Next week we'll be entering in Christmas week, were the majority of market will either be closed or if opened the trading activity will be very low as is in the case of the Forex Exchange market. With the major banks being closed during the Christmas day, and we know that banks are the biggest participants in the Forex market, liquidity will dry away. Even during normal days liquidity will vary throughout each trading day differently. A low liquid market will tend to have prices moving more dramatic and in larger price increments when a bad news event hit the market.
For a newbie trader holiday trading can be very tempting, so I'm going to outline 3 different reasons to avoid trading on holidays:
I have wrote an extensive article where I have been given more details on the implication of this three reasons that can affect your trading activity. This low liquidity environment can lead to a narrow range, take a look for example on USD/JPY the weekly range has also been below average every year since 2003. In fact, the average trading range during Christmas week, in the Forex market tends to be approximately 25% less than the average trading range throughout the course of the year(see Figure 1).
Now please don't get me wrong, you can still trade this market if you're a professional trader and how know to read market conditions very well, there are money laid on the table to be made. I hope that I'll be smart enough to spot in what direction the market will be moving next week and take the trade, as for sure there will be far less trading opportunities.
Best Regards,
Daytrader21.
For a newbie trader holiday trading can be very tempting, so I'm going to outline 3 different reasons to avoid trading on holidays:
- Low Liquidity.
- Market Spikes.
- Recharge Yourself.
I have wrote an extensive article where I have been given more details on the implication of this three reasons that can affect your trading activity. This low liquidity environment can lead to a narrow range, take a look for example on USD/JPY the weekly range has also been below average every year since 2003. In fact, the average trading range during Christmas week, in the Forex market tends to be approximately 25% less than the average trading range throughout the course of the year(see Figure 1).
- Figure 1. USD/JPY Christmas week trading range.
Now please don't get me wrong, you can still trade this market if you're a professional trader and how know to read market conditions very well, there are money laid on the table to be made. I hope that I'll be smart enough to spot in what direction the market will be moving next week and take the trade, as for sure there will be far less trading opportunities.
Best Regards,
Daytrader21.
