When trading Forex, it is important to know when national holidays occur as they can serve as a good guide for forecasting market situations in this period. As a rule, there is a jump in market activity immediately after a holiday is over. With care, you can choose the most profitable time to enter and leave the market. The primary cause of the downfall of the forex market in December is Christmas. As soon as Christmas comes, a sudden dryness in the market will be introduced. Most of the currency pairs’ value comes down measurably.
In the forex market, most major pairs have shown a considerable dip in Christmas week volatility compared to the previous trading week, but it is worth noting that most pairs have still yielded more than 100 pips in price action for those days. The Christmas break offers most traders a chance to review their performance for the year and identify things that they could still improve on in preparation for the upcoming trading year. Apart from looking for more profit opportunities in the markets, it is also worth investing some time in revisiting your trade setups for the past twelve months and making the necessary adjustments in your trade strategy.
It doesn't get any easier to make money just after Christmas either because the markets tend to remain subdued until well into January when all of the traders are back at their desks. So if you have a profitable trading strategy in place that is able to generate consistent profits during the rest of the year, you might want to consider reducing your profit targets or making changes to your strategy during the month of December because you could easily come unstuck in this quiet trading period.
In theory, one might think that since these holidays are the busiest time for commerce with money flowing like no tomorrow, a 24 hour global market should allow ample opportunity to trade. Except, of course, it’s primarily the banks who are the major movers of the currency markets. Hence, when they are closed, it is natural that everyone else, including forex brokers, follow suit. As we all know, even on the days when they allow some trading during this period, there is going to be terrible and unpredictable price movements with higher spreads than normal.
However, according to many successful forex traders, you should take a break altogether and enjoy the holiday season without worrying about the markets because, in general, volumes and volatility are greatly reduced and the price moves are often a lot more unpredictable. You have the rest of the year to make decent returns from the forex markets because they will always be available for you to trade. So why risk losing money and stressing yourself out during what should be one of the most enjoyable times of the year?