Day trading the stock market with a full time job? ...or Swing trade? Please help!

[panvulcon]

Over the past six months i have spent around four hours per night and entire weekends devoted to learning how to trade, how to research stocks and how to apply technical analysis. I now feel confident enough to begin trading on the nasdaq with my hard earned cash.Which brings me to my problem - I am conflicted between the style of trading that will suite my routine, or more specifically, the style that will best fit around my job, lifestyle and my bias towards technical analysis and pennystocks (50p to £10) - this means not getting the sack for looking at charts whilst I'm supposed to be working and not completely abandoning my young family. A tough ask, but I think that this is manageable. Let me explain...

I live in the UK and work somewhat flexible hours. My current start and end time is 07:30 while 03:30 GMT, which means that I get home around 04:15 GMT (11:15 EST) apart from Fridays when i finish at noon (07:30 EST). So for the most part of the week I get home after the most volatile period of the day has just ended. This bugs me somewhat, which is why i have included an option three in my trading styles list below.

Option 1) would be to drive home after work and use the lunchtime lull to spend checking my watch list for anything in play during the afternoon session, making sure that I am square by the end of the day; leaving me with only a small window of opportunity to turn a profit. Another negative is that i will be almost guaranteed to watch a pattern develop that i want to trade on a daily chart, only for me to miss a large part of the opportunity or to miss the opportunity entirely by the afternoon. This of course would be classed as day trading, or rather day trading the afternoon session.

Option 2) is to swing trade using daily charts only - from what i have observed so far, this would provide more reliable eastern and western pattern convergence. The negative of this though, and its a big one, is in leaving a position open overnight and all morning. I wouldn't want to rely on stop loss orders to get me out of dodge and cant guarantee i will be able to look at the charts during work at all times.

Option 3) this is sort of a hybrid of option 1 and option 2 and is my preferred option for trading but i'm not sure that it will fit my family life. This would be to work until 13:30 GMT (08:30 EST) at which point i would take an extended lunch break. Allowing me to trade the morning session, square any trades before noon and then complete an extra few hours at work before driving home, at which point I would either setup for the afternoon session or just relax, depending on how the morning session went.

Option 4) go stick all my money on black, cross my figures and say a prayer in 7 different languages!

But joking aside, any advise would be greatly appreciated! Especially from people who have managed to hold down a full time job and either day trade or swing trade.

Almost forgot to mention, my aim\ agenda in all of this is to one day trade for a living, I've read a few articles about people just leaving their day job with little experience and or capital. Which sounds like disaster to me, so i have made a vow to myself to spend time mastering this art and only consider thinking about quitting my job after becoming consistency profitable; and if that day never comes then i have one of the most expensive hobbies in the world . For those that are interested, my initial budget\capital is a very modest $3000 BUT this is topped up monthly with around $800 of completely, will not cry if i lose it all, disposable income.

Sorry for the long post and thanks for reading.

Andy

 

[tomorton]

Make a consistent paper profit under all market conditions before trading with real money.

Day-trade brilliantly and full-time - or not at all. While you have a job, it has to be not at all. Think of the salary you could lose by doing a bad job.

Otherwise, swing trade and definitely hold overnight (and one weekend if necessary) but go for the least volatile instruments to make it tolerably low risk. Forex is less volatile and subject to shocks than stocks, especially small caps. Forex trends are readily identified and can persist for months so you don't have to give it a lot of attention or be a brilliant trader. Trade small until you're laughing in money, then bump it up a gear. Why not just swing trade EUR/USD?

 

[panvulcon]

Make a consistent paper profit under all market conditions before trading with real money.

Day-trade brilliantly and full-time - or not at all. While you have a job, it has to be not at all. Think of the salary you could lose by doing a bad job.

Otherwise, swing trade and definitely hold overnight (and one weekend if necessary) but go for the least volatile instruments to make it tolerably low risk. Forex is less volatile and subject to shocks than stocks, especially small caps. Forex trends are readily identified and can persist for months so you don't have to give it a lot of attention or be a brilliant trader. Trade small until you're laughing in money, then bump it up a gear. Why not just swing trade EUR/USD?

Hi Tomorton, thanks for your reply.

I certainly wouldn't want to risk my job over trading. My thinking behind day trading was to take advantage of my flexible hours and the time difference between Europe and the USA. As you pointed out though, this may be too involved, however I think trading longer term such as weeks and months wouldn't be involving enough for me. Striking the balance between the two feels right, a couple of days to a week or so perhaps, however I would like to be aiming at 10% profit per trade. I'm see these sorts of profit windows on stocks but I'm not familiar with forex tbh - are these types of gains possible over the same timeframe?

My reasoning for trading with real money is so that I can as close as possible mimick professional trading, including any emotional aspects. My plan would be to use small positions until becoming consistently profitable at which point I would scale in.

I was originally drawn into trading stocks largely due to the huge range of potential plays, allowing me to play patterns and setups I feel comfortable with. I will certainly be reading up on the forex market though.

 

[panvulcon]

This is a common dilemma for many new traders
You'll need to experiment and find the best way for you -depending on your risk appetite, whether you can sleep at night knowing that you have an open position, how much time you can dedicate to monitoring the charts versus spending time with your family, and so on....
If you want to try day trading I would suggest to consider trading Forex. The daily ranges do offer enough volatility for a day trader to be able to go in and out a position within a few hours or sometimes even minutes .
Regards
KarmaD
www.forex10best.com

KarmaD, it's kind of like a chicken and egg scenario!

Trading the afternoon session wouldn't be a problem for me, it's the morning that's tricky. To be comfortable holding a position overnight i would want to be alerted of any trend change the following morning and be able to act on it. Something I will have to figure out I guess - unless I was to hold positions longer and swing trade.

 

[panvulcon]

Can anybody provide any insite into the routine of a swing trader? ...Is the end of day price action all that really matters or do you look at intraday charts throughout the day too?

 

[0007]

Can anybody provide any insite into the routine of a swing trader? ...Is the end of day price action all that really matters or do you look at intraday charts throughout the day too?

It all matters. I do my major analysis on the EOD data – that's a broad general statement. Specific methods will most likely vary according to the individual trader's style, but that's not important with regard to the big picture situation. Probably one of the most important things I do EOD is to review my stops and my overall risk situation. My second routine is to look at intraday charts during opening, midway and closing periods. These are used for potential entries and exits based on the EOD analysis, and also to keep an eye on open positions doing anything untoward. My temptation is to spend too much time looking at the live charts/price and it requires a bit of practice to get the right balance between leaving the pot to boil and watching it cook.

It's reasonably easy to make all your decisions beforehand: the ideal theory says that you then swiftly execute them with laser-like focus during opening hours. But it frequently doesn't work quite like that! These days I find myself spending more time in a sort of day trader mode in order to get the best entries – with a bit of practice you get a feel for the candles just by watching the intraday chart in the sub-15 timeframes. With regard to exit I just get out once the decision has been made (beforehand). Again, the temptation is to hang on to get just a little bit better price but experience has shown that on average it's just not worth it and nothing is more galling than having made a decision to get out, you bottle out of doing it, and then see the price go seriously against you. You soon learn though, due to the spring in your step on account of the lightness of your wallet!

Having said all that I consider that the end of day analysis is the most important part of my routine and if I did just that and executed my decisions the next day I would still be profitably okay. But I just like to do as well as I can hence time spent during intraday – this is an individual thing and depends upon your personality / perseverance / appetite for improvement and time available. Because I trade the US markets I can do my analysis in the very late evening and there is plenty of time the next day to do anything outstanding. I think one of the big advantages of swing trading is that you can choose markets and a trading style to fit any temporal routine that is imposed upon you e.g. like the inconvenience of having a day job and family to attend to! It's also unnecessary though quite possible, to go cross-eyed in front of a screen for hours on end with your butt firmly anchored in a chair.

 

[Dr. Toad]

I am in a similar position as you are panvulcon, although I jumped into the fire with a pick up as I go attitude. Probably not advisable for most people though so kudos to you for doing some research at the outset. You are most certainly already ahead of me since I have only been at it for about 2.5 months now. So to you I will offer no real advice, just my observations.

Much like you I have a fairly flexible schedule. Unfortunately for me, my cube is directly outside my bosses office so he can see me at all times simply by looking through the reflection in his window (damn my luck ). I have to this point only really been testing out swing trading strategies since this allows me to set limit orders, update stops, and set alerts for when my target sell is approaching all before the day even begins. I typically look at the price action of the day after it ends to help me set these and don't fudge them much throughout the day. My success thus far has been lacking so perhaps this really is not a way that it can be done...to early for me to say one way or the other.

I have found that my smartphone is very much my friend as this allows me to set my stops after my buy limit orders get filled during the day, and to cancel my sell stop orders and set them to sell limit orders when my target price is near. That is really the extent I need to look at/fiddle with stuff through the day.

I am actually testing a pseudo day trade strategy now though. I say pseudo since my understanding is that for the most part day traders need to watch price action closely during the trade, and I have developed my system so I don't so much need to monitor. I have serious doubts as to if this will be successful, but I really don't see many ways that day trading would be practical for someone with a full time job other than something like it so I would be interested if other have found ways to do this as well.

The only comment I will make with regards to your plan of trading penny stocks, is be very careful with that. I started with the idea that stocks between about $5, and $8 would be ideal for me as well. In fact, one of my first few trades was a stock around $7, that went up 15% in about 3 days and I got out. Somehow I managed to get out at the top because it tumbled back down to about $6 over the course of the next few days.

Another early one I took was ~$6, went up strong to ~$6.5 in a day and I bought in. It continued up to ~$7 the next day. The day after that, it gapped all the way back down to ~$6 and I panic sold it for a ~7.5% loss.

The point I am making with this is that in my very limited experience, it seems these move around a lot faster than most stocks and may require more than just a cursory glance every day especially if swing trading these.

I now stick mostly to stocks in the above $15 range with high volume (typically greater than 1,000,000 shares a day) as these seem to move at a more manageable pace for the most part.

 

[panvulcon]

It all matters. I do my major analysis on the EOD data – that's a broad general statement. Specific methods will most likely vary according to the individual trader's style, but that's not important with regard to the big picture situation. Probably one of the most important things I do EOD is to review my stops and my overall risk situation. My second routine is to look at intraday charts during opening, midway and closing periods. These are used for potential entries and exits based on the EOD analysis, and also to keep an eye on open positions doing anything untoward. My temptation is to spend too much time looking at the live charts/price and it requires a bit of practice to get the right balance between leaving the pot to boil and watching it cook.

It's reasonably easy to make all your decisions beforehand: the ideal theory says that you then swiftly execute them with laser-like focus during opening hours. But it frequently doesn't work quite like that! These days I find myself spending more time in a sort of day trader mode in order to get the best entries – with a bit of practice you get a feel for the candles just by watching the intraday chart in the sub-15 timeframes. With regard to exit I just get out once the decision has been made (beforehand). Again, the temptation is to hang on to get just a little bit better price but experience has shown that on average it's just not worth it and nothing is more galling than having made a decision to get out, you bottle out of doing it, and then see the price go seriously against you. You soon learn though, due to the spring in your step on account of the lightness of your wallet!

Having said all that I consider that the end of day analysis is the most important part of my routine and if I did just that and executed my decisions the next day I would still be profitably okay. But I just like to do as well as I can hence time spent during intraday – this is an individual thing and depends upon your personality / perseverance / appetite for improvement and time available. Because I trade the US markets I can do my analysis in the very late evening and there is plenty of time the next day to do anything outstanding. I think one of the big advantages of swing trading is that you can choose markets and a trading style to fit any temporal routine that is imposed upon you e.g. like the inconvenience of having a day job and family to attend to! It's also unnecessary though quite possible, to go cross-eyed in front of a screen for hours on end with your butt firmly anchored in a chair.

0007, thank your post it was very insightful. Do you trade small caps?

 

[0007]

0007, thank your post it was very insightful. Do you trade small caps?

I trade the S&P 500 so no small caps thus avoiding big volatility and the more frightening unexpected mini black swan type of events – all part of my risk management. I trade S&P 500 shares with prices greater than $25. Once you go below that e.g. the $10-$15 range, even though they can trend quite nicely the actual change in $ tends to be a bit on the small side which means you have to hold it for longer to get a decent return which in turn means you are increasing your risk exposure. I never have any problem finding suitable shares from the rest of the pool so it's not a problem.

 

[timsk]

hi panvulcon,
There are plenty of day trading opportunities to be had in the final two hour session of the day, i.e. 7.00 - 9.00pm U.K. time. I did this for quite a few years when I started out trading U.S. equities.
Tim.

 

[0007]

hi panvulcon,
There are plenty of day trading opportunities to be had in the final two hour session of the day, i.e. 7.00 - 9.00pm U.K. time. I did this for quite a few years when I started out trading U.S. equities.
Tim.

Isn't that how Mr. Charts started? And he seems to know a thing or two about day trading US stocks.

 

[panvulcon]

Apologies if I have Not replied to all messages yet - I will reply to all once I am back home.

0007, I seem to remember reading somewhere that Many day traders focused on only one part of the day. Which is along the lines of what you suggest Mr. Charts is/ was doing.

I wouldn't mind betting that it is the morning that the majority choose but I would love to here from anybody who identifies themselves as a day trader who focuses on the afternoon session.

 

[timsk]

. . . I wouldn't mind betting that it is the morning that the majority choose but I would love to here from anybody who identifies themselves as a day trader who focuses on the afternoon session.

Hi panvulcon,
I recommend that you don't rule out the evening session without looking into it. You might be pleasantly surprised. It's different for sure, but the opportunities are definitely there, and some might say it's a better time of day to cut your teeth on. Slightly less volatility, fewer news announcements to catch you out and the European markets have closed. The thing about the evening session is that unless its a very strong trending day, many stocks, sectors and the market as a whole will tend to revert to the mean. Reasons given that account for this are traders taking profits and value investors looking to get in at or below VWAP and other significant averages etc.

I did rather well trading the evening session, got over confident in fact and, when I had a few days off work, I dived into trading the afternoon session and promptly blew up my account!
Tim.

 

[0007]

Apologies if I have Not replied to all messages yet - I will reply to all once I am back home.

0007, I seem to remember reading somewhere that Many day traders focused on only one part of the day. Which is along the lines of what you suggest Mr. Charts is/ was doing.

I wouldn't mind betting that it is the morning that the majority choose but I would love to here from anybody who identifies themselves as a day trader who focuses on the afternoon session.

I think you will find that's how Mr Charts started before he went full-time. I like the US markets on a personal basis because they open late in the UK day and I'm not always fully awake in the morning. But for someone holding down a day job the US markets are well timed for trading after you get home – say 7 to 9 pm by the time you've got your act together. But far be it for me to tell you how Mr Charts trades. You will see in his main threat that he is always prepared to answer sensible polite questions. I'm sure you would also find it useful to read his interview with T2W and various other pieces he has written over the years. He has given a lot of information based on personal experience that I have found extremely helpful. I'm not a day trader, though I'm warming to the idea: so I'm totally unqualified to advise in that area.

 

[tokyojoe]

Hi Panvulcon, I am a part time day trader of approx 4.5 years.
I am very glad to have kept my freelance business going along side for all this time.

Not only is this game highly addictive (if you let it in too much), but actually once you become accustomed to the various trading scenarios & price behavior (yadda yadda) & go through a few seasons, then come to a point where you can actually read what has & more importantly IS unfolding in front of you on the screen (without a gazillion lines & flashing do-da's) then you will find that trading can be very boring indeed, especially with low volume (i.e typically summer/hols/US bank hols etc).

I would advise it is very important to become familiar with speed of flow if you enter the day trading arena. It is all good learning the various ins & outs of the game, but different days present their own test of this speed of flow (or volume). You sound like you've done some homework, so I imagine you will know where I'm coming from.

Anyway, the upshot of my post was just to say keeping my fingers firmly in another pie was the best thing for my trading, because I don't rely on it to pay my way, therefore I'm not all sweaty palmed & eyes bulging (though I've done plenty of that over the time) & I have a completely different focus away from this time consuming vocation.

Day trading is very tricky.....get caught in a trap, trade tired, make the mistake of trading in slow grinding churn, all very real situations that can empty your coffers.

Then there are the days when the market is ready, the day you are also ready, perfect combination.

Good luck.

 

[panvulcon]

I am actually testing a pseudo day trade strategy now though. I say pseudo since my understanding is that for the most part day traders need to watch price action closely during the trade, and I have developed my system so I don't so much need to monitor. I have serious doubts as to if this will be successful, but I really don't see many ways that day trading would be practical for someone with a full time job other than something like it so I would be interested if other have found ways to do this as well.

Sounds interesting, keep me posted on how it goes

I understand that many people trade only the morning action, but it looks like a few people do seem to be concentrating on the afternoon too. You mentioned that you have similar working hours to me, did you considered trading the afternoon using day trading strategies? I know that one strategy is to short the afternoon fade, whereby the price enters a trading range, fails multiple times to break out to a new high before eventually breaking down below the morning low, with an optional test of resistance before free-falling! TBH this sounds risky, so you would definitely want to have one eye on the charts and the other on level 2

 

[panvulcon]

hi panvulcon,
There are plenty of day trading opportunities to be had in the final two hour session of the day, i.e. 7.00 - 9.00pm U.K. time. I did this for quite a few years when I started out trading U.S. equities.
Tim.

I guess there are pro's & con's to each session.

Were there any specific strategies that helped you trade the afternoon session?

 

[panvulcon]

Hi Panvulcon, I am a part time day trader of approx 4.5 years.
I am very glad to have kept my freelance business going along side for all this time.

Not only is this game highly addictive (if you let it in too much), but actually once you become accustomed to the various trading scenarios & price behavior (yadda yadda) & go through a few seasons, then come to a point where you can actually read what has & more importantly IS unfolding in front of you on the screen (without a gazillion lines & flashing do-da's) then you will find that trading can be very boring indeed, especially with low volume (i.e typically summer/hols/US bank hols etc).

I would advise it is very important to become familiar with speed of flow if you enter the day trading arena. It is all good learning the various ins & outs of the game, but different days present their own test of this speed of flow (or volume). You sound like you've done some homework, so I imagine you will know where I'm coming from.

Anyway, the upshot of my post was just to say keeping my fingers firmly in another pie was the best thing for my trading, because I don't rely on it to pay my way, therefore I'm not all sweaty palmed & eyes bulging (though I've done plenty of that over the time) & I have a completely different focus away from this time consuming vocation.

Day trading is very tricky.....get caught in a trap, trade tired, make the mistake of trading in slow grinding churn, all very real situations that can empty your coffers.

Then there are the days when the market is ready, the day you are also ready, perfect combination.

Good luck.

Thank's you for your advice Tokyojoe.

Being self employed must be great, so much flexibility - although i bet its difficult deciding between seeing a trade out vs actually doing your day job.

I have spent a good while looking at small caps and really appreciate what a high spread and illiquid mean. The only stocks that i plan to keep track of, are the ones in play on high volume which means scanning stocks, making watch lists and doing homework before entering the market; as opposed to having a select few stocks that i know like the back of my hand.

 

[panvulcon]

I think you will find that's how Mr Charts started before he went full-time. I like the US markets on a personal basis because they open late in the UK day and I'm not always fully awake in the morning. But for someone holding down a day job the US markets are well timed for trading after you get home – say 7 to 9 pm by the time you've got your act together. But far be it for me to tell you how Mr Charts trades. You will see in his main threat that he is always prepared to answer sensible polite questions. I'm sure you would also find it useful to read his interview with T2W and various other pieces he has written over the years. He has given a lot of information based on personal experience that I have found extremely helpful. I'm not a day trader, though I'm warming to the idea: so I'm totally unqualified to advise in that area.

Good call, I will definitely be reading up on Mr. Charts - i see he is from Leeds UK which is near where i grew up - small world!

 

[tokyojoe]

Thank's you for your advice Tokyojoe.

Being self employed must be great, so much flexibility - although i bet its difficult deciding between seeing a trade out vs actually doing your day job.

I have spent a good while looking at small caps and really appreciate what a high spread and illiquid mean. The only stocks that i plan to keep track of, are the ones in play on high volume which means scanning stocks, making watch lists and doing homework before entering the market; as opposed to having a select few stocks that i know like the back of my hand.

Hi Pan, being self employed is like everything else in life, it's yin yang, I've been self employed since my early 20's, it's one of the reasons I got into this trading milaky (as well as having a few mates on "the other side"....who told me not to do it)

I am able to concentrate 100% when in the market on any day I'm in (market TF is usually 7am-11am, then 1pm-4pm), but if I don't make my money by 11am, or worse I'm really off kilter & taken a slap, I find it's not a good mindset for the afternoon session.

I have a very hard & fast rule re my time in the market, it's a habit I'm glad to have gotten into early when I started in 2011.

I have whittled my way down to trading just the Dax for the past year or so.
I used to be all over the show looking for trade ops here, trade ops there, watch lists etc, but finally settling to trade the Dax, mainly due to it's volume, European time frame etc.

It's not so much knowing it like the back of my hand, it's more the fact I do not want to spend too much more of my time in the markets than I need to, I've spent so much time on it already that I find it easy to see what I need to do, it's more now see monkey..do monkey

As you are working full time you are right in thinking the the US is good for you to track in real time, although the US volume often drops off after the European close (generalizing of course) you seem to have decent finish times in your job, real time exposure with real money on the line was the most important learning curve for me.

For me nowadays....

...Market moving, lots of traction....I'm in

...market dead or creepy....I'm o'ot