How to Be a Part-Time Day Trader

How Much Work Being Part-Time Really Takes

part-time day trader
••• Part-time day trader working from home. Morsa Images/Getty Images

You may be interested in day trading, but don't want to pursue it as a career or quit your day job to do it. That's actually smart. In fact, even many professional day traders only trade part-time, trading for one to three hours per day, and then moving onto other activities. 

If you are interested in day trading part-time here are some ways to do it, as well as the pitfalls you may face. 

Day Trading Stocks and Futures Part-Time

Day traders only need to trade stocks or futures markets for about one to three hours per day.

While some day traders do trade all day, the greatest possible returns in the shortest amount of time are typically concentrated around the official open and close of stock trading. These occur at 9:30 AM and 4:00 PM EST respectively.

If you want to day trade stocks part time, focus your attention on the open. Be sitting at your computer by 9:00 to 9:15 AM, getting yourself prepared. If you don't have much time, the first 30 minutes is usually the most volatile time of the day, providing the most profit potential. If you only have an hour, finish your trading by 10 or 10:30 AM EST. If you have a bit more time, extend your day trading out to 11 AM. As the lunch hour approaches typically there are fewer opportunities, and trades take longer to complete, as volatility tends to die down.

If you can only trade later in the day, or are capable of trading near the open and the close of trading, consider day trading from 3:30 PM to 4:00 PM EST.

Since day traders close all positions before (or at) the closing bell, your trading day ends at 4:00 PM.

That was the stock market, but the same times apply to futures trading as well. You're typically going to see the most trading volume and action occurring in futures markets just before and after the US stock market open.

This is especially true in stock-related futures, such as the E-mini S&P 500 (ES), which is one of the best day trading futures contracts.

Day Trading the Forex Market Part-Time

The Forex market is tradable 24 hours a day during the week, making it a flexible alternative for day traders who only have one to three hours to day trade.

The Forex market is traded in currency pairs, with the most popular currency pair being the EUR/USD. Other popular pairs include the GBP/USD, AUD/USD and USD/JPY. Each pair has periods of the day where it is most active. For an introduction to the Forex market read Think Forex is Confusing? Here's What You Need to Know.

If trading the EUR/USD or the GBP/USD--recommended pairs for day trading--the most movement occurs around the US stock market open. That's 8 AM to 11 AM EST.

If that time doesn't work for you, 1 AM to 8 AM EST is also a good time to day trade. Europe is open for business, and while this period isn't the most volatile, there are often tradable trends that develop during this time. This is also a suitable alternative for people who simply don't like trading near the US open (each part of the day has a different dynamic, so traders may prefer a certain time of day more than another).

For more, see Best Times to Day Trade the EURUSD, GBPUSD, and/or USDJPY.

Casual and Part-Time are Different

Many potential day traders fail to make the distinction between part-time and casual. 

Being part-time is fine, and recommended. You trade every day during the best times of the day and then do something else with your free time. 

Being a casual day trader is when you day trade whenever you have an urge to or the time permits. This isn't recommended. There is no structure, and since markets act differently at different times of the day, trading at random or casual intervals isn't a good strategic play. 

Part-time traders don't trade all day, but they do trade regularly. Casual traders may trade for several days and then take several days off. These periods of activity followed by inactivity leave you less sharp, slow your reaction times and make you more susceptible to mistakes.

Be a part-time day trader, but don't be a casual one. Trade on a desktop or laptop during an allotted time each day, not on your smartphone in a bathroom stall at work. If you're casual and unstructured about your trading, those who are serious and work on refining their technique every day will take your money.

Part-time trading is still serious business. Do it right, treat it like a (part-time) job or business, or don't do it at all. If you are serious about day trading, read 4 Trading Tips I Give to Every New Day Trader.

Part-Time Pay

As indicated, most full-time traders (their only job) end up being part-time, simply because they find that there are only a few hours of the day that produce the best results for their strategies. In this way, being an independent part-time trader or an independent full-time trader often end up being the same thing. In terms of money, that means not giving up very much profit potential. 

For example, a part-time trader may find that they extract $500/day on average, trading during only the best two to three hours of the day. If they traded all day, they would be forced to sit watching their screen during times when good trading opportunities typically don't arise, resulting in a very similar daily-profit outcome. 

Trade the best times of the day for your strategy, and you won't be missing out on a lot of profit (compared to trading all day).

Final Word on Being a Part-Time Day Trader

Yes, you can be a part time day trader, trading stocks, futures or Forex. There are times of day that offer the best opportunities, though. If trading stocks or futures, trading near the official US stock market open or close is your best bet. For the Forex market, day trading near the US open, or during the European session, is your best bet.

Part-time trading is fine, but trade regularly. Casual trading isn't recommended. If you "dabble" you're unlikely to gain consistency, making some money but then giving it right back. Once you've mastered your strategy and technique, day trading really is only a part-time job. Learning how to day tradecan be more like a full-time job, though.