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30 Nov 2020
5 min read

Trading the Festive Season

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Written by OspreyFX News Team

Trading the Festive Season

*OspreyFX would like to state that traders should research extensively before following any information given hereby. Any assumptions made in this article are provided solely for entertainment purposes and not for traders to guide or alter their positions. Please read our Terms & Conditions for more information.

Key Takeaways

  • Is the festive season a good time to trade?
  • How stocks get affected by holidays
  • Find the magic formula to festive season trading
  • What are the best Christmas strategies?

A time to be jolly, with many already dreaming of their winter holidays, Christmas presents, and frothy eggnogs. But Forex markets are still open leading into Christmas. Many may wonder, is the festive season a good time to trade? At the best of times, traders have a love-hate relationship with holiday trading. With a most unusual holiday season coming up this year, traders might be even more on the fence about trading. However, it may be just the right time to try out online trading. We’re helping you sort out the plus and minuses of trading during this very volatile season.

How the Holidays Affect Trading Assets

It is often noticed that the activity at Christmas is lighter than the rest of the year. This is primarily because there are fewer active traders. Banks are the major players in the currency markets and when they close, Forex brokers go on holiday too!

In addition to that, traders expect to have unpredictable price movements and higher than normal spreads. The volatility related to festive seasons is not biased. It may go on an upward or downward trend. Therefore it is key to select your strategy according to a low or high volatility index.

November and December trading can be great if you have nerves of steel and know-how to sail your way through rough waters! Some positives:

  • Strong profit taking brings higher volatility and can be exploited for your advantage. Seek to be there at the right time and on the right side of the market.
  • Trends for day-traders appear in the first hours of a session. Once again, being at the right place, at the right time can play in your favor.
  • Risky assets such as equities and some commodities will bring on risk-on, risk-off sentiment fluctuations and potential opportunities for you. Be on the look-out for favorable moves on inter-market correlations.

Find the Magic Formula to Festive Season Trading

There may be hidden opportunities to unlock in this highly festive and volatile market. As often is the case, the finest openings are divergence opportunities. This refers to a disparity between what the market expects and what the consumer data is actual showing. To locate these potentially highly profitable opportunities, be on the lookout for a stock showing these 3 signs:

A historic poor performance during the holidays

Some stocks do well during the holiday shopping spree. But take a look at the statistics from the past years and make sure to compare the performance with the competition. Study the history of the stock to avoid drawing hasty conclusions based on a broad sense of market performance.

High expectations for the current holiday season

You can deduct the expectations about a stock by reading the news, checking social media trends, and the way the brand is faring online. Simply, try to analyze the level of excitement from the consumers.

Data showing brand sentiment among consumers is negative

The scientific way is hard data and that’s what you really need. Search for the data on consumer sentiment closer to the holiday season. This will give you a deeper understanding on the true intent to purchase.

What are the Best Christmas Strategies?

Trading during uncertain times is quite similar to trading the holidays. When doing so, you need to be prepared with two strategies. The first, a low volatility approach and the second, a high volatility strategy. Both are appropriate for Christmas trading on MetaTrader 4 and MetaTrader 5. You can then decide to trade pairs or indices and commodities. So get your festive trader hat on and begin observing, analyzing, and strategizing. Landing a favorable stock will make your Christmas all the more cheerful!

Learn more about how to take advantage of the best trading strategies in our forex trading education section.

Get the Most out of the Festive Period

OspreyFX wants to gift our traders with more opportunities to earn. During this festive period, you can be in with a chance of turning $50 into $1,000 in our Christmas Competition.

Or is that wasn’t enough to cheer about you can earn extra money from your referrals’ trades with our Refer a Friend campaign. Celebrate the right way this Christmas.

 

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