Is it good to trade on a holiday?

Beginner Questions
1

I’ve heard it’s not good to trade on holidays. What about Monday, it’s Columbus day holiday in the U.S. and what about the day after a holiday like Tuesday of next week?

I tend to stay away from Mondays anyway but since I’m off from the day job, thought I might give it a try.

any opinions ?

2

Hi Talon,

Sunday PM the Asean-Pacific will kick off around 9PM GMT with a thin Market up until 5-6AM GMT Monday morning. That is around 17% of FX trading by volume (Tokyo 11% and the rest 6%), so there are pips to be made as long as one is aware of new week opening gap. Between 6-9AM GMT mainland Europe and London will be active as usual. London is the largest market with over 30% of share. From 9:00AM till 11:00AM these market tend to range with US market expectation of opening at 11:00AM GMT. There is always some correction/reaction when US opens. US handles around 14% of market transactions. This Monday there will not be any of that so I guess as before range trading and rather less liquid market will prevail. There will be some corrections between 3-4PM GMT due to European and London Market closing. Since US is closed there will not be any impact/influence from US stocks and no major upheaval in US dollar and hence crosses should behave following European markets. Of course between 4:00PM and 9:00PM GMT Monday it is just watching paint dry.

The point to remember is that with US Market closed we are only talking about around 14% of the Market so this is by no means a universal holiday. In summary I would not stop trading because of US being closed

HTH,

Mich

3

It might not suit some styles of trading such as scalping seen that things will be slow. But long term and some intra-day traders should be present.

4

thanks guys, I was just wondering what to expect, still new at this. Good analysis Mich

5

The NYSE will still be open. Only the bond market is closed. So while things will be thinned out (especially after London closes) there could still be some interesting action.

6

Hello Mich,
Very well written and informative post. I learnt something very useful.

Regards,
Muthu.
Chennai.
India.

7

Hi guys,

Now that it is almost close of business Monday what would you say was the main impact on crosses due to holiday in US? Take GBP/USD as an example.

Cheers

8

I don’t know enough forex yet to answer that question, but I did get about 20 pips in the early morning around 4am gmt. but what was the cause of that big 100+ pip drop ?

9

Hi Talon,

The main cause I believe was the reaction of the market to the report by the Centre for Economics and Business Research that stated it believed the interest rate will remain at its current 0.5% level until 2011 and not reach 2% until 2014. This meant GBP being not an attractive currency for deposits etc.

The report predicted the pound will weaken further, falling to $1.40 and “possibly” below 1 euro. Its forecast is based on the government managing to slash the UK budget deficit by £100bn over the next parliament.

Additionally UK started selling the family silver when it announced a £16bn sale of government assets in an effort to reduce the growing budget deficit.

HTH,

Mich

10

I should pay more attention to news

11

When markets are volatile and edgy like now news has a higher degree of impact on currencies. I love fish and chips and Cornish pasty but I still think sterling is on its way down. The economic stimulus package props up GBP otherwise this currency is heading South.

Cheers