How to trade during Christmas?

Today is Christmas Eve which will be followed by Christmas tomorrow while some countries also celebrate a second day of Christmas on Thursday. Since this year the celebrations fall in the middle of the week most traders decided to enjoy a longer break and took vacation days which means their probably enjoyed their last day trading forex last week on Friday.

It is good to take some time off from the joy and stress of trading and Christmas is the preferred time for traders from Europe through Asia and into the American continents to take some of their earned vacation time and spend it with friends and family.

What does this mean for forex traders who want to trade?

The biggest impact forex traders will feel is the lack of volume which is created by the absence of the majority of forex traders. This results in rather flat trading throughout the entire trading sessions around the world. The lack of volume also leads to a lack of volatility and therefore less trading opportunities may be created.

In addition to the absence of many traders there will be an absence of economic reports which usually add volatility as well as trading volume to the trading session. The reason for the slow economic news flow is the same as for the absence of traders; the Christmas holidays and most governments operate on a skeleton staff.

How to trade during Christmas?

There are traders who wish to trade throughout the Christmas holidays and this week so here are a few facts to know and understand:

• Low Volume – The absence of most traders means that volume will be very low.
• Low Volatility – Since volume will be low volatility usually decreases with it which means less trading opportunities may be presented.
• Less Economic News – One very important fact to keep in mind that there will be a few reports released and given the low volume-low volatility environment this could lead to much bigger price movements than usual.
• Shortened Trading Day – There are some institutions which operate on a skeleton staff and a few traders will remain active, but on today on Christmas Eve they are likely to end their trading session early.

During Christmas Day there are not traders which should be trading and you may want to take a full day off as well. The last two days of the week as well as the first two trading days of next week which would mark the end of trading for 2013 should be used to make necessary portfolio adjustments and close positions which are not performing in order to start 2014 on a much fresher note.