5 Smart Tips for Trading Stocks Part-Time

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There’s a misguided view that when it comes to trading stocks, you need be all in to really make it financially worthwhile. That’s simply not true. It’s important to build a solid portfolio over time at a rate that makes the most sense for you.

Need a little help? Here are some tips for trading stocks part-time that can help you build your portfolio and earn a little dough.

1. Swing trade your way to profits.

Swing traders hold stocks anywhere from a few days to a few months, depending on trading strategies and market conditions. While there are many different trading strategies, most seek to identify and capture a trending stock’s “sweet spot,” or the bulk of the trend. This type of trading is conducive to the part-time trader, since precise entry and exit is not the goal and you don’t have to watch the ticker around the clock.

2. Develop bread and butter trading strategies.

Every successful athlete needs a go-to move and traders are no different. Successful traders rely on bread and butter strategies to maximize their profit potential. A toolbox of strategies include break out-pullback, trend pullback, post earnings trades, and more. Becoming an expert in these strategies mans you’ll know them better than the back of your hand.

3. Build a strong watchlist.

Watchlist development is the key to successfully trading part-time. Every evening, I identify 10-20 Primary Watchlist Stocks that will receive most of my attention the coming trading day. These stocks are culled from my master Focus List, which is developed over time using my bread and butter strategies.

4. Identify entry and exit points for primary watchlist stocks.

When picking stocks for your Primary Watchlist, write down the price that would get you to enter the stock, your expected target and your stop-out prices. Base these prices on your bread and butter strategies. For example, if a breakout strategy identifies $25 as the level that will propel the stock higher, mark this level as your entry point. If $30 is the level at which you would take profits, mark this as your target. Most important, figure out how much you’re willing to lose and mark this as your stop-out level. Most traders want their stop out to at the least match their target level, while risking no more than 1-5 percent of their portfolio. In this case, your stop-loss would be no lower than $25.

5. Let your target and stop levels do the work.

Once you have entered a trade, there is an overwhelming temptation to continually eyeball your positions. This can lead to over trading, which can be detrimental. Instead, turn off the quote feed once your trade is made. You’ve already researched your positions and set target and stop levels. It’s now time to let your analysis work itself out. With risk analysis and a stop-loss order in place, the probability of a disastrous loss to your portfolio is minimal. So sit back and relax. Or better yet, focus on your day job!

Following these 5 smart trading tips will do wonders for your portfolio, help you evolve as a trader and help you better manage time and stress levels.