How to Trade in a Holiday Market

How to Trade in a Holiday Market

Those trading the past few days should have noticed a series of one way moves

This suggests an end-of-year holiday market dominated by real money flows driven by position adjustments/book squaring rather than fresh positioning that are harder to absorb as participation tends to fall with each passing day.

This leaves the algos to run the asylum and why you see a tendency for one way moves until the orders are filled without the usual speculators willing to take the other side.

So just keep this in mind if trading, especially this week where Xmas falls in the middle of tt with many opting for extended holidays.

Just an aside, before there was electronic trading many banks would only quote for customer orders and otherwise with bid-offered spreads wide enough to drive a truck through them due to a lack of liquidity.

This is not the case today as electronic platforms provide competitive pricing for the retail trader and thus opportunities to trade.

Just keep in mind that this is not a normal trading week. Beware of standing in front of a moving train when real money flows hit the market but don’t get caught overstaying your trip when the train stops.

This GBPUSD 1 hour chart from Friday, December 20 illustrates trading in a holiday market (1,2476 = 1.2614 => 1.2570)

How to Trade in a Holiday Market

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