The Day before a Holiday

[Salty Gibbon]

I have heard a number of people say that it is unwise to trade on the day before a market holiday.

I would be interested to hear from those people who do refrain from trading on the day before a stock market holiday together with their reasons for doing so.

 

[SOCRATES]

As you know, Salty, and I have said this many times, I invariably, (unless there is something really serious going on) take Friday afternoons off. This is because of my own experience on the floor.

I found that after Friday lunchtime, the mood changed. Poeple were thinking and dreaming of the weekend and not as driven as earlier in the week.

The same applies in reverse the first trading day after a holiday. It takes a couple of days for the same rythm as previous to pick up, and this is my experience and the result of my observation.

Kind Regards As Usual.

 

[dbphoenix]

Depends on the strategy. With my particular strategy, it doesn't make any difference. If the setup is there, I take it. If it isn't, I don't. But it's an easy subject to research, as are options expiration days or FOMC days.

Even so, statistics aren't necessarily something to rely on. If one were to find, for example, that FOMC days rarely reach the ADR, he might be playing in the park rather than enjoying the profits to be made from yesterday's move.

 

[roguetrader]

My experience is that volume is typically low and this can result in either unusual behavoir and or odd price swings. I'd say if trading to treat it with a little more caution than usual imho.

 

[najj]

Markets generally end up higher on the eve of a bank holiday history has shown, even it's only by a few points.
So if you bet on Binary bet.com for a 'UP' finnish on Wall St, you may be rewarded by the end of the night.

 

[rog1111]

Volumes are likely to be low, and bid ask spreads will be much worse. However sometimes this quiet (low cost) environment is used to move prices very substantially, so depending on your strategy, it might still be worth watching.

rog1111

 

[macbonzo]

Certainly , if there is reduced to liquidity, I tend to be wary. As far as Nasdaq is concerned, I personally would not trade August at all. Witching day (and possibly the day before), can be really dicey too.

That said, I have found the couple of days before Christmas to be rather good. If you study the FTSE close of day auctions, it is not unusual to find "sticky finger" syndrome in evidence, due to extended lunches. I used to trade FRCL a lot, and someone put a huge 600,000 sell order in the auction (share had traded 450,000 for the day) on the day before the holiday, dumping the price by 4%.

Even last week, I noticed the FTSE 100 fell 10 points (4932 to 4922) in the afternoon auction. So I guess it pays to be around.

I think you just have to be very disciplined and be wary about trading when volumes are light.

 

[SOCRATES]

Yes, that is because when the fat cats are away, the mice come out to play.

 

[Salty Gibbon]

But do they still get their tails chopped off by a carving knife ?

 

[SOCRATES]

Yes, at this moment the fatcats are playing games, they are so naughty, you cannot imagine how naugty they are, but I will tell you a secret, they don't like a squirt of cold water, you know.

 

[clylbw]

Pre holiday or not, today seemed a good day, at least to my stardard.

I did not know about the pre holiday theory. Even if I had known, I would not have paid much attention to it today. There was clear indication that big boys had been getting into positions yesterday afternoon, so I had expected some activities today, especially this morning. Bingo.

What I would like to say is, I will take note of the conventional wisdom and rules of thump, but I always remember for every rule there is an exception. I take actions based solely on market activities. If the setup is there, trade; if not, no trade; nothing else matter. Simple as that.

Hope this helps.

 

[dbphoenix]

Actually there's no need to theorize or to rely on conventional wisdom. All one has to do is look up the data for days preceding holidays, whether or not important news occurred on that day, whether the day occurred before a Friday holiday or a Monday holiday, and so on. Then decide if it's worth sitting there or if a day off is a better use of the time.