Hi from Andrea Unger, trading on holidays.
This is a question that often comes when there are holidays.
On one side, people who have a job trying to take advantage of the days off and they want to sit at the monitor trading and they wonder if trading during the holidays, obviously when the exchanges are opened, is as effective as during all the other days.
As I always say, it depends!
It depends on a number of factors.
There are major holidays, where the whole period shows a decrease, a significant decrease in volumes in the market.
Not only a decrease of volumes but also a decrease in volatility due to the small number of players.
A classical example is a period between Christmas and the New Year’s day.
Those days, that might be 2 or 3 days, normally the activity is very quiet and it’s really hard to do something that shows good results because there is not much to do, actually it’s a sleeping market normally.
Another example is right now, Easter.
On Monday US markets are opened, while the European markets are normally closed and in this situation we found out that also US markets are very quiet, not only because of the European close, but just because most of the people are still on a holiday mood and they are probably spending time with their families instead of trading.
So, to sit down and trade during these days, just because you have the opportunity to do it, not having your tasks to do in the office, is not really a good idea.
It’s not a good idea because first of all, it’s difficult to get something out of the markets during these days and second because the markets you see in these days are different from the reality.
The volatility that you find is completely different from what you find when you trade in all the other normal days, so it’s not a real test of your skills in what you do.
Of course, if you are profitable exactly on these days, keep on doing it, but remember this is a specific market, it’s different for the markets overall that you find during the year.
There are also other holidays, which are minor holidays or some specific bank holidays in some countries, in others not.
In that case, obviously, the markets are not really affected by the difference and you can trade, but these are specific cases which are not that important.
There is, in any case, another thing that we have to consider, that it has been shown a certain degree of stability.
I mean there is a bullish bias on index markets during the holidays’ period.
It’s not my discovery, I mean Larry Williams and other traders before him probably found out that there is something during these periods.
So there are setups to enter long on miniS&P or on DAX or any index future market, two days before the holiday starts and then to close the trade after the holiday period.
This means to keep an open position during the holidays and to take advantage of this bullish behavior which normally takes place during the holidays.
This obviously, I don’t mean it’s a bet because there has been a bias and there had been the opportunity to take advantage of it, but obviously, it also comes with a decent amount of risk, because the markets are closed and you cannot react in any way if something happens.
I don’t necessarily mean a terroristic attack during the holidays, which I hope does not take place, but whatever happens during those days with the markets closed, you are sitting there and you are able to do nothing to eventually react.
So there is a higher degree of risk, you might say that also during the night the markets are closed yes, but yes, yes, yes.
Be aware that there is a decent amount of risk in this kind of trade and also that these trades do not take place that often, you have an opportunity on Christmas, Easter time, Halloween, more or less that’s it, three or four setups during the year.
So actually there is not that much to do, but there is a bias.
If you want to dig further into this, do it and you might discover something, or if you want me to show you some statistics, write it here in the comments and if there are enough requests, not just one please, I will show you one next video on something about it.
And now I go back on holiday.
Ciao from Andrea Unger, see you next week.