As strange as this question may sound, many traders are curious to know whether to trade Forex during holidays or not! They keep enquiring in FX forums the thing in a different way like- which are the best Forex trading hours holidays? No matter which ever way they put this question, the answer will always remain- NO, especially to neophytes.
Here are 4 reasons.
• Very low market liquidity
• Unreliable market movements
• A change for brokers to ensnare in traps
• Ridiculously low volatility
And a suggestion- JUST DON’T THINK OF TRADING…
Now let’s get to the bottom of these reasons one by one:
- Very Low Market Liquidity:
The 1st reason to not waste time knowing Forex trading hours holidays is simply because of the extremely low market liquidity. All the big market boys like Hedge Funds and Banks/Financial Institutions don’t operate during holiday seasons. They prefer spending time on some beach sulking the sun then thinking about surge in USD or decline of JPY.
These market leaders are well aware of their business and prefer thinking over it post holidays. With a cigar in their mouths and a glass of martini, they give out the perfect hint- don’t trade as there is no liquidity for trading prospects.
- Ridiculously Stumpy Volatility:
During holiday seasons, market currencies- even FX majors shrink in swings during day trading sessions. Going back to pointer before, as most of the big boys are out of business temporarily, there are no considerable interests in specific currencies. Henceforth, the market which traders have in front of them is a ranging market and that means very less feasibility of profit procurement.
- Erratic Market Movements:
3rd reason to not even think about Forex trading during holidays is because the market prices can move unpredictably. The market lacks volatility and liquidity and hence that makes the prices fluctuate unlike anything. It would be very difficult for a venture veteran to figure out the price movement direction, let alone a newbie.
- A Chance for Brokers to Ensnare In Traps:
It is very important for a newbie to know that during holiday seasons, some Forex brokers tend to increase their spreads. That results in extra payment to the broker in the form of commission. When one finds that the spreads are witnessing a noticeable dip- that is a sign that the holiday seasons are coming to an end.
An additional tip for traders- JUST DON’T THINK OF TRADING…
Holidays are a time or refreshing the mind and spending time with family members. It’s always suggestive to not think about GBP/USD exchange rates and look for occurrences in the UK and European markets. It’s the time to get those thoughts together and get all the rest one can get.
Experts suggest that post holidays, then market seems to offer high degree of volatility and liquidity. So, one will anyway have their work cut out, particularly day traders.
Hopefully these reasons and suggestion proved useful for traders wanting to know about Forex trading hours holiday. The answer is again NO. If one does want to stay close to the market, they can read FX tutorials and PDFs for strengthening their basic understanding of the market. This will surely make them more ready when the market again becomes active.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.