Trading foreign exchange (Forex) as a retail day-trader is often marketed as a glamorous part-time occupation.
Websites promoting forex training courses or brokerages may suggest that trading forex is a fulfilling part-time hobby that could supplement a users’ income or even enable them to quit their job.
These claims are very familiar because they are usually attached to any product marketed under a get rich quick sales pitch. Such pitches will pander to our daily frustrations with our jobs and effectively tap into our desire for financial freedom. Who wouldn’t want to lounge on a beach every day like a vacation?
In this article, we’ll examine the practical realities of becoming a forex day trader and examine whether the part-time lifestyle being promoted by many online is a feasible option.
What does Forex trading demand of a trader?
Trading is a mentally demanding profession that requires resilience and perseverance.
When we paint a mental picture of ourselves as a day trader, we tend to visualise the wins rather than the losses. However, trading professionals will acknowledge that even when they’re relatively successful in the market, they could be making losing trades 53% of the time.
With odds like those, the chances of a losing streak are high. A string of 5 consecutive losses is almost inevitable over a long period. Try to put yourself in the shoes of a trader who has performed research and placed a trade only to lose money for the 5th time in a row. Would this rattle you? Would this cause you to question the effectiveness of your trading strategy? Would this throw you off your game?
If you are answering yes to these questions, congratulations! This proves that you are human. Of course, these are all perfectly natural responses to witnessing your own decisions consistently leading to a financial loss.
A successful forex day trader has a good grasp of trading psychology and has built up the experience to keep their head during difficult trading periods.
Comparing day trading to a full-time job
If you compare the above to the demands of a full-time administrative assistant working in an office. Who do you think of the day trader or the office assistant would:
- Pay more attention to their work?
- Operate at a consistently high level of performance?
- Want to use every hour possible to provide themselves with an edge?
These rhetorical questions are designed to highlight that the stress and adrenaline which accompanies day trading elevates the demands of the job beyond many traditional full-time occupations.
Therefore, it is difficult to see how a forex day trader could be successful while treating the exercise like a casual part-time hobby.
Trading is ultimately a pure expression of competition. If hedge funds and investment banks are asking their teams of well-trained, traders to compete through the world’s most popular trading platform such as MT5 in long positions, does a part-timer stand a good chance at toppling them?.
Traders bring their A-game in the hope of beating thousands of intelligent and motivated traders to the financial prize. An FX hobbyist cannot hope to consistently beat the market unless they are gifted with abnormally brilliant mental faculties. We’ll let you decide.
