Can I day trade for just 2 hours?

Day trading is fast and it’s ruthless. Day traders are often glued to their screens for hours on end, monitoring price movements, and executing trades in a matter of seconds sometimes. The strategy is often seen as one that requires full-time dedication, with little to no time left over for other commitments. However, the question begs to be asked, can one day trade for just 2 hours a day and achieve any level of success? Well, the answer is somewhat nuanced. Let’s discuss. 

What does day trading involve?

Day trading is a short-term trading strategy used by traders looking to profit from small but rapid price movements. Can be applied to a variety of financial instruments, be this forex, stocks, metals, commodities, etc.

Positions are usually held for seconds, minutes, or a few hours, and are typically closed before the trading day ends. Day traders that choose to leave a position open overnight are likely doing so to minimise losses on a losing or maximise profits on a winning position. You must have a strong understanding of the markets, the factors that impact price movements, and what measure of risk management one must adopt to protect their capital.

While day trading can result in profitable wins, it does rely heavily on one’s ability to think quickly (and accurately) on their feet, and being able to assess risk properly. So, given the time pressure involved in day trading, is it possible for someone to succeed while trading only 2 hours a day?  

What hours should one trade?

The markets are divided into the concept of day trading for only 2 hours a day is based on the premise that the most substantial market movements usually take place at certain times. Typically, the first and last hours are the most active and therefore the most volatile, providing key opportunities for day traders. More specifically, the first hour sees heightened activity as the market reacts to overnight news and institutional traders place their trades, leading to increased volume and volatility.

Similarly, the final hour of trading is busy too, as traders close their positions and institutional orders are executed, offering further chances for short-term gains. So, acting on the basis that one can day trade for just 2 hours a day, picking the right hours is key.

Why opt for only 2 hours a day?

So, why might a trader choose to focus on trading within a short window of time?

• Committing only 2 hours out of your day to trade ensures there’s enough time left over to pursue other interests, ensuring a more balanced schedule or routine.
• Day trading is notorious for being highly stressful, impacting psychology immensely. By limiting your trading time to 2 hours, you’ll be able to focus better – important for making more accurate trading decisions.
• Restricting your period to two hours may reduce the impulse to overtrade. Instead, you’ll have the clarity to make more informed decisions without the stress of day-long volatile trading periods impeding your judgement. 
• By limiting time, a trader is likely to reduce their exposure to risk that can occur throughout the day. This may help in managing risk more effectively and avoiding fatigue.

The challenges of trading within a 2 hour period

While there are many reasons backing the idea of day trading for just 2 hours, there are risks involved which are just as important to note. For instance, confining yourself to just two hours may see you miss out on opportunities occurring at other times during the day.

There may also be an increased pressure to perform, leading to impulsive decision making ou overtrading. You may pick a day where not much action is taking place, limiting  your potential for achieving your profit goals even more as you’ve restricted yourself to just two hours worth of trading.

Finally, sticking to just 2 hours requires discipline and restraint. Avoiding the impulse to continue beyond those two hours can become very taxing psychologically, particularly if you experience FOMO.

Becoming effective at 2 hours

There are several factors to consider when becoming a day trader, particularly for the effective implementation of this strategy over a two-hour window. Some of the most important are as follows:

1. Build a trading plan and stick to it. Use the plan to pre-establish entry and exit points and set proper risk management measures.
2. Ensure your plan includes appropriate risk management tools like stop-loss orders. This is to limit losses and safeguard your capital as best you can.
3. Keep informed of any news and events that could impact your 2-hour period. This includes economic releases et indicators, corporate earnings announcements, outbreak of war, pandemics, etc.
4. Develop a very good understanding of technical analysis. Day trading depends on it, and without knowledge of how to use this form of analysis, the likelihood of executing misinformed increases exponentially.
5. Consider journaling your trades, noting what positions you opened and closed, and why. Also record what trades were successful and which ones weren’t. In addition, note what the triggers were that caused a change in your behaviour, driving you to take certain decisions. By having a historical record to look back on, you’ll be better equipped to deal with the triggers, and increase your potential for more successful outcomes.
6. Manage your trading psychology as best you can. A calm mind and sound reasoning is required for day trading. Without it, you’re likely to make financial decisions based on emotions/feelings, rather than objective data. So do what you can to stay level-headed, be this engaging in mindfulness practices, exercising, eating healthy, etc.
7. Consider signing up for a demo account to practise. Using virtual funds, you are able to enter and exit positions in a virtual environment, thereby not putting your own money at risk. Over time, you’ll gain the experience required to become a better trader, using your two-hour time frame more optimally.

How do you know whether to become a day trader?

Day traders typically possess specific traits. They are confident and quick thinking. They have a tenacity for technical analysis and are congniscent of the impact that certain events or news have on price movements. They realise the importance of investing time and learning into making more strategic trading decisions. If you decide to become a day trader, regardless of whether it’s for two hours or eight hours a day, ensure you have the personality, temperament and skills that are conducive to handling the challenges that day will throw your way.

In so far as honing your expertise is concerned, dedicate some time within your schedule to learn as much as you can about day trading. Read blogs, e-books, or physical books. Listen to podcasts and webinars. Attend seminars if you can to engage with other traders and experts in their field, in person. Watch videos and tutorials. Join online communities to exchange insights and ideas. These are all great resources for gaining information.

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