Thanksgiving Week Forex Markets…..One Country…..Global Impact

It’s that time of year again…..How much will you read this holiday season that starts with that line?  Oh, I know!  It’s a popular phrase during the holidays and beyond.  The feeling created when this string of vocabulary is used generally harkens to something that occurs with regularity and predictability.  Which is PRECISELY why I went all cliche here and used it!  We have come upon this Thanksgiving week in the forex market which seems to be right along the lines of what I usually know it to be…….slow. Unlike many markets, forex has the advantage of not only being able to trade 24-hours a day, but also that it functions in a tradeable capacity during more parts of the year.  This is a good thing as money can be made throughout the 4 seasons……..with some notable exceptions.  The week of Thanksgiving beyond Tuesday is generally a great time to enjoy the week off of trading forex.  It is only one of two periods of the year I get a planned break from trading and analyzing the market.  It is a phenomenal time to get caught up on your caloric intake and enjoy watching pickup trucks dressed as football players play demolition derby in freezing conditions (Go Steelers!).  It is a moment in your life to relish times spent with those closest to you. But enough about my week, this is supposed to be about trading right?  So why would we want to avoid this week?

1. The World Knows About It:  Despite much effort, the United States has failed to keep Thanksgiving a secret from the rest of the world.  Going away from it’s normally “low-key, low-visibility” approach to everything, the US found the Thanksgiving holiday became sooo popular, that the word got out.  Seriously though, most of America takes this time off, ESPECIALLY government employees (who push around $$ in the market in in particular), and those who can afford to be off work for the whole week (big money managers).  On top of that the Stock Markets and US banks are also closed in the middle of the week.  The rest of the world sees a huge mass of money away from the market and decides to sit this dance out too.
2. History:  As long as I have been trading, I have never really seen very good forex markets during this time period.  As mentioned above, so much of the normal volume and liquidity is gone from not only forex but much of the major markets’ action.  Daily ranges get even smaller than we have seen them.  Price moves tend to be short-lived and limited.  Sometimes, we see unusual spikes from lack of liquidity and then the return to from whence they came.  This is not a great environment to get out there and grab the pips.
3. Black Friday:  Yes, this is a big deal to so many businesses.  They have spent years building this concept of “Day After Thanksgiving is the Best Day to Buy Stuff”.   Why?  See #1…..lots of people have the time off!  (not to mention needing holiday gifts)  This huge rush of consumerism generally can either be a boon or bust to the economies around the world.  The markets take many cues from information gleaned from this mad rush to get great deals.  So the markets leading up to Black Friday economic results take a very cautious approach, much like waiting for an important NFP or FOMC statement.  That can lead to a very exciting week after this one, as the holiday season starts to climb towards the fever pitch before the New Year hangover.

If these three reasons don’t convince you not to trade, think of your sweatpants (“fat pants” in my house).  They miss you…..don’t let them down by not filling up to secure them!  I truly hope everyone has an enjoyable week and we will be back in action ready to trade next week!  I will write a special article on Thanksgiving day for everyone here so check back then!  Turkey Day Away!