What is special about trading during the holiday season? Find our holiday trading tips and get into the holiday mood.
It’s the most wonderful time of the year. Well, this year the holiday season is a little bit different for everyone since Covid-19 has changed our life.
Trading around holidays has always been special, mostly because it is quiet as traders take it easy. Usually, at the end of the year, there are few economic reports for release.
The normal trading hours change throughout the holiday season since most markets close.
What is Santa Rally and how it affects trading?
The markets enter the silent mode. But equity investors have one key seasonal trend to look forward to. Researchers have identified the so-called Santa Rally, a historical pattern related with a year-end rally in stocks. While not guaranteed, stocks have tended to rally during the final five trading sessions of the year. The same happens in the first two trading days of the New Year as well.
This means that December can be a positive month for stock market investors. This phenomenon has delivered returns historically. But, there is no guarantee that investors will see gains in any particular year.
A lot of factors may trigger the Santa Rally such as optimism for the new year. Following a pandemic-stricken 2020, the sentiment is positive across traders, especially in view of the vaccine against Covid19.
Another theory is that some large institutional investors, who are more pessimistic, leave the market to retail investors, who tend to be more bullish.
Investors may also look at the consumer goods sector, which often gets a boost from holiday shopping. Historically, strong equity markets have correlated with increased spending on goods.
Christmas Holiday Trading tips on the go
– Get the chance and create your trading plan for 2021. It is the time of the year to evaluate your trading strategy and set your goals.
– Design your trading strategy taking into consideration your experience until now and your wider plan for the New Year.
– Set goals, do not make resolutions. Your trading strategy goals must be both achievable and measurable. They must also be realistic.
– Do not hesitate to ask for an expert’s opinion or that of a more experienced trader.
– Buy or create a trading journal. It is a useful tool which can help you to avoid the same trading mistakes.
– Choose the most Loyal, Quality and Devoted broker you can find in the industry: Trade with LQDFX.
Follow this week’s economic calendar.
PLEASE NOTE The information above is not investment advice.