Ah yes! December, a month filled with festive spirit, gift-giving and the inevitable Christmas rush. Stores and commerce bursting with long queues and orders here and there. Everyone trying to secure a gift for their loved ones or themselves. A chaotic yet good opportunity to rack up some holiday sales indeed.
You may have wondered — or just now — that a holiday month such as this, boasting with bountiful transactions, is a herald of a healthy and profitable stock / forex market, yes? In this blog, let’s discover how Christmas Season can affect your trading and is it a good idea to trade during this annual tradition?
Low Liquidity – less significant profit / no market movers / no demand or order for currency
Officially, markets are closed during December 25 as most celebrate Christmas all around the world. Thus, the biggest and most influential market movers are out of play. Due to their absence, the market tends to have low liquidity resulting to less movement and less significant profit for traders. There are also less demand or order for currency during Christmas majorly because banks are on break. As we all know, Low liquidity is not a favorable trading condition. The inactivity of pro traders and market giants (like hedge funds, banks, market leaders) are strong red flags not to trade.
High Volatility
During Christmas, the market may experience high volatility and price swings but these movements are not due to market movers and trading giants since they’re inactive. This corrective volatile trend may lure you and eat up your profits to a false break. The sheer risk and unpredictability during Christmas break may spiral down and hurt your capital. Don’t be in the vulnerable position that the market moves against you before you even have a chance to act on it.
…but in the end
You are the trader! You’re the boss and the decision-maker. These are all tendencies and indicator s only and it’s up to you to evaluate as per your trading plan. The market only closes during this specific date (Dec 25) and this may not stop you to scoop out some sweet trades during the rest of the month. In addition, there are brokers ready to back you up and provide a better trading condition for you with higher leverages and wider spreads during the season. As to most, setting up calculated risks and strict stop-loss order are great safety nets for you and your beloved assets.
In fact, here in CXM Direct, we’ve got Christmas deals and promotions you might want to check out.
