The first quarter of 2015 is drawing to a close and Easter is just around the corner. For many retailers, the question arises how to position yourself around the holidays and what opportunities there are at all during these times. Basically, the question can only be answered as follows:
Trading around the holidays is recommended if strategies are used that require little liquidity. Otherwise, you should distance yourself from trading.
But here too you have to be able to make a good distinction, because especially holidays that end at the end of a quarter are accompanied by a lot of liquidity in advance - so also in this case. The end of the quarter before Easter led to many sell-offs on the stock markets and purchases in raw materials. Why? Traders such as funds or banks need realized values for their quarterly report. Therefore positions are closed towards the end of a quarter and profits are taken away, so to speak.
However, it cannot always be ruled out that these sales will be accompanied by new acquisitions, because at some point the largest traders in terms of volume have also said goodbye, It also depends on the general market picture. If stock markets are currently preferred, acquisitions can be very dynamic, especially at the beginning of a new quarter. If the beginning of the quarter falls on a weekend or on public holidays, acquisitions can take place sooner, as can currently be seen in the DAX.
A distinction must also be made between a short quarterly end and a quarterly end towards the end of the year. Since many companies operate the so-called window dressing, a lot of acquisitions are made in the course of the fourth quarter, but are sometimes realized towards the end.
Nevertheless, many traders are already on vacation around the holidays or they are just doing organizational work done. Trading takes place only occasionally. Due to the fact that holidays in all countries do not always run at the same time, trading is usually smaller in volume terms than it is otherwise. While there is no trading in Germany and the USA on Easter Monday, the Asian markets are open. However, most of these countries adjust their trading volume to the holidays in the EU and the USA.
Which strategies can still be traded?
Experience has shown, however, that the low level Liquidity leads to lower volatility. As a result, technical setups can be traded more reliably in many cases.
If, for example, you have identified a sideways range, it will most likely last a few days around the holidays. In this way, resistance and support could be anticipated fairly accurately. However, it is also important to choose the days on which the liquidity is lower in some countries due to public holidays, for example Easter Monday or Good Friday.
What times should be avoided?
However, if traders follow the medium-term trend following, it would either be advisable to stay away from trading and wait for the holidays or - if the entry was made some time earlier - to hold the positions further. In this case, those times should be avoided which would be better suited for trading in a sideways range.
best time to trade binary options and what times to avoid
Trading around the holidays is depending on which strategy you use pursued, either to be avoided or recommended. The former applies when you are pursuing strategies that require liquidity and volatility. These can be trend-following strategies on a short to medium-term basis or day trading strategies.
We would recommend holiday trading when trading conservative strategies, such as in sideways phases. The low liquidity due to a lack of market participants, especially computer-aided traders, ensures lower volatility and therefore also the reliable holding of certain price ranges. For example, fake break-outs occur less frequently in less volatile phases.
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