With the holidays fast approaching, many traders are winding down their trading activity. Not me. I'm actually planning to trade as much as I can during the holidays, partly because my Christmas shopping bill is getting bigger and bigger by the day!
In all seriousness, holiday trading can be a worthwhile endeavor if you have the time to spare. Trading in a low-volume environment isn't always easy. Opportunities are rare and execution must be timed just right if you're going to make any money during the holidays.
The following diary illustrates how I'll approach the financial markets this holiday season. I've been a good trader this year, so I hope Santa rewards me with a few solid opportunities over the next few weeks.
Friday, December 18
Target 1: USD/JPY
This should actually say Thursday, December 17 because that's when I plan on trading the USD/JPY. I live on the US east coast, so I'll be staying up late to monitor the Bank of Japan, which could announce changes to monetary policy. With the USD/JPY hovering around 123.00, further easing by the BOJ could provide a solid buy opportunity. If that's the case, I can easily see a rise to 125.07, the close from August 12. I don't think an inactive BOJ will provide much of a shorting opportunity.
Monday, December 21
Target: Gold
There's not much on the economic calendar on the 21st, so I'll have to make my own opportunities. Commodities have been especially sensitive to investor sentiment as of late. With the Fed expected to raise interest rates on the 16th, there will plenty of opportunities to short precious metals, especially gold. If gold declines as sharply as I expect it to after the Fed announcement, investors will be short covering the yellow metal. This could create an initial spike. With this setup in mind, I have many options.
Tuesday, December 22
Targets: S&P 500, FTSE 100, EUR/USD
Many opportunities could present themselves on Tuesday, a day that features several market-moving events, including a deluge of Eurozone economic data. The Commerce Department will also release revised US Q3 GDP data, while the NAR will release US existing home sales figures. If there's one day to trade forex this holiday season, the 22nd could be it. Although I won't stay up for the European releases, I'll be at my trading desk before the US GDP report at 8:30 am ET. I should be able to piece together the trend for EUR/USD just by analyzing the overnight session. Solid US data could also provide a good buying opportunity for US stock indices, such as the S&P 500. Stock markets should view data positively again after the Fed raises interest rates.
