day trading part-time to overcome overtrading

Kicking The Overtrading Habit By Trading Part-Time

Trading Blog


November 20, 2020

Day trading part-time is a fascinating exercise in discipline. I love seeing how other successful traders are doing it while also having a full-time job or attending a college. It’s amazing to see how resourceful these traders are and how they manage to spend their time. And, of course, there always are a few things to learn from them.

Just like many other traders, Matt Monaco started his journey in the small caps world. Inspired by Tim Sykes, Matt started trading penny stocks back when he was in college. And while he liked OTC, the market was somewhat slow in 2019. Plus, it was very volatile, and it was extremely frustrating to trade when the market offered little certainty. It’s one thing to lose a trade because you did something wrong, and it’s a completely different thing to lose big when things just didn’t trend the way they normally would. What’s worse, a single loss could easily wipe out multiple wins. Long story short, switching to big caps was a perfect solution for Matt in 2019.

Turns out, trading big caps has many advantages due to its slower pace. You don’t get squeezed out, and you don’t experience slippage as much. But most importantly, most trades take several hours, not minutes, to play out. Thanks to that, you can use automation to help you manage your trades. Once you enter your position and your stop, you can let them play out all by themselves. You don’t need to be glued to the screen for the whole duration of the trade anymore. You can study, attend classes, do stuff around the house, or go to work because the market moves so much slower. When you have the automatic stops in place, the risk of the trade going terribly wrong is extremely low when compared to the OTC world. And since Matt still trades only part-time, he now prefers big caps over OTC.

 Thanks to a great internship, Matt managed to put enough money into his account to get over the PDT level. Apart from having unlimited trades per week, being over the PDT has more advantages.  When you’re trading some of the bigger companies out there, the price per share is often on the higher side of things. For example, when you have $5000 at your disposal, and a stock price is $70 per share, you can only trade 71 shares, and that’s at full size. Of course, your position size and your potential earnings are very limited in that situation.

Day trading P&L chart Matt Monaco
Matt Monaco’s PnL chart over the past 2 years

Raising capital quickly with the help of his internship helped Matt get started the right way. And because he was working full-time, he had to adapt and learn how to fit day trading into a busy schedule.

I think that it’s amazing when people can multitask in such a great way. Additionally, having multiple streams of income is always a great thing. And it’s even better when they come from the areas that you deeply care about. And, of course, being able to focus on several things at a time certainly helps with discipline and life goals.

Typically, Matt starts his trades within the first half-hour after the market opens. Once he finds the right setup, he enters the trade and auto sets his stop. Now that his exit strategy is covered, he can go about his day.

Obviously, it takes a lot of experience to be that confident in your strategy. It takes months and even years to develop a trading plan, research and test it enough to have a clear understanding of what to expect. But once you have the system in place, you can rely on it and do other stuff while the trades are playing out on autopilot.

Personally, I love this idea because it allows you to enjoy the double income and multitask in a laid back way.

Another enjoyable side effect of trading part-time is that a packed schedule doesn’t let you overtrade. Matt admitted that he had a bad habit of trading a random setup or two whenever he’d get bored. I find it very relatable. For me, the more time I spend actively seeking out trades, the worse results I get. Just a year ago, I had a pretty bad November mainly because of that. My P&L started going down, and I couldn’t help but make silly mistakes. I was also spending too much time toying with mirages – the subprime setups that seem promising at first but don’t go anywhere. And while there are ways to force yourself not to trade, such as splitting your account into several smaller ones so that you’re under the PDT rule, the easiest thing to do is simply walk away from the screen when you don’t see a decent setup. You don’t have to tempt yourself, and you won’t have to get upset over doing something that you know is wrong.

Rushing into trades is never a good idea. It’s such a simple idea, but it’s difficult to implement, especially if you already have the habit of forcing trades for no good reason.

Having a daily routine helped Matt break the habit of overtrading. Most often, it happens because day trading or checking out the market is a go-to activity during the day. And the more free time you have, the more tempted you are. Creating a list of other activities and adding them to a schedule should certainly help.

Just like me, Matt trades mostly in the morning and early afternoon. He typically creates a watchlist the night before, and sometimes, he updates it in the morning if he sees anything worthwhile. One of his goals is to focus on A+ setups only and ignore everything else. He has the criteria written down on a Post-it note that’s taped to his computer.

Of course, we’re all different. If you’re the kind of trader who forces trades despite having a sound trading plan, consider Matt’s experience and see if it can help you too. Last year, I managed to kick this bad habit too by following a similar plan:

  1. Realize what triggers overtrading (e.x. Just being bored while checking out the market).
  2. Find something else to replace it with (e.x. Find other activities that will help you occupy the time during the day when there are no good setups available).
  3. Create a routine so that your new good habits become second nature to you. Write a schedule for yourself. If you need, spell out what’s considered a good setup and a meh setup, and have it pinned right where you can see it.
  4. If you feel like you’ll benefit from having more structure in your life, consider getting a part-time or a full-time job to keep you occupied for the rest of the day. Time yourself as you trade and see how long it actually takes you. If you find that you’re done within an hour or two just like Matt or me, having another hustle may become a great solution. In that case, you’ll also get to enjoy multiple streams of income.

Having a system in place is a huge help. Many people enter the day trading world in hopes of leaving their 9-to-5 lifestyle and look forward to working from home. I know consistently profitable day traders who do it full-time from home and even when they’re traveling. And while it’s a very comfortable way of trading, this is not a cookie-cutter solution for everybody.

If this topic is relevant to you, watch the full interview to see Matt go into more detail about his plans and daily routine. 

Do you trade full-time or part-time? Share your experience in the comments below!


Comments Off on Kicking The Overtrading Habit By Trading Part-Time