Thin liquidity at year end and the strange price action it creates
Posted: Sat Oct 31, 2026 7:41 pm
The last week of December brings a different market. Many desks are closed, volume drops, and price behaves differently from normal.
Spreads can stay wide for hours, and thin books mean small orders push price further than usual. Spikes happen on little news, then fade. Technical levels that normally hold may break briefly.
For scalpers, this creates both danger and temptation. The ranges can look inviting, yet fills are worse and false moves are common. Strategies tuned on normal months often misbehave.
A sensible approach is to treat the period as separate. Check how the strategy did in previous years during that window, and reduce size if results are poor. Excluding those days from backtests can also give a cleaner view of normal performance.
Many experienced traders simply close the books for the year around mid-December. The opportunity cost is small, and the risk of strange fills is avoided.
Do you trade the holiday period or step away?
Spreads can stay wide for hours, and thin books mean small orders push price further than usual. Spikes happen on little news, then fade. Technical levels that normally hold may break briefly.
For scalpers, this creates both danger and temptation. The ranges can look inviting, yet fills are worse and false moves are common. Strategies tuned on normal months often misbehave.
A sensible approach is to treat the period as separate. Check how the strategy did in previous years during that window, and reduce size if results are poor. Excluding those days from backtests can also give a cleaner view of normal performance.
Many experienced traders simply close the books for the year around mid-December. The opportunity cost is small, and the risk of strange fills is avoided.
Do you trade the holiday period or step away?