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Trading forex during the Christmas holidays is a poor idea. During the Christmas season, forex trading becomes extremely difficult for traders. Instead of staring at the chart, a trader should spend that time with their children in the garden. However, if a trader desires to trade in a turbulent market, he must make certain assumptions.
During such days, many traders take a long break from forex trading. During the Christmas and New Year holiday periods, it is difficult for traders to produce gains. Many seasoned and professional traders adhere to this practice of taking a trading break on specific days.
As a result, traders should start trading far into the New Year once they have returned to their chart and life has returned to normal.
According to tradition, Christmas Day commemorates the birth of Jesus on December 25, 1 BC. As a result, most countries observe this as a public holiday. Furthermore, the entire week around December 25th is recognised as a holiday in lieu.
Most professional traders are hesitant to trade against low liquidity and excessive volatility at this moment. Banks will be absent from the market, and there will be a dearth of market-moving news. However, it is the most profitable time of year for scalpers. Any news storey might cause the market to jump in traders’ favour.
During that moment, the majority of traders would close their positions. As a result of the wide spreads, brokers will benefit handsomely. Despite the fact that businesses would generate less profit owing to trade inactivity, they must pay their employees.
Reasons to Avoid Forex Trading During Christmas
The market will be unpredictable throughout the Christmas Holidays session, and your preferred currency pair may respond negatively.
The major tycoons are well-versed in their industry, thus they would not take any chances at that moment. As a result, rather than monitoring the charts, they will spend their time on the beach with a cigar and a drink of martini. Furthermore, their inaction serves as a warning: do not trade.
• Forex Market Volatility Is Extreme
We know that there is an impulsive non-volatile trend and a corrective volatile trend in the currency market. This pattern reflects the engagement of market titans. Traders may easily make money during an urge since the market follows the levels better than at other times. As a result, there is a possibility of false break and stop-loss hunts.
The proof of extreme volatility may drive the price nowhere after consuming your profits by producing false breaks. There is no way to generate a reasonable profit.
True, forex brokers hike their spreads over the holidays. The fundamental cause for this is a lack of liquidity. As a result, tiny traders are exposed to the hazards of bid and ask proposals. It is up to the broker to decide when to increase the spread. It’s difficult to pinpoint a precise time.
• Market situations that are unpredictable
The forex market is a decentralised market in which no one can predict where the price will go in the future. All traders and investors profit from the forex market by correctly forecasting market possibilities. If the probability is correct, the trader will benefit. On the other side, if the probability is incorrect, the trader loses.
Forex trading during the Christmas holidays is dangerous since the market is difficult to forecast because there is no solid trend. There is a chance that a bearish trade setup from a strong barrier may fail. Furthermore, due to poor liquidity, the entire day may swing within 15 pips or rapidly jump in a minute. Ordinary traders find it difficult to respond to that market scenario.
• Prepare for the New Year by recharging your batteries.
Working overtime may be harmful to your health as well as your intellect. Furthermore, if your A+ trade ideas are hitting stop losses, the market conditions may place further pressure on you. In that scenario, you should spend the time by taking a big breath of fresh air before beginning your lengthy run.
Rather than studying the EURUSD chart on December 25, the greatest practice during the holiday season is to play with your children in the yard or visit your closest relatives.
If you are unable to refrain from trading, keep in mind that the spike and spread may eat away at your prospective earnings. In such an instance, you should only trade with a bigger stop loss if you stick to the important levels.