Why you Should Avoid Forex Trading During Christmas?


Forex Trading During Christmas Holidays is a bad practice. A trader should pass that time with their kids in the garden rather than looking at the chart. However, if a trader wishes to trade on a volatile market, he should follow some assumptions. 

01 December 2020 | AtoZ Markets –During the Christmas holidays, forex trading becomes very hard for the traders. Many traders take an extended break from forex trading during those days. Therefore, it becomes hard for the traders to generate profits during the Christmas and New Year holiday sessions. Many experienced and pro traders follow this tradition of taking a break the trading those days. Moreover, traders should stop trading at least a week before Christmas as it becomes very difficult to make money at that time.

Therefore, traders should resume trading well into the New Year traders are back at their chart and everything is back to normal life.

What Happens in the Forex Market During Christmas Holidays?

Christmas day celebrates the natively Jesus according to the tradition that took place on December 25 on 1 BC. Therefore, this is celebrated as a public holiday in most countries. Moreover, the whole week around the 25th December is treated as holidays in lieu.

During the time, most pro traders take a break, as they are unwilling to trade against low liquidity and high volatility. The banks will be out of the market and there will be a lack of market-moving news. However, traders can enjoy the taste of risk as it is the most lucrative time of the year for the scalpers. Any news stories could spike the market towards the favor of traders.

Forex Trading During Christmas Holidays

However, the risk and uncertainty both will keep the traders on pressure. Most of the traders will not keep their position open during that time. Therefore, brokers will enjoy a tasty profit due to the high spreads. Although they will earn less profit due to the inactivity of trades, they have to pay their staff.

However, Do I have any Proof?

Let’s have a look at the EURUSD Chart during the Christmas holiday in 2018.

As we can see, the price opened at 1.1484 on 21 December 2019 and closes on 31 December 2019 at 1.1467. Between the time, the price showed a corrective volatile structure with a false break below 1.1350. There was no clear trend at that time to influence traders to enter a position.

The same thing happens in GBPUSD Chart- price made several false breakouts during the holiday period. Moreover, the overall structure was extremely volatile.

5 Reasons to Avoid Forex Trading During Christmas

Forex Trading during Christmas Holidays is a bad practice. During the session, the market will be volatile and your favorite currency pair may react adversely. There are several things to consider before opening any position during the Christmas Holiday.

Forex Trading During Christmas Holidays with Low liquidity

During the Christmas holiday, there will be low market liquidity as the market giants like hedge funds, banks, market leaders will not present.

The big giants will have a small interest in buying or selling their currencies during the holidays. The big giants know their business well, so they will not take any risk at that time. Therefore, they will spend their time on the beach with a cigar and a glass of martini rather than watching the charts. Moreover, their inactivity gives us a hint, do not trade.

High Volatility in the Forex Market

In the forex market, we know that there are an impulsive non-volatile trend and corrective volatile trend. The impulsive non-volatile trend represents the participation of market giants. During impulse, traders can earn money easily as the market follows the levels better than at other times. However, the absence of the market movers will keep the trend volatile. So there is a chance of false break & stop loss hunts.

The evidence of high volatility may push the price nowhere after eating your profits by creating false breaks. As I told you earlier, top forex players will be out of the game at that time. That means no one can produce any interest in some currency pairs. As a result, we will see a ranging market. Therefore, there is no possibility to make any decent profit.

Broker’s May Trap You

It is true that forex broker’s raise spread during the holidays. The main reason behind this is the low liquidity. Therefore, small traders face risks of the bid and ask propositions. It is upon the broker when they will increase the spread. It is hard to say the exact time.

Forex Trading During Christmas Holidays

Therefore, if you want to take any trade at that time, you should check the spread before opening any position. Moreover, you can use some free indicators available online that will show the current spread on the price chart. Finding a well-regulated broker will minimize the risk slightly. The intention of a well-regulated broker is to earn money from the spread, not by increasing the spread. To find a good broker, you can see the Broker Review section of AtoZMarkets.

Moreover, after ending the holiday sessions, the spread will decrease to normal, indicating that the big giants are back in the market. Therefore, you can trade your favorite currency pairs.

Unpredictable market conditions

Forex market is a decentralized market where no one can assure that where the price will go in the coming period. All the traders and investors earn from the forex market by predicting the market-based probabilities. If the probabilities work well, the trader enjoys the profit. On the other hand, if the probabilities go the wrong way, trader loses. Now the question is when the Probabilities work well in the forex market? 

In the Normal market where big giants are in.

However, Forex Trading during Christmas Holidays is risky as it is hard to predict the market as there is no stable trend. There is a possibility that a bearish trade setup from a strong resistance may go wrong. Moreover, due to low liquidity, the whole day may move within 15 pips or it may rise dramatically in a minute. It is hard for ordinary traders to react to that market condition.

Moreover, if you trade with expert advisors, you should avoid those tools during the Holiday sessions. All automated trading tools based on some technical indicators. On the Christmas Holiday, the market may mislead the algorithm of your reliable expert advisors that may cause a huge loss.

Recharge yourself for Upcoming Year

Doing overtime may harm your health as well as your brain. Moreover, the market condition may put extra pressure on you when you see your A+ trade setups are hitting stop losses. In that case, it will be wise to pass those times by taking a deep breath of fresh air before starting your long run. This break is a great opportunity for traders, as the forex is a mind game. Taking some training in emotion control & stress management may enrich your trading psychology. Moreover, you can plan for your next year’s trading activity during that time.

However, the best practice in the holiday session is to play with your children in the garden or visit your closest relatives rather than following the EURUSD chart on 25 December.

Are You Still Interested in FX Trading during Christmas?

However, Christmas trading requires some appetite for risk. If you failed yourself to keep away from trading, you should keep in mind that the spike and spread might eat your potential profits. In that case, you should follow the key levels only to take any trade with a wider stop loss.

It is possible to make a profit from the forex market, even if there is a lot of volatility. The forex market in 2020 is going to be closed with a lot of volatilities due to the trade wars, Coronavirus pandemic and BREXIT. Therefore, a whole year’s price action with volatility may indicate the possible price movement for the coming year.

What do you expect from the forex market during Christmas 2020? Let us know in the comments section below.

  1. Bill N. says:

    My strategy has stopped working this entire month. I will be taking a break for the month of December every year.
    Thank you for the insight in this article.

  2. RASEL says:

    Excellent opinion

  3. Deen says:

    Excellent Article!

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