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Trading Psychology Posted by Team Topstep February 12, 2023

Finding The Right Time To Trade


Trading presents many challenges, especially when it comes to moving from a traditional profession to trading full-time. For many, trading capital is an issue, and for everyone, there is a process of education to learn and perfect our craft and a significant learning curve. 

However, for most people, time premium is another critical factor to consider. Most of us don’t have the financial means to quit our jobs and devote the necessary time to weather the learning curve and develop profitability. So the question is, what do we do? 

This article addresses how to allocate time. It is a juggling act, but it is possible to find ways to maintain our livelihoods while also dedicating time to learning how to trade on the job. From the onset, I must acknowledge that everyone’s circumstance is unique. Therefore, no article can incorporate a “one size fits all approach.” Instead, the factors explored here should be taken as a conversation piece that you consider while determining your best course of action.

Change Your Hours

I know one trader in the United States who desperately wanted to have a career trading the S&P 500 futures. However, his problem echoed that of many traders: his work hours overlapped with the prime trading hours for his preferred market. His solution was to change his schedule. 

Now, I recognize the limitations of this idea, as only some of us can determine what hours we will work. Neither could this guy at his existing job, but he changed companies to increase his scheduling choices. It worked out for him because he received a modest salary increase due to his willingness to work the awkward evening shift. 

The result was that he was able to trade the best hours of his preferred market and then schedule his sleep accordingly. Unfortunately, I lost track of this trader and wish I could follow up to see how it turned out, but nevertheless, he is one example of someone who knew what he wanted and went after it. 

Moonlight Trading

Trading after hours might be the most feasible path for many aspiring traders. It means maintaining your current employment and trading during hours that accommodate your existing schedule. The advantage is that this method disrupts your professional life the least. The disadvantage is that it limits you to trading at specific times. 

For example, you might have to trade your preferred market during hours that are not recommended when it is hardly active, which makes the learning curve even more challenging. Or, you may have to change your preferred market to something actionable during your available hours.

Let’s say you live in the United States. While your work schedule most likely overlaps with the prime hours of the local markets, you should still be able to trade some of the most active periods of the Asian session, particularly the Japanese market(s), at least for the opening hour or two. This is one way to moonlight (so to speak) and capture a prime market during your off hours. 

Another way is to wake up early and trade the European markets during their active period. In fact, I know one trader in the U.S. who learned to trade by waking up at 5:00 am (EST) daily and trading the German DAX for about two hours before going to work.  

One thing I must convey is that when trading while maintaining a separate vocation, you mustn’t let your trading exhaust you to the extent that you are mentally and physically depleted, unable to efficiently and effectively perform and earn your livelihood. That is not conducive to long-term health and sustainability. 

Lunchtime Trading

I only mention this because I’ve known aspiring traders who were motivated and courageous enough to attempt this. With a strong will to succeed, they spent whatever time they had on their lunch break trying to capture some level of trading experience. However, I do not recommend this approach. 

Your work day can be hectic enough, and during the moments of your break, it is helpful to decompress and prepare to face the rest of the day. What I observed is that traders who attempted to trade on their lunch breaks brought their professional stress into the markets and never loosened up. 

Furthermore, they would sometimes involve themselves in stressful trading, which is challenging to manage in a short period of time. This, in turn, would cause them to be more stressed out when returning to their job. I admire anyone who has attempted this, but I do not believe it’s the best recipe for success. 

Swinging For Success

Okay, I realize that my target audience is day traders; however, I do have to float this possibility. If you are time-starved but feel compelled to be involved in trading, then you might consider holding positions longer. This could involve a hold for hours or days. 

The longer-term focus creates an opportunity for you to avoid having to sit and monitor charts intensely during your trading intervals. Instead, you might look at your charts before you go to work, briefly review them on your lunch break, then take a look again after you leave work. In addition, because you are taking a longer-term approach, you might be able to monitor multiple markets and locate more precise opportunities. 

This could mean setting up orders at critical support and resistance areas that would result in wider targets before you go to work. Again, it doesn’t have to be held for days, but it will be held for a bit broader period than is typical for micro trading management. What this does is keep you active and in the markets with the possibility of earning money, even when you have to work. 

Automate Your Approach

This option must be considered, albeit with the caveat that newer traders aren’t usually prepared for this. However, this might be seen as a potential goal rather than a first step. There are a couple of ways automation might work. 

One way is where you still monitor your trades personally; however, you can run your platform in the mornings before going to work and evenings upon your return, and your system will alert you to your trading conditions. What this enables you to do is to relax more during your off hours while having a computer program that seeks out your trade criteria, letting you know when your desired entry is qualified. This makes the task of moonlight trading much easier.

Alternatively, once your skill increases, your eventual goal could be completely automating your trading. Of course, there are plenty of nuances to grasping such a sophisticated approach, but for some, it may be worthwhile to aim for this. In fact, I knew a computer programmer who decided to take up trading. Before moving to full automation, he first incorporated a semi-automated approach like the one in the previous paragraph. 

Now most of us are not programmers; however, if we are adventurous enough to trade, and we find something we are convinced works and validate it by backtesting, then automating such an endeavor is not something to be quickly dismissed.

Ready to Take the Plunge?

My last scenario is risky and not suitable for the majority, but it is something I don’t want to skip entirely. Some would-be traders will never know until they take the plunge and go all in, seeing firsthand what it’s like to do this for a living. I’ve consulted with many who have considered the possibility of doing this and have found that the option of quitting their jobs entirely to see where trading will take them is only viable for a small portion of people. However, for those few, it’s something that may be worth considering. 

So how do you know if taking this plunge is or isn’t right for you? Unfortunately, I can’t answer this, but I can tell you variables to weigh. 

First, is your current career path worthy of walking away from? If you left your job to trade, could you quickly and easily return to your career path with little risk? Do you have the financial capital accumulated that you can risk as a speculating trader? Who are your dependents? Are you single without obligation, or do you have a partner and children who depend on your income? How much debt do you have? What are your current financial obligations? What are your savings?

Again, for most people, taking the plunge and abandoning a job to free up time for trading is not the right choice. However, for those of you who have an ideal scenario to support this choice, it may be the only way you’ll ever know. Keep in mind, though, before you go this far, that I’ve offered you five other approaches that you might consider first.

In conclusion, most of us share a comparable dream—a life of financial freedom and personal independence. However, I think most readers have been in the situation of wanting to become professional traders but needing to maintain existing professional obligations. If this is you, then you might consider the scenarios presented here. Remember, there are no easy choices; everything in life is like trade management, constantly managing risk to reward. My hope is that you have a prosperous 2023; until next time, trade well!