Is trading part time better?

I work full time. I have a wife, two kids, and a mortgage. I have enjoyed investing and trading for many years (decades now that I think about it!), but have always needed to find a way to do it part time. Today, I explore some of the advantages to trading part time vs. full time.

  1. Free time. This is a “gimme”. Assuming trader A and trader B both make $50k a year trading and trader A can do it in 40 hours a week and trader B can do it in 5, I would much rather be trader B. This would allow for more free time to pursue other interests – read (or write) a book, go for a run, donate time to charity, or finally catch up on that Netflix (ticker: NFLX) series you keep hearing about.
  2. Planning. I cannot watch the markets all day. That means I need to set up my trades ahead of time and execute them in small windows of time when the market is open. The benefit is that I can really think through the trades before I put them on, considering what can go wrong, and making sure my sizing is appropriate.
  3. Discipline. A lot of traders suffer from “overtrading”. Staring at the screen, watching candles grow (or shrink) can lead traders to put on trades trying to catch small movements or “scalping” the market. While some are successful at this approach, many more are not. I don’t chase trades, I don’t try to scalp, I don’t see a short term loss and panic and put on more trades to get ‘even’. I Can’t do these things, since I simply don’t have the time.
  4. Defined risk. Traders that can watch the markets continuously have a bit more flexibility in the positions they put on as they can more easily adjust positions or more quickly take off losers. As I don’t have this flexibility, almost all of my trades have defined risk going in. That way, even if I can’t get to the markets, I know exactly how much I can lose on any given trade. If I keep this small enough relative to the size of my account, I can never go bust.

So what is the disadvantage?

Covered a bit in #4, there are simply certain trade types that I can’t put on and others that are harder to capture all the profits, since I can’t be in front of the screens all day. I think the advantages outweigh the disadvantages though. Disagree? Am I missing others? Drop us a line via email, Facebook, or Twitter.

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