How to get back to trading after the holidays

04-01-2021

For the majority of traders in financial markets, the winter holidays start on December 24. Until about mid-January, the market will be fairly inactive (under normal circumstances). However, during the transition from 2020 to 2021, the coronavirus news, the latest executive orders by President Donald Trump, information about Covid-19 vaccines, and relations between the EU and the United Kingdom can easily throw the market into a spin.

The holiday season is the time when traders who wonder whether it makes sense to trade need to be very cautious or take a break as well. This is an excellent time to sum up the year that is coming to an end and make conclusions about the results of your trading, as well as prep yourself for the trades in the next year. In this article, you will find some handy tips on how to trade during the holiday if you so decide.

Contents:

1. How to Get Back to Trading with a Bang After the Holidays
2. Specifics of Trading After the Holidays: Here’s What You Need to Know Before You Start
3. Hidden Pitfalls of Transitional Period

How to Get Back to Trading with a Bang After the Holidays

We have already mentioned in our previous articles that trading during the holidays can be a risky affair. However, the markets will be back to their normal operation starting from January 4 which is the first business day in 2021. The first week and sometimes even the first portion of January (until January 14-16) may still continue in the atmosphere of low liquidity depending on the world economic and political situation.

It’s best to return to trading after the holidays by actually preparing for it. After all, these will be your very first trades in the new year.

Here are some essential steps you should consider taking:

  • Check your trading strategy. Give your trading plan the once-over and make relevant adjustments where necessary. The market situation could have changed during the holidays.
  • Determine the areas you would like to work on in the new year in order to improve your trading performance. Create a roadmap for your goals.
  • Find yourself a mentor if you wish to boost your confidence in the market and receive professional trading advice.

How to trade profitably after the holidays: Pro tips

Specifics of Trading After the Holidays: Here’s What You Need to Know Before You Start

So, you have recharged your batteries sufficiently during Christmas and had loads of fun welcoming the new year, made a plan for improving your trading skills in the coming months, and now you are ready to hit the market again.

How to do it the right way:

1. Evaluate this situation from a fundamental standpoint. Think about what will affect the markets and assets that you are trading. In the days ahead, the coronavirus pandemic and political situation in the United States will continue to dominate the headlines and will remain among major impact factors in financial markets.
2. The experts do not recommend intraday traders to set overly ambitious goals and place short stop-loss orders on the first days of January as the market will still be recovering from the holidays and big money will be returning slowly. Real Market Volume indicator with a built-in Expert Advisor - which gives a clue to the levels for stop loss placement, market entries, and exists - can help you find out the volume of trades and current power balance in the market.
3. Scalpers should wait until the market becomes more stable.

Hidden Pitfalls of Transitional Period

After you have taken all the necessary steps to prepare yourself and entered the market on the first days of January, it’s very important to not rush.

1. Volatility can be quite unpredictable.
2. The market is still pretty thin in early January.
3. Entry points may be rare and it can take a while for the price to reach the take profit level.

Despite the aforementioned, make sure to stick to your training strategy and do not make impulsive trades only because you’re bored. If the dynamic of the financial instruments you are trading is relatively low, you can make trades with smaller profits than you typically have. However, the risk/reward ratio must not be less than 1:2.

PLEASE NOTE:

Be sure to transition into the new year without the rush. Regain momentum progressively as the market is coming back to normal and the big capital is returning after the holidays. Remember that you have a whole year ahead. So, take risks cautiously. First things first, you must learn how to preserve your capital, and then how to earn.

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