Yes, for anyone who has what it takes to live off trading, trading forex full time can be a good idea. In fact, it can be highly liberating as it offers you freedom from the typical 9-5 jobs and allows you to choose when to trade, what to trade, and how to approach the market.
To some, this freedom is priceless, and they can’t exchange it for any other thing, which is why a lot of people are now exploring forex trading as a source of livelihood. But this sort of independence may not be good for everyone, just as trading may not be the best for some people, let alone trading forex full time.
The reality is that trading is a psychological warfare, and not everyone is cut out for the emotional battle involved. For instance, some people may not be disciplined enough to stick to a trading plan and trade it consistently every day — it may appear boring to them. But that is what trading as a full-time job requires.
So, in this post, we will explore the following:
- Why you may want to trade forex as a full-time job
- Ways you can start trading forex full time
- When to know you’re ready to trade full time
- The daily routine of a full-time trader
Why you may want to start trading forex full time
You may have just heard about forex trading and want to consider it as a career path, or probably, you have been trading part time for a while and now want to switch to full-time trading. Whatever is the case, there are factors that should inform that decision, and these are some of them:
Passion for the market
One of the good reasons to choose to trade forex full time is having a passion for trading. That is, you enjoy everything about trading — from analyzing the price charts and economic data to find trading opportunities, to placing and managing the trades — with all the emotional battle and the psychological stress involved. It takes a genuine passion for trading to survive such a high-pressure the forex market.
Learning to trade can be very difficult, but if you have a passion for the market, you will have the drive to learn everything you need no matter how long it takes. And when you eventually start trading live, you need that energy to sustain you when the results are not as you would expect.
Trading for a living
Another reason to start trading forex full time as a career is to make a living. Forex trading can be highly rewarding if you know what you’re doing. But it is not always easy, as a lot of learning, planning, and strategizing is required. You will need to practice until you have mastered how to trade, and the factors that move the market.
On the aspect of planning, you will need to save a lot because to be able to live off your trading profit, you must have a sizable account that can make a reasonable profit without you trading with too much leverage. Then, you need a strategy with a proven edge on the market.
If you put in the hard work and everything ticks well, you can trade forex full time and make a good living.
Desire to be independent
It’s possible you’re like us who love to be free — free from a boss and free to do your thing when you can, how you can, and as you can. The freedom that full-time trading offers can be priceless, especially if you are an introvert who loves to work on his own and be his own boss.
This is one of the main reasons people go into trading forex full time, and it is a legitimate one. Sometimes, that freedom to do what you want may be your main source of happiness. But to succeed in your journey to full-time trading, you need to put a lot of work to learn the skills first, if not, you will lose a lot of money in the market.
Ways you can start trading forex full time
There are many different ways you can start trading forex full time if you have acquired the necessary skills. You can trade for an investment company, become a money manager on a brokerage platform, trade for yourself, or even become a signal provider. Let’s take a look at each of them:
Trading for an institution
Many financial institutions need qualified forex traders. If you are good at forex trading and have a verifiable track record of success over many years, you may be hired by any of those institutions, such as an investment fund or a trading company to trade for them.
This can be a very lucrative job, and it will give you the opportunity to save enough capital to trade for yourself full time. For most trading companies, your remuneration may be in the form of taking a specified percentage of the profits you make. Investment funds may place you on a basic wage plus a commission based on the profit you make.
Trading for an institution offers several advantages. Apart from saving good money to trade for yourself as mentioned above, it gives you the opportunity to trade real money and acquire more experience without putting your own money on the line.
Trading for yourself
Most people who learn how to trade the forex market do so to trade for themselves. When you really acquire forex trading skills — knowing how to analyze the markets and financial events, identifying tradable opportunities, properly executing your trades, managing the trades, and analyzing your outcomes after several trades to assess your performance — trading for yourself can be a highly rewarding adventure.
But you need to be ready for the psychological battle. Because your own money is on the line, all your emotions will come to bear. The ultimate trading skill is knowing how to control your emotions during the heat of the moment.
One good thing about trading for yourself is that you may start trading part time and gradually move to full-time trading when you are ready with regard to the trading capital, finances, and emotional maturity.
Becoming a signal provider
Apart from trading your own account, you can also sell your trading signals to other traders who would like to copy your trades into their own accounts. But your signal must be of high quality, and you have to provide your track record for traders to analyze and decide whether to copy your trades.
Depending on the platform, when you are selling signals, the platform shares a fraction of the spread or trading commission with you. The amount can be very small, but if you have large followership, the income from selling your signal can be sizeable.
Some of the platforms where you can sell your signal include the MQL4 community, eToro, and Myfxbook. These platforms make your trading records public so that other traders can see your results. The platforms often have tools that prospective traders can use to quickly analyze your trading results based on certain parameters, such as your win rates, average win size, average loss size, and others.
Becoming a money manager
Some brokers offer PAMM (Percentage Allocation Money Management) and (Multi-Account Manager) MAM accounts for traders who want to manage other investors’ accounts. These accounts help to link the investors’ individual accounts to the manager’s accounts such that whatever trades made on the manager’s accounts can reflect on the investors’ accounts. The manager gets a percentage of the profits made on the investors’ accounts.
The money manager role is left for traders who are very good at what they do and have the required funds to open PAMM or MAM accounts. If you have enough trading experience and the required funds to open the account, you can do so and make some extra income in addition to the profits you make on your own account. Obviously, the more investors you have the more you can make, but for more investors to come to you, you must have a good record.
How to know that you’re ready to start trading forex full time
So you have been trying out forex trading with the hope of doing it full time in the future. But how do you know when it is the right time to go all out and become a full-time trader? Here are some things to consider before making that jump into full-time forex trading:
You have tried part-time trading before
As a new trader, it is not advisable to jump straight into full-time trading no matter how well you think you have learned forex trading. The best approach is always to start trading part time while you keep your usual job. This way, you will keep getting income while perfecting your trading skills and growing your trading account until it can consistently make enough profits each month to cover your monthly expenses.
Moreover, part-time trading gives you the opportunity to gain some vital experience when you can still afford to make serious mistakes because you still have a main source of income. You need to have traded part time for 6-12 months before considering going all out for full-time trading. Within this period, you can make your savings and plan your life as a full-time trader.
You have been trading live for a long time and mastered your emotions
Trading forex full time means that you spend most of your day analyzing the markets, looking for trading opportunities, placing orders, and managing your trades. You will hardly have time for any other income-yielding activity, so you would depend on your trading profits for feeding and paying your bills. Thus, it is a serious business.
To stand a chance of succeeding in the business, you need to have acquired trading experience over many years and have all your strategies planned out. You must have practiced with a demo account and developed different trading strategies for tackling different market conditions.
Above all, you must have been trading a live account on a part-time basis for up to a year. This is very vital as it enables you to acquire the necessary emotion management skills required to succeed in trading. As a full-time trader who depends on trading profits for survival, you will be under enormous pressure so managing your emotions becomes even more difficult. So, until you achieve a high level of emotional control, don’t ever jump into trading your account full time.
You have developed a passion for forex trading
Some people set out to trade the forex market because of the desire to have a means of making some extra income at the end of every month. But along the line, they come to love everything about the forex market — following financial news and commentaries, studying and analyzing charts, the bull and bear battles, and all the rest.
If the thought of watching the Fed Reserve Governor’s speech or reading the minutes of the last ECB meeting motivates you and analyzing charts and back-testing strategies keep you awake at night, you must have developed a passion for trading. It would only make sense that you plan how to go all out and trade full time.
But passion is not enough reason to quit your job and start trading full time. You need to acquire the right skills first and plan how to succeed as a full-time trader because you would have to depend on what you make from trading for sustenance. Be sure you are mentally prepared for it before you make the move.
You have saved adequate trading capital
Have you saved up to double of $50,000 that you can afford to lose? We said double because it is good to prepare for the worst. Many new traders blow up their first trading account. While this may not happen to you because you must have been trading profitably part time, it is good to be prepared if you want to succeed in your trading journey.
Apart from having your trading capital, you need to save enough money that can take care of your food, rent, and other bills for the next six months since you may not be making any tangible profit in the first few months — that is if you are not in a big drawdown.
So, if you haven’t saved double of your intended trading capital and enough money to sustain your lifestyle without any income for some months, you aren’t yet ready for a full-time trading career. Keep your job and continue trading part-time until you’re ready.
The daily routine to keep when you’re trading forex full time
When you are finally ready to take forex trading as your full-time job, there are certain routines you will need to keep to make things move smoothly. They will help reduce your chances of making silly mistakes and also enable you to find more trading opportunities. Let’s take a look at some of them:
Reviewing open positions
You may want to start each day by reviewing your previous trades if you have open positions in the market. Here, you check where the price is in relation to your stop loss and profit target, assess whether the factors that support the trade are still viable and there’s still a possibility of the trade meeting its target, and finally, determine if it is right to move the stop loss to breakeven if the trade is already in profit.
With this, you know where you are starting the day from. If you don’t have any position, you move on to the next trading routine.
Creating a list of the currency pairs to trade
Here, you go through the various currency pairs to choose the ones you will monitor for trade setups for the day. You should already have a trading strategy and have decided whether you are an intraday trader or a swing trader. If you’re the former, you will be looking for your trade setups on H1 and lower timeframes, but if you are the latter, you look for your trade setups on the D1 and H4 timeframes.
Based on your trading strategy, you can analyze the currency pairs and create a watchlist of currency pairs in which your trade setups are potentially forming. These are the currency pairs you will monitor all through the day to know when the trade setups are completed so that you place your trades.
Another factor to consider when making your watchlist is the correlation between currency pairs. You should take note of correlating pairs and the nature of the correlation so that you don’t build large positions in highly correlated pairs.
One more thing, you can mentally rehearse what you will do when you see a trading opportunity in a particular currency pair — your trade size, where your stop loss and profit target can be, and how you will manage the trade when placed.
Making sure your price charts are set up properly
This is a very important routine that can help you avoid some little and silly mistakes that can cause some serious damage to your trading account. First of all, confirm the charts that you have on display and be sure that it’s that of the currency pair you intend to trade and the right timeframe you trade on.
Next, check the screen display size and take note of the length of the candlesticks. If you have an idea of the size of the candlesticks, it makes it easier to identify when volatility is increasing or decreasing. This can help you make quick decisions as to how to manage your trades.
But the most important thing to check here is the one-click panel on your charting platform, which helps you place orders fast with a single click. Although it helps you enter trades fast, a mistake here can damage your account. So, make sure that the lot size there is the right lot size you trade. If your usual lot size is 0.1 and you quickly click a buy or sell button when the lot size there is 10.0, you run the risk of blowing your account with any slightest adverse price movement.
Checking the Economic Calendar
Now, check your economic calendar to know the kind of data, financial news, and political events to expect for that day. This can help you plan your trading day — you decide whether you want to be in the market when those data or news are being released, especially if you are an intraday trader. Swing traders may not bother so much about the immediate impact of such data and events.
There are many financial websites where you can follow the economic calendar and other financial news. Some notable ones are Forexfactory, Investing.com, DailyFx, CNBC, Bloomberg, and Reuters. On Forexfactory and Investing.com, take note of the data, news, and events designated high-impact; those are the ones that will have the biggest effect on price movement for that day.
Marking the time for the news releases on your charts
If you are an intraday trader, you should not joke with the high-impact data and news releases. They can seriously affect your trading results. You should decide whether to wait until after they are released before you enter your trades or enter your trades when you see your setup but get out before the data release.
Whatever the case, you need to mark the time for the release of high-impact data and news on your charts so that you don’t forget about them.
Keeping your trade journal beside you
It is important you manually record all your trades, so you should have your trade journal beside you whenever and wherever you trade — whether on your desk or on your bed trading with a phone. Just get everything ready.
Getting a cup of coffee if you need one
If you normally need a cup of coffee to clear your head in the morning, please grab your coffee and get ready for the day. Ideally, you should shower first to feel refreshed to start the day.
Sure, forex trading can be a full-time job if you are really prepared for it. Although it can be highly rewarding — freedom, doing what you love, and making money — there are things you must put in place before you start trading forex full time. Perfect your skills, save enough money, and be mentally ready!