Trading Holiday Markets

by Jeff Friedman

With the holidays approaching, I’ve been asked how one should trade during holiday/quiet periods. As we head into the season, we know we will likely encounter periods where trading activity will slow to a crawl. The markets get thinner, and can stagnate with no movement. On the flip side, there can be a lot of volatility during times like this, because illiquid conditions can create big swings when news does break, or a big order hits the market without much to absorb it.

We know that volatility equals opportunity in futures, so trading holiday markets can offer some great opportunities, particularly for day traders. If you would like to trade during holiday market periods, look for short-term opportunities, and always use sound risk-management techniques, including stops. I wouldn’t advise walking away with an open position before a three-day holiday weekend, if you aren’t well capitalized and would like to sleep soundly!

My advice would be to stay away from the markets that are generally the least liquid. Go where the volume is, and concentrate on the “mainstream” contracts. Holidays are not the time to experiment with markets like tiger shrimp, butter, or canola, where volume on a regular day is light, let alone a holiday. So, if I want to trade a stock index contract, I’d trade the S&P futures over the Russell. If I want to trade an interest rate product, I’d choose the 10-year Treasury note over the Libor or Fed funds futures. In livestock, I’d trade live cattle over feeder cattle. In grains, I’d stay away from Kansas City Board of Trade wheat futures, and trade CME Group wheat futures. I’d choose soybeans over soybean meal. You get the idea.

Please feel free to call me at 866-231-7811 or contact me via email at if you have questions on this topic or to discuss specific trading strategies for your unique situation in this or other markets.

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Past performance is not necessarily indicative of future trading results. Trading advice is based on information taken from trade and statistical services and other sources which Lind-Waldock believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder.

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