Understanding the risk involved in trading forex during the Christmas season

By: Damian Okonkwo

What are the risk involved in trading forex during the Christmas season？

The Christmas season is a period of holidays for the majority of forex traders across the globe. Many traders quit trading during this period to celebrate Christmas with their family and loved ones. Many institutional traders pause from trading too. This reduces the trading volume in the market and increases slippage.

However, despite the reduction in the number of traders during this period, the market remains very volatile due to the high demand for forex amongst travelers. The market prices of various pairs tend to rise and fall rapidly due to increase in demand and supply rate.

Similarly, commodities such as Gold, Silver, and Crude oil are also very volatile during this period. Gold is largely demanded as ornaments and gift items during the Christmas festivity. Government and several health institutions buy gold in large amount during this period, hence increasing the demand for gold.

Nothwitstanding, some investors who have held gold for a long time before Christmas also utilize this opportunity to sell off their holdings as the prices keep rising. Hence, will some are buying others are busy selling off at higher prices. This makes it difficult to predict the exact direction for gold and silver during this period as the prices keeps rising and falling based on the demand and supply rate.

Consequently, it becomes all the more difficult to predict the direction of the market during the Christmas season as the demand keeps rising and falling intermittently. Thereby increasing the risk involved in trading forex during the Christmas season.

Is the forex market open during the Christmas season？

The forex market is officially closed on the 25th of December which is the Christmas day celebration. This extends to the 26th day of December which is a federal holiday and a public holiday marking the boxing day celebration. The market reopens on the 27th of December and closes again on the 1st of January to make the new year.