Interesting enough, did you realize that an amount of trading on the forex market can decrease with up to 60 percent on important holidays, however volatility can soar enormously? This paradox poses high risks and also opportunities which are exclusive to currency traders all over the world.
Trading forex in major holidays is the opposite of trading in regular market conditions and as such, a different approach should be used when learning how to do it. The forex market is open every working day throughout the 24 hours yet, during the holiday season, the dynamics of the market changes in a manner that may surprise unaware traders.
The fact that forex is decentralized implies that even when significant financial centers are on holidays, the trading process does not stop. The small involvement of institutional traders and banks, however, puts the environment in such a way that price fluctuations become more often unpredictable, and spreads grow significantly.
Learning about Forex Market Holidays and Their Doses
Forex market holidays are days on which at least one of the major financial centers closed, such as New York, London, Tokyo or Frankfurt on the occasion of a national bank holiday. The forex market is partly functioning as compared to the stock exchange which has everything closed. The two are different since the former is a global and decentralized market.
The biggest effect is the liquidity decrease. Even the major banks and financial institutions which offer the majority of forex liquidity arrear their operations or shut down completely on the days that their respective countries use as holidays. This has the domino like effect throughout all currency pairs especially including the currency of the holiday observing country.
The major impacts of forex holidays are:
- Reduced market liquidity by 40-60 percent
- Broader bid-ask prices
- More price fluctuations and unpredictable trends
- Possible price differences of closing to opening prices
- Less successful algorithms of trading automation
The Forex Major Holidays 2025 That Will Influence The Trading
The knowledge of the 2025 forex holiday calendar will enable traders to plan ahead to avoid issues that may arise due to low liquidity and altered market conditions.
Critical holidays impacting on more than one currency:
- January 1: New Years Day (USD, EUR, GBP, ChF)
- April 18: Good Friday (USD, EUR, GBP, CHF)
- April 21: Monday Easter (EUR, GBP, CHF)
- December 25: Christmas Day (USD, EUR, GBP, CHF)
- December 26: Boxing Day (GBP, AUD, NZD)
US holidays with the effect on USD pairs:
- January 20: Martin Luther King Jr. Day
- February 17: Presidents Day
- July 4: Independence Day
- Nov 27: Thanksgiving
- A wide range of Federal Reserve bank holidays
Europe holidays that influence EUR and GBP:
- May 1: Labor Day (several countries of Europe)
- August 15: Eurozone Aug. 15 (Assumption Day)
- August 25: Summer Bank Holiday (UK)
The Chinese New Year time (January 29 – February 3, 2025) has a major effect on the CNY pairs and overall liquidity of the Asian market.
Demonstrated Forex Forex Trading During Holidays
Liquidity conditions are low during holidays, and hence forex markets demand particular strategies to ensure success in navigating them.
Major Currency Pairs Orientation
Major currency pairs such as the EUR/USD, GBP/USD and USD/JPY are better liquid during holidays than the exotic pairs. Such pairs generally have:
- Reduced spreadage
- More foreseeable price fluctuations
- Improved execution of orders
- Shrunken slippage danger
The exotic currency pairs are also very volatile in the holiday period when the countries involved in the pair are celebrating national holidays. The low trading volume also increases volatility of the prices, and they are inapplicable to the majority of trading strategies.
It is necessary to Modify Position Sizing and Leverage
The trading environment during the holidays requires that traders should hold a conservative size in positions. Typically professional traders:
- During holidays cut the position size by 30-50%
- Decreased leverage ratios in order to cover broader spreads
- Put in close stop-losses
- Do not put up new positions just before major holidays
This strategy cushions against capital in times of extraordinary market behavior.
Low Volume Range Trading
The holiday markets tend to induce range bound conditions as a result of which the currencies trade in narrow price bands. Strategies concerning range trading include:
- Determining well-defined support and resistance levels
- Buying into support and selling into resistance
- Establishing profit targets at extreme range ends
- A smaller position size is possible because of potential breakouts
Range trading is most applicable when the holiday period is long and where key news is not expected.
Holiday Trading Risk Management
Pre-Holiday Position Management
Intelligent traders assess their open positions before significant holidays. Those methods can be considered:
- Free up hazardous short positions: Squash trades that may be impacted negatively by holiday news or gaps.
- Hedge your exposure: Protect yourself against outflow movements using the correlated pairs of currencies or safe-haven currency/asset.
- Widen stop-losses: Take into consideration the volatility of the situation, and keep the right objective ratios.
Market Re-Entry after Holidays
After holidays, markets are usually very busy because traders go back. This is an opportunity but with only careful timing:
- Enter new trades when first volatility has subsided
- Watch gap fill and continued trend patterns
- Expect that liquidity will normalize during false breakouts
News Event Monitoring
The holiday seasons may yield disproportionate trading responses to surprise news events. Remember to be aware of:
- CENBANK EMERGENCY ANNOUNCEMENTS
- Geopolitical developments
- Economic releases of non-holiday observing countries
Pairs to Avoid during Holidays
Some currency settings provoke acute problems at the time of holidays and in general should be avoided by majority of traders.
- Exotic currency pair (USD/TRY, EUR/ZAR, GBP/MXN)
- Commodity-linked currencies when the commodity markets are on holidays
- Thin liquidity emerging market currencies
Safer alternatives:
- Commonsense USD pairs (EUR/USD, GBP/USD, USD/JPY)
- Cross-major pairs EUR/GBP, EUR/JPY, GBP/JPY
- Safe-Haven Substitutes with Gold and Silver
Other Holiday Trading Mistakes to Avoid
Overtrading In Inactive Markets
The length of trading during holiday markets is likely to record sideways trading. Do not be tempted to go fishing in these low-activity periods. Patience is particularly useful when market tendency is not to be used.
Neglecting Time Zones Difference
Different time zones have a great difference in holiday effects. A holiday in the US will impact mostly the USD pairs when the New York session is open but may cause little to no impact on the Asian sessions.
Employing Normal Position Sizes
Consistent position sizes over the holidays are blissful disregard of the greater risk context. The wider spreads and volatile levels require an increase in restrained sizing.
Being Dependent on Technical Analysis Only
Technical analysis works less well on holidays as there is reduced liquidity that can lead to erroneous analysis. Use technical research and basic knowledge of holiday-centered conditions in the market.
Factors of Technology and Automation
The systems that practice automated trading have special difficulties when it comes to holidays. The majority of algorithms that are formulated to suit the regular market conditions are challenged with:
- Slower market due to lack of liquidity instigating delays of execution
- Increased spreads to profits calculations
- Strange price movements causing pseudo signals
- Gap openings that avoid stop-loss orders
It is advisable that automated systems can be disabled or altered during the major holidays to avoid incurring surprise losses.
The Holiday Trading Preparations
Holiday trading takes planning beforehand and realistic reviews of the market scenario.
- Develop a trading strategy to be used during the holidays that should have:
- Pre-set position size boundaries
- Concrete standards of the termination of jobs before holidays
- Low-volume alternative trading strategies
- The contact details of your broker in the event of an emergency
Watch economic calendars closely to keep abreast with those upcoming holidays in major financial hubs. Most of the brokers offer detailed holiday programs, which present the anticipated market effect.
The Conclusion of Holiday Forex Trading
The forex trading during holidays is accompanied by special challenges and opportunities which have to be addressed with special solutions. The trick is being able to interpret the impact of the decreased liquidity on market movements and work new strategies around them.
It is also good to bear in mind that capital maintenance in times of uncertainty is usually more important than burning capital through challenging trades. Stick to the large currency pairs, lessen size and set stringent risk control measures.
The 24/5 operation of the forex market implies that even holidays do carry opportunities, provided they come with patience and preparation to the changed market conditions. With such advice and setting a realistic expectation, traders would be able to navigate the market during such periods and preserve their capital toward better trading times.
Adaptation is the overall success with respect to trading forex during holidays rather than the attempt to fight subdued liquidity circumstances. Slow it down and trade with high probability, don’t trade at all because the perfect trade is sometimes no trade.
