until you go travelling.
The place I lived for a few months back in 2012 looked like the below images (note this is an image from airbnb) but it cost me £500 / month to live there at the time, including all bills and utilities!
What I’m trying to say is you might want to make 6 figures in your first year of trading, but instead you should be thinking about what you can do with the freedom of earning 25,000…. Travel, work when you want, in my opinion that’s more valuable than 100,000 a year from year 1.
3 Steps to become a part time trader & Still Quit your Job in 12 months
Stage 1: Learn & Fund – Month 1-6
Before you even make your first trade, as mentioned above, you should learn everything about the markets. You can realistically do this in about 100-200 hours if you already have the basic knowledge. If not then you are probably looking at closer to 500 hours, but that’s not that long in relation to a year!
The second part of stage 1 is funding. To make money in the forex markets you have to have some sort of capital to invest. I’d recommend putting together £20,000 by the end of month 6. I know this will be difficult for some people that have lower paying day jobs, but I recommend a higher figure for 2 reasons. The first is it is a lot easier to make “decent” money without having to have crazy leverage ratios. With 20k you can have a leverage of 5:1 giving you £100,000 to trade with. And reason 2 is you will be more committed to the cause if you have a good chunk of money on the line. You will never be trading more than 1% in any one trade, but if you only get together a few k then in the big of your head you have the “if this fails it doesn’t really matter” thought process.
Stage 2: Implementation & System Refining – Month 6-9
This stage is all about implementing what you have learnt. Chances are you will be a bit slow at first and need to tweak your systems to make them exactly what you need. In this stage you also want to continue learning and finding experts to follow. Tweak the strategy with the guidance of others, but always keep your underlying system in place. Refine the system so you know it off by heart, you know what to look for in a markets. If X happens then Y should happen and if Y happens I will short for XX amount of movement and so on. This should all be second nature by month 9. Forex trading is not fun! Making money is fun!
Stage 3: Weekly Goals, Scaling and Quitting the day job – Month 9-12
I always say if you work extremely hard for an entire year you can make money in forex. The issue is people don’t understand that means literally working everyday for a year. Working hard in your day job to give you enough money to invest in capital. Coming home and learning, reading and absorbing all the information in your evenings instead of watching TV. Then implementing these and putting your hard earned cash on the line. All of which is just extremely time consuming and well, hard to do! But stage 3 is when you begin to see the results.
You want to also set weekly earning goals. For example I wanted to make £100 profit per week as my first goal. Sometimes I made this in a day, and if I did I would usually make fewer trades through the week. This is not the ideal situation, as you should view every new trade opportunity independently of the last, but its human nature.
Scaling, once you’ve hit your weekly goal 3 times in a row (some people say 5, others 10 which I think is crazy) you should increase the goal. So in my case this might be £120 a week. Do this continuous and don’t worry if you have negative days, weeks or even months! Although this might take a long time you are slowly building your earnings (and at the same time you should NOT be withdrawing any of this capital, it should all stay in the amount making it easier to scale!)
Now to probably the most important point in the whole article.
You should quit your day job when you make the same amount of money per month as you did in your salaried position! Why? Because your income won’t take a hit! Meaning your lifestyle won’t change (although it does.)
Continue to trade as frequently as you did before but also look into new opportunities with a similar system. If you only traded 4 hours a day previously because of your job, now you can trade 8 hours a day and make twice as much! (Obviously not that simple, but possible)
Hope you enjoyed the post and let me know what you think.