Thanksgiving week and the vanishing US desk

[Fairman]

Thanksgiving week and the vanishing US desk

The Thursday itself is a US holiday, and the Friday after is a shortened day with thin trading. Many US participants take the whole week quietly. The result is a market with half the usual flow and an unusual amount of random movement.

Spreads widen, especially in the late New York session. Volume per tick drops, and small orders move price more than they should. Technical setups look familiar but behave differently, with levels tested by tiny volumes and breakouts that lack real conviction.

At the same time, positions put on earlier in the week sit in a market that cannot easily absorb them, so unexpected news can cause bigger swings than normal.

The safest approach for most short term traders is reducing size, tightening the trading window to the London morning, and treating the Friday session as optional.

Another approach is using the quiet to test ideas on small size, since the unusual conditions teach something about how a strategy behaves outside the comfortable zone.

The Friday after Thanksgiving also brings an early close for US bond markets, which removes another layer of support for the dollar. Fewer participants, fewer hedges, and fewer reasons for price to behave in the familiar way.

What has Thanksgiving week done to the results in past years?

[Fairman]

US Thanksgiving falls on the fourth Thursday of November, and US stock markets are closed that day and close early the following Friday. The FX market stays open, but with many US traders away, liquidity in the New York session is thin on both days. A hypothetical example: a EUR/USD spread that's 0.2 pips at the normal New York open might average 0.5 pips or more on Thanksgiving afternoon, and depth behind the best price is much lower. For a scalper, that changes the cost of every trade.

[Amanhasnoname]

I have traded the last full week of November for four years and I keep a small table of what happened. In the first two years I treated it like any other week and my results there were poor, with a win rate about eight points below my average and several stop outs from sudden jumps on small volume. After that I changed the plan: I trade the London morning only, cut size in half, and stop completely at 1pm New York time.

On the Friday after the holiday I often do nothing at all. The spread on EURUSD in the late session went from my normal 0.3 to around 0.9 on one afternoon I recorded, and a single large order moved price nearly 6 pips with no follow through.

If you want to test the week, use demo or minimum size for a year. It is a cheap way to learn how your own setup behaves when liquidity is thin.