Forex Trading During the Holidays

With the holiday season about to take over our lives, most new Forex traders are wondering what to do. With extra time off from work should you use that time to trade around the clock, or should you put the trading platform on the side and enjoy the time with your family and friends? The holidays affect almost all of the major currencies, especially the US dollar, British pound, the Euro, Canadian dollar and the Australian dollar. Without much movement here, is there even a point in trading?

Will the Time Away From the Market Hurt You or Help You?

There is such a thing as what I like to call Forex burnout. It happens to everyone who is active in the market. And just like a tired quarterback will start to lose the strength in his throwing arm, Forex traders will start to lose their biggest strength, their brain power. That’s why I take advantage of the slow moving market during the holidays to take a respite myself.

If you are still gathering trading knowledge and are afraid of losing ground by taking time off, you can take a few hours here and there to go over your journal or plan future strategies. You may actually find that doing this without the pressure of actually being involved in any trade will help you absorb the information easier.

Besides the personal reasons for taking time off during the holidays, there are some logical reasons as well:

• There is no liquidity. I am not the only Forex trader who is going to Christmas parties and putting the trades on hold. Those big-wigs who really move the market, like the banks and hedge funds are enjoying their egg nog too. This means little money in the market during this time to even make the trades worth missing Christmas carols for.
• There is no volatility. This goes back to those big wigs and their tall glasses of egg nog. With no great exits or entries taking place, the market runs sort of flat. This ranging market trend allows for very little profit, making it pointless to lose any family time over. Even unexplained dips and highs will quickly turn back to that flat line trend.
• Your strategies mean nothing. You can’t count on your tried and true strategies during this time, because there is absolutely no predictability to count on. Even if you are using a robot, they are not programmed to deal with the odd behaviors of the market during the holidays rendering them useless. Trying to work your strategy into this type of market will only cause you to grow frustrated with it.
• Your odds at a big profit are made even smaller. Not only is the flat line of the trend line going to make profits minimal if that, your broker is likely to raise the spread. This is a trickle down effect from the lack of liquidity in the market. The odds of a big profit continue to just stack against you as the holidays start to roll around.

Other Currencies

You might be thinking that now is a good time to look at Japan, or other currencies that are not that big on Christmas and Hanukkah. Trouble here is, they are being affected by our lack of concern in the market just as much as you are. Plus, regardless of religious cultures no country escapes the revelry of New Year’s Eve.

Other Holidays

While what we have termed the holidays affects the major currencies in a big way, other holidays around the globe are having similar effects at other times of the year. It’s not a bad idea to keep up with bank holidays in the currencies you trade in to find other days in the year when you may just want to skip out of Forex for the day. Boxing Day, for example, can make the EUR/USD do some funny things. You are better off taking that day off if this is your currency pair.

The fourth of July is another one for the USD, just like Thanksgiving Day is. What some traders will do with these one day holidays is try to make a long trade that covers it. This is akin to leaving a trade open over the weekend where anything could happen that could make the pair suddenly change direction. Do yourself a favor and eat some turkey or light off those fireworks and wait until Monday to start trading again.

Don’t miss out on your chance to enjoy the holiday season because you are too worried about the Forex market. It will still be there in January, just the way you left it. For now, start buying your gifts and decking your halls and take advantage of the slow moving market time to let your brain have a much deserved rest.

About the Author

Casey Stubbs is the founder of WinnersEdgeTrading.com which is one of the most widely read forex sites on the web. Winners Edge Trading has trained thousands of people to trade the Forex markets.