This article doesn’t deal with how to open a brokerage account or creating a trading strategy, rather we will be looking at tips the “average trader” can use to successfully trade stocks with limited time.
The ancient myth is that you need access to a computer during market hours to perform any stock trades; however, when I first started trading stocks, I was still in school. This was when all cell phones could do was play snake much less any mobile trading, so sitting by the computer executing trades all day was out of the question.
I define the average trader as pretty much somebody who isn’t relying on their trading for primary income. Most likely they are also occupied during trading hours be it with school or a job.
Below is a list of tips average traders can use to trade on limited time contraints.
1. Choose the Right Stock
Obviously, I don’t mean the literal sense of choosing the right stock, but rather choose the right type of stock. If you are not going to be able to monitor you stock on a consistant basis, then you want to avoid volatile stocks, stocks that move up and down in erratic fashion.
You will want to avoid stocks with major or pending news that can cause a spike in the stock’s price. For example, if a bio-stock is awaiting test trial results or a company set to report earnings.
2. Use Special Market Orders
I was usually already in class or on the way to class when the markets open, so I was unable to put my orders in until I see how the market is unfolding. Instead I used specialized ticket orders like a stop market order. This pretty much assured me that my stock order would only go through if a certain price action was met. See more market order options.
So if a stock I wanted to buy opened lower, then my order would not go through. Certainly it isn’t a full proof system, but more often than not it should protect you from drastic losses.
3. Create Your Own New Source
When I first started trading, quality news seemed easier to come by or at least the noise was not near what it was today. Nowadays we have all different type of media outlets, that it can be an overwhelming task in itself to just go through the news.
To save yourself some time, aggregate financial news from your favorite sites into a RSS reader. This will cut down the time needed to cut through news you don’t need and also help you stay more focused by de-cluttering any extra information or unsolicited news. Check out 50+ stock market websites, blogs, and communities.
4. Subscribe to a Premium Service
When time is limited premium services can be extremely beneficial to your trading. There are essentially two types of premium services: stock picking and premium news services (i.e. Investors Business Daily). Ideally you want to find one that works best for you and meets your needs.
Most of these services have some sort of free trial, so you can give them a test run first. A good way to determine whether a premium service is worth it or not is to weigh the cost. Does the cost for membership result in better or most consistent returns? Test out MarketClub’s triangle trade for 30 days.
5. Create an Exit Strategy and STAY WITH IT
Regardless of what type of stock trading you do, you should always have an exit strategy (both stop and price targets), but this holds even more true when you can’t follow the market all day. Letting a stock run a day or two longer passed its exit point can be much worse than a couple minutes. That is why you should keep a dedicated stop or exit plan in place at all times and stay with it.
All in all, advancements in technology and common knowledge has made stock trading much more user friendly among the masses, and there is no reason time limit should have an impact on whether or not you should enter the market.
At the end of the day, all you really need a little bit of organization and strict time management.