Today we are going to discuss how to trade during holidays avoiding unnecessary losses. I am a firm believer that when there is low volume in the markets, it is a good idea not to trade. Low volume means there are not many traders in the game and the big money is on vacation, not on Wall Street.
Let us dig into this and look at different countries: USA, Eurozone , United Kingdom, Asia ,
The United States
Thanksgiving Day. Let’s begin with one of the biggest holidays in America. During the “turkey” holiday the market is closed. Trading ends in the middle of Wednesday and reopens on Friday only. Friday is not a good day to trade as most people skip work that day as everyone wants a four-day weekend. Thus, Forex trading is open on Wednesday until the NY session and then it’s time to wrap it up until Monday. There is one rule I always stick to - if the US is on holiday and all markets are closed, I do no trading in any of the sessions.
Christmas and New Year. The markets during these holidays are usually very slow. I prefer not to trade during those two weeks as I just do not like such risk. I have to say that it is the only two weeks a year I stop trading. Luckily, those weeks in Thailand are great time to be out and enjoying as the weather is not hot and we are in high tourist season. I call this break in trading a “good time for a vacation”.
Banking holidays. The US also has banking holidays when all the banks are closed and usually the bond markets are closed as well. The rest of the markets are open, so I do trade on bank holidays with caution, when making my trades and properly with a smaller lot size and tighter stops.
Three-days rule. The last rule in America to be considered is that the markets can only close for a total of three days. The only exception to that would be a national emergency declared by the President. Example was 9.11 when America was attacked. The markets were closed for over a week, I think.
Always keep in mind that Germany is the largest economic country in Eurozone, so be cautious trading, when German markets are closed. When Germany is closed for a holiday, I would enter a session only if all other countries are trading. Normally, though, I try to avoid entering the market when the whole Eurozone is closed for the holidays.
The United Kingdom
When the UK is closed for a holiday, I would simply skip GBP pairs. Other than that trading goes on as usual.
In Asia all countries don’t close for holidays all at the same time. I have to be honest, I do not pay much attention to their holiday schedule most of the time.
Note that if Australia is on a holiday, I will still trade Asia. I would only avoid a AUD currency pairs that day.
So let me simplify everything said above. Note that am only talking about holidays when certain markets are closed.
So how should we trade during holidays all over the world?
The USA: trading is closed
The Eurozone: when whole Europe is on holidays - no trading; when single country is on holiday - we trading cautiously
The UK: no GBP pairs trading
Asia: trade as usual
Wishing you successful trading during holidays with www.fxclearing.com!