Part-time traders don’t generally have the flexibility of their full-time counterparts. Not only is their time for research and analysis more limited, but often by the time they’ve left work, arrived home, and fired up the computer, the active share market is closed, forcing them to deal with the after-hours system to enter or exit their trades. While of course this can be done, there are a few practices which may ease the process.

As a part-timer, it’s a good rule of thumb to only enter trades on the day following an entry signal’s trigger. Even if the trend continues in the appropriate direction, a stale or too-late market entry reduces profits and increases the risk of the trade turning south. Depending upon one’s trading system, trades could be entered on the day following:
•    the break beneath a double top’s or head and shoulder’s neckline;
•    the crossover of two moving averages; or
•    an engulfing candlestick or outside day indicates a potential reversal of a downtrend.

Most part-time traders prefer limit orders for after-market entries. Limit orders provide trade execution, long or short, at a specified price or better, e.g., at the trigger price or lower for a long market entry, at the trigger price or higher for a short sell. Limit orders can be utilised after-hours with most online trading platforms, with the stop-loss and take-profit levels entered at the same time.

Note that not all limit orders will be filled for after-hours trading, for various reasons. As an example, there may not be sufficient quantities of the stock available to fill all the long entry orders at the specified price or better, and therefore some limit orders may languish. It happens. Traders should remember that it’s preferable to enter the market on the trader’s terms rather than the market’s, and simply move on.

The worst type of order for part-time traders are market orders, which should never be entered outside active market hours. Recall that the stock market is at its most volatile upon first opening, with prices rising and falling dramatically as the day’s first orders are filled, and recall that a market order is filled at the next available market price, even if it’s significantly higher or lower than the trader desired. This is the reason for the old Wall Street saying, “Amateurs trade at the open, but professionals trade at the close.”

Trailing stop losses were created out of kindness for part-time traders. They’re perfect for protecting an open position and locking in profits so long as the trade travels in the correct direction. Should the price action stop and reverse, the trailing stop freezes and will be triggered at its last level.

There are two reasons to exit a trade—the profit is satisfactory or the loss is not. Either way, part-timers have no reason to wait. When the exit signal pops up, enter the order and move on. Another trade awaits.

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