Trading Forex over the Christmas Holidays

Christmas is arguably the most magical time of the year, a time when friends and families reconnect and spend valuable time together. Although Christmas is certainly a wonderful time, it’s not so wonderful if you’re looking to make profits trading forex. The majority of the world’s largest institutions are completely shut down or operating on a skeleton staffing system. This means that the currency markets are relatively useless for traders! This leads to the question, can you trade forex over the Christmas & New Year period?

Let’s find out!

Can You Trade Forex Over The Christmas Holidays?

It’s very possible to trade forex over the Christmas and New Year period, but it’s not a good idea. The markets do actually stay open, besides the bank holidays, meaning it will be possible to execute orders from your brokerage account or funded account. 

However, just because it’s possible, doesn’t mean that you should!

 Christmas is actually the worst time of the year to trade forex, with some of the toughest trading conditions for Day Traders. We would highly recommend that traders cease all live market trading for about 3 weeks or so, over the Christmas period. This only relates to live market trading, not simulated or demo trading. In fact, these few weeks of tougher trading conditions make a wonderful opportunity to spend some time refining your trading skills, developing strategies, and even creating automation within your strategies.

Why Is Christmas A Bad Time To Trade Forex?

In essence, Christmas is just a bad time to trade any kind of financial market, including forex. The reason for this is elementary… The banks are shut. If you have a good understanding of how currency exchange works, you’ll understand that the large majority of trading, buying, and selling daily is done by hedge funds, banks, and large international institutions. Retail traders only make up 1% or 2% of the total volume traded per day. These banks and large institutions typically shut up shop the week before Christmas. Many bankers will have already taken their end-of-year bonuses and cashed in the annual leave/PTO that they, no doubt, couldn’t take the rest of the year. This means that the trading volume takes a nose dive. A low trading volume will cause several problems for retail traders. These include sudden price movements, high spreads, lack of movement in price, and overall confusion in the market.  As you can see, this isn’t very conducive to successfully trading forex. This, however, does also ring true for futures, equities, and any other market that can be actively speculated.

What Markets Can You Trade During Christmas Holidays?

Let’s assume that you’ve got 2 weeks off from work, and you don’t fancy spending the whole time sitting around with your family. Well, luckily, there are still plenty of opportunities to ‘sharpen the sword’ as it were, in the forex markets. Whilst the markets are slow and bringing unneeded risk, you should be moving onto simulated trading platforms. The most common trading simulator is TradingView but there are a number of fairly cheap platforms you can use to back test the markets. This, of course, will earn you no money, but it will help you develop your skills in the market and potentially even find new trading strategies. Over the last Christmas break, I sought to take my Swing Trading strategy and turn it into a Day Trading strategy to drive up trading opportunities per month. In my book, this was time well spent!

If you’re unsure of how to back test forex strategies, I’d have a read of this article!

Combining this back testing with some very thorough trade journaling should give you a considerable edge in the markets, going back into the New Year. At this point, you could consider becoming a prop firm funded trader!

When Should You Start Trading Again?

Provided you’re heeding our advice, and you’re taking a break from the charts over Christmas, you will need to be aware of the best time to get back into the markets. Now, there is no exact science to this, but we would recommend that you start checking the markets around Monday 9th of January. There is very little point even logging onto your charting software between Christmas and New Year, as none of the major financial institutions will be moving much money around. In theory, many bankers will be back at work on Tuesday 3rd of January, following the public holiday. However, this first week will be fairly slow and will most likely hold some fairly bizarre moves in price. Therefore, easing back into the markets on Monday 9th January is your best bet.

In Conclusion – Should You Trade Forex Over The Christmas & New Year Period?

In summary, it’s best to take a break over the Christmas and New Year period and take no live forex trades. This is due to the lack of volume and unpredictable moves within the forex markets when large institutions are not trading. With that being said, this is the best time of the year to use a simulator to test trading strategies, tweak existing strategies, adapt to more currency pairs and even start automating some aspects of your strategies!

 Do you trade over Christmas? Please let us know in the comments.