After a hot and sunny Christmas weekend (plus the two Australian public holidays), I’m just checking in on the markets and of course our finance Twitter family! 🙂 I’m sure your actual family welcomed the break as much as mine did and that you made sure you all enjoyed yourselves!
With many traders still on holidays, the markets and our book at Vantage FX are noticeably thin. I’m not going to sit here and tell you to take a EUR/USD breakout on the 5 minute chart or whatever it may be. That’s not what I’m about as a trader and that’s not what Vantage FX are about as a broker.
Yes, forex markets are open but with a large portion of bank traders, prop traders and retail speculators alike on holidays, it isn’t an easy time to trade. As a result of so many market participants being away from their trading screens, market liquidity thins out and moves become unpredictable. Just take a look at this EUR/USD intraday chart over the Christmas period so far:
For many of us, it is the fact that Forex is most liquid market in the world that keeps us here compared to say, trading equities on your local stock exchange and that 70 pip spike up and down in the lead up to Christmas is a textbook display of what happens in an illiquid market. Not the sort of conditions that many of us want to be in the market during!
Following that spike, we then see that markets are experiencing the opposite end of the spectrum, setting into a maximum 30 pip range throughout all 4 sessions for the next few trading days. Lack of liquidity in markets can go one of two ways. They can cause irrational spikes as gaps in the bid and ask price cause the market to jump around, or they can be boring as batsh*t like this.
The great thing about forex markets is that there is always another trade just around the corner. The market is always there for you, so show some patience and give it the respect it deserves between Christmas and New Years.
Instead, use this little between Christmas and New Years period of limbo as a chance to clean up your MT4 charts and get your higher time frame levels drawn clearly so you know what’s in play come January 3 following the final holiday for New Years Day.
Opportunity will present itself in the new year. In the meantime, why not open a LIVE forex account with Vantage FX so you can experience the difference that trading with a true ECN broker gives.
Dane Williams – @VantageFX
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