Coping with Stock Market Holidays

Warrior Trading

As a seasoned day trader who has spent countless hours studying charts, patterns and market trends, I’ve come to realize how stock market holidays can impact my routine and results. These holidays, although few, tend to throw a wrench into the market’s momentum and take away from our ability to benefit from market volatility.

The Psychological Impact of Trading Breaks

Given the sentimental nature of the stock market, where each movement is influenced by traders’ expectations and optimism, holidays introduce an extended pause, disrupting the usual pace. After 3-day weekends, especially, I notice a shift in market behavior, and I’m not alone. Imagine the cumulative effect this has on a trader who hardly ever takes a week off. The one time I did, I returned feeling rusty and out of sync with the market. This minor disruption is magnified on a larger scale with every long weekend.

The Calm Before the Holiday Storm

It’s intriguing how the anticipation of a holiday can slow down the market, as many traders start to wind down their activities before they officially kick off their celebrations. On the Thursday and Friday preceding a holiday on Monday, it’s not unusual to notice a decrease in participation and thus, lower volume and volatility. This downtime, however, is not set in stone. Occasionally, certain days, like the Friday after Thanksgiving, can morph into “Wild Card” days – days where unexpected spikes in trading occur, possibly due to traders like me who stick to their posts come rain or shine.

Navigating The Post-Holiday Market Cool-Off

Past experience has taught me that trying to push through and trade as usual during these lower volume days often backfires, leading to greater losses and a weekend consumed by trading remorse. What typically works on normal days doesn’t apply universally, particularly when there’s a disconnect in market continuity brought on by holidays.

The Market’s Memory: Starting Afresh After Holidays

Understanding that markets are driven by traders’ sentiments, the return after a holiday often starts with a search for a memory of the last ‘hot’ stocks to stir up some action. But after a few days off, even the most noteworthy previous movers might have faded from memory, leaving traders to commence the week without a clear leader to drive the momentum.

The Quiet After the Holiday: A Slow Start

Starting a new week after a long weekend often feels disorienting; it’s a Tuesday pretending to be a Monday. There’s no particular stock to pile into, no momentum to feed off from previous sessions. It almost feels like kicking off with a blank slate. And when it’s adjacent to significant holidays like Christmas or New Year’s, the likelihood of compelling corporate news to stir the pot further dwindles.

Adopting a Tactical Slow Down

Given this atmosphere, I tend to approach post-holiday trading with cautious strides. Holding back, maintaining the discipline not to overextend, and even considering the validity of a no-trade day becomes paramount.

As frustrating as these holiday patterns are, they remind us that trading is about more than just numbers and charts; it’s a human endeavor, susceptible to rhythm and flow disrupted by our calendar’s red-letter days. The key is to adapt, even if it means stepping back now and then, to navigate through the slower tides of the market.