How is the Forex Market impacted by the Bank holidays  

A very short post about forex trading on bank holidays and  the effects it has  on the markets. The Forex Market consists of big banks, hedge funds and retail traders. The big banks are the major players in the markets. A large portion of Forex comes from the banks, when the banks are closed it also mean less activity which may lead to low liquidity on the currencies that are involved. If Canada, America or any other bank is closed, traders should try to avoid the currencies that are involved due to the minimal activity and the fact that there won’t be large volumes of trade coming from those particular banks that are closed.  As a result, a currency may become extremely volatile and that can be too risky. Forex trading on bank holidays can be very tricky. During a bank holiday the markets tend to react abnormally, It can either be too volatile or very sleepy.

We are approaching December holidays and the market will not be as liquid as it was during the year. Year after year I have witnessed this during December holidays, the market just slows down. This is due to the fact that most traders are taking holidays and there are less participants in the markets. Less participants also mean less liquidity. Even though the Forex market is opened 24 hours 5 days a week, there are worst and best days to trade Forex.  The market remains open during December holidays and only closes on Christmas day and New Year’s day.  It is important to know when to trade and when to stay away. There are so many distractions during December holidays, don’t let it be the time to loose all your money. I choose to stay away from currencies that are involved in a bank holiday. This week on the 22nd the Japanese banks will be closed in observance of their Labor Thanksgiving holiday (I will avoid the Yen/JPY)  and the US will observe theirs on the 24th (I will avoid the Greenback/USD) . Thank you for stopping by, I hope you found this post informative. If you, kindly share with your peers.