When one major market is on holiday

[Fairman]

When one major market is on holiday

A US bank holiday means London trades the morning with no New York to follow it. The afternoon turns sleepy, volume dries up, and the usual overlap burst never comes.

The reverse also holds. When London is closed for a bank holiday and New York is open, the early part of the US day carries unusual weight, and spreads on sterling pairs can look odd for hours.

Japanese holidays matter for JPY crosses in much the same way, and a few Asian public holidays can quietly shift liquidity in the AUD and NZD pairs as well.

A trader who runs the same plan on a holiday as on a normal day is effectively trading a different market without noticing. Volatility measures calibrated on regular days produce stops that are too tight and targets that are too ambitious.

Keeping a holiday calendar for the main financial centres on the wall costs nothing and prevents a lot of silly trades.

One more habit helps: checking the holiday calendar for the week every Sunday evening. It takes two minutes and covers the central banks too, since a closed central bank often means no scheduled speakers and a very different news flow.

Which holidays have been the most unpredictable in your experience?