Forex Trading over the Holidays? Not the Best Idea

For Forex

Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term traders, it’s that time of year again. The time which harbours a love–hate relationship.

While many traders love the time off the screens, spending time with their families and having a break, it’s not that infrequent to find a few bemoaning the fact that their broker has shut down, disabling their platform and thereby eliminating the ability to make a single trade.

In theory, one might think that since these holidays are the busiest time for commerce with money flowing like no tomorrow, a 24 hour global market should allow ample opportunity to trade.

Except, of course, it’s primarily the banks who are the major movers of the currency markets. Hence, when they’re closed, it’s natural that everyone else, including forex brokers, follow suit. Come on, even bankers need a holiday, right? As a result, forex brokers shut down for a few days.

As we all know, even on the days when they allow some trading during this period, there’s going to be terrible and unpredictable price movements with higher spreads than normal. Trading during this time is folly, especially if you’re a scalper.

Here’s an example from the USD/JPY on the M1 timeframe. Overall, USD/JPY is usually smoother in price action (along with AUD/USD) compared to most other pairs, but even here you can see it’s not a pretty picture.

Take a look at the multitude of appalling price action occurrences:

- Consecutive long candles, followed by many short candles which really skews with the ATR

- A lot of the candles having huge wicks and barely any candle-body

- Whipsaws are visible within quite a few of the candlesticks

- Often you’ll see gaps appearing in data with price stalling for a few seconds, only to jump rapidly to an unexpected price

- Candle open prices are on many occasions different to the previous candle’s closing price

Failing indicators

All of these negative trading attributes virtually makes any sort of technical analysis very difficult, indeed. Just try using some classic trading tools and indicators such as the Bollinger Bands or the Awesome Indicator.

Even tried and tested indicators that analysts have been using for decades are no longer reliable. Overbought or oversold on RSI or Stochastic doesn’t mean much any more.

So with barely any Liquidity

Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term (which can result in your orders being executed in slow motion), and with barely any volatility (which means your 61.8% Fib retracement level may never get hit!), there’s no point in trying to make any pips during these winter nights. The best thing to do would be to grab a mug of your favourite hot beverage, lay back and watch the news or football instead.

There’s some top-flight football on during these days in the UK. The Premier League matches can be a good way to take your mind off trading then, if you forget for a minute who are the sponsors of an increasing number of clubs.

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Ashton Fraser is routinely publishing his trading strategies at Forex Lasers

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