Trading During the Holidays
December 22, 2008
The question gets asked every year around this time:
Is it worth trading during the holiday period?
… or some variation of that.
I think that this year provides a pretty good example of how interesting the price action in the markets can be at this point on the calendar. The volatility in markets like crude oil and forex has been more than sufficient for traders to get their price action fix. Some might argue that it’s been a bit scary, in fact. 
That’s actually part of the risk with these weeks from about mid-December until the start of the new year. Volume tends to dry up as people go on vacation and institutions wind things down to settle the books for year-end. Some years this is going to mean a very boring period, with the markets basically going nowhere fast.
At times, however, the light volume serves to create an environment where very rapid movements can take place. This can be loads of fun, and quite profitable for the trader ready and willing to go along for the ride.
So what we have during this time of year is a barbell type of situation where there will tend to be small movements or big ones and not as much in the middle as we would normally see at other times of year.
Struggling with support & resistance and knowing what the key market levels are? Check out the Price Distribution Analysis methods I use.
[...] This question comes up every year. I wrote about it on my blog last year: Trading During the Holidays [...]