Holiday Trading Sessions

As we move into the end of 2010 and into the New Year 2011, trading activity will vary. A majority of the trading sessions will result in more action in the early morning sessions followed by slow, sluggish trading movement during the afternoon hours. The key to successful trading over the holiday season is dealing with this adverse trading activity, in a professional manner. While some traders simply hang up their trading platform until after the holidays, others maintain their trading methodology and monitor momentum for stocks, futures and forex more intensely prior to taking positions. Many will say, isn’t that the norm? Well, maybe not and reason being, trading volume plays a major part in the success of any trade made. Positions with light trading volume can be more difficult to exit therefore, the increase in position monitoring is crucial.

Potentially, if a trader has vital personal or business activity to attend to during any given day, the afternoon would be the best time to plan such events, at this time of year. Not only is Wall Street faced with traders taking time off during the holiday season, weather also plays a role in action on the Street. Recent major winter storms hitting the northern parts of the country, from the west coast to the east coast, will wreak havoc on market action. Traders in all markets – stocks, futures and forex – know how trading action varies therefore; blizzards will hold traders at bay. Internet access can be affected during major storms.

So, the best way to handle trading any market during this time of year is with caution. While we would not suggest any trader give up on any potential trading activity, caution is in order. We all know there is market moving news every day and traders need to keep one foot in the markets in an attempt to seize those opportunities. We highly suggest traders keep an eye on world events as well, especially during the holiday trading season. Potentially, traders may wish to consider reducing the lot size of trades they make in an effort to more efficiently be able to exit positions, without trying to unload large blocks.

Trading over the holiday season does tend to give traders opportunities to test new trading strategies, while in demo mode of course. Maybe there is a sector, maybe a basket of stocks, various futures contracts or forex currencies you’ve wanted to try trading. Flip the switch to your demo platform and fire it up. Remember, only demo-trade with the amount of trading capital you normally use, or you will be wasting your time. It makes no sense to demo-trade with a $500,000 demo account for example, when your trading account is less than that. You will get no fair reading of testing a trading strategy when you do so with an unrealistic trading capital amount. Additionally, you should always demo-trade with the same amount of caution you normally use, with real trading capital. Again, frivolous trading action while in demo-mode will not allow a true test of variable trading strategies.

December 2010