Part Time Trading Truths to Know
Many traders love day trading, and for good reason, because it allows you to work from anywhere, whether from home, a hotel, or your parent’s too. Moreover, day trading is associated with financial freedom, big profits, sports cars, and of course, being able to be your own boss. However, the fact of the matter is that part time trading can be quite attractive, and it can come with many benefits.
A study conducted a few years back proved that well over 95% of traders actually lose money on a consistent basis, and yes, this applies mostly to full time traders. However, what about part time trading? The fact of the matter is that part time trading can be very beneficial, convenient, and lucrative. Let’s talk about bit more about part time trading and what benefits it brings to the table.
Part Time Trading Can Increase Your Success Rate
Alright, so when it comes to full time trading, there are two big problems that traders face. These include a lack of capital for trading, and a certain syndrome known as the “need to make money” syndrome.
Not Enough Capital
One of the biggest problems that many traders face, particularly full time traders, is not having enough capital for trading. Sure, people who start out with plenty of cash may not have problems, but many full time traders have very limited funds to work with. If you are just starting out, this could mean being forced to limit the amount of trades and investment amounts.
Moreover, simply put, if you don’t have enough money, you can’t trade. Therefore, as a full time trader, at one point or another, your capital may dry up. However, this is an issue that does not affect part time traders nearly as much.
If you have a full time job, or even a part time job, whether as a nurse or a burger flipper, you can save a portion of your earnings and use them for trading. In other words, if you a are a part time trader, and still have a job on the side, you have access to a secure revenue stream, a portion of which you can invest into trading on a monthly basis.
Need to Make Money Syndrome
Another big problem that many full time traders face is the need to make money syndrome. So, what is this syndrome? Well, this syndrome is what happens when full time traders need to make money to make ends meet.
Full time traders only have a single revenue stream, which is trading. If things don’t go their way, they lose money, and don’t have enough cash left over to eat, pay rent, buy school supplies, or whatever else.
This then often leads traders to make crucial mistakes and to ignore their own trading rules. You might average losers, start trading things that don’t make sense, and you might start shifting your stop loss even though your shouldn’t.
In other words, full time traders face a lot of pressure to make enough money to make ends meet. However, this is not something that affects part time traders nearly as much.
Sure, making money through trading is great, but if you still have a regular day job on the side, you don’t need to rely on trading to make ends meet. You can use your earnings from your day job to support yourself, and then use whatever is left for trading. Simply put, part time trading is just much less stressful.
Part Time Trading & Transaction Costs
Something else to realize about part time trading is that it can be beneficial due to transactions costs. Let us explain. Alright, for example, as a full time trader, you might have a $10,000 account, your transaction costs could be $10 per trade. As a full time trader, you might place something like 500 trades per day. Therefore, to break even, you need a return of 50%, which is of course a ridiculously high number.
However, as part time trader, things look a little different. As a part time trader, with the same $10,000 account, and the same $10 transaction fees, if you place maybe 50 trades per year, based on the costs, you need to make a much lower return to break even. As a part time traders, using these figures, your returns would only need to be 5% to break even. As you can see, in this sense, it is much less stressful.
You Can Still Make Great Money
Something that many people are concerned about when it comes to part time trading is the ability to make real money and to build wealth on a consistent basis. Of course, the amount of money that you stand to make with part time trading is not nearly as high as with full time trading, but this is not to say that you cannot make decent profits.
For example, if you start off with as little as $5,000, and you make a total of 10% in returns per year, after 10 years, your account would be worth over $12,000. After 25 years, the account in question would be worth well over $50,000.
Now, of course, a 10% return per year is not huge, and many part time traders can make much more than this. A really good trader can make way more than that. Let’s assume that as a part time trader with a $5,000 starting account, with a 25% return each year for 20 years, your account could grow to over $430,000, which is not too shabby at all.
The Truth of Part Time Trading – Final Thoughts
As you can see, the bottom line here is that part time trading is much less stressful than full time trading. You can still be your own boss to a certain extent, you have a steady flow of capital to invest, and you don’t have to worry about making ends meet. If you want an easy way to trade part time, and to make easy money, check out this article on copy trading.