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.
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.
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.
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.
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.
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.