Forex trading is a popular investment option for many people. It involves buying and selling currencies on the foreign exchange market with the aim of making a profit. However, there are certain times when it is not advisable to trade forex, and December is one of them. In this article, we will explore the reasons why you shouldn’t trade forex in December.
1. Holiday season
December is the holiday season in many countries, including the United States, the United Kingdom, and Europe. During this time, many traders take a break from trading to spend time with their families and friends. This can lead to low trading volumes and decreased liquidity in the market, which can make it difficult to find good trading opportunities.
2. End of the year
December marks the end of the year, and many traders are focused on closing out their positions and taking profits. This can lead to increased volatility in the market as traders scramble to make last-minute trades. This can be risky for inexperienced traders who may not have the skills to navigate this kind of market.
3. Economic data releases
December is a month when many countries release their economic data for the year. This can include GDP figures, employment data, and inflation numbers. These releases can have a significant impact on the forex market, and traders need to be prepared for any unexpected changes in the market. However, during the holiday season, many traders are not actively monitoring the market, which can lead to missed opportunities or unexpected losses.
4. Central bank decisions
Central banks often make important decisions in December, such as setting interest rates or announcing changes to monetary policy. These decisions can have a significant impact on the forex market, and traders need to be prepared to react quickly to any changes. However, during the holiday season, many traders may not be actively monitoring the market, which can lead to missed opportunities or unexpected losses.
5. Reduced trading hours
Many forex brokers reduce their trading hours during the holiday season, which can make it difficult to find good trading opportunities. This can be especially challenging for traders who live in different time zones, as they may not be able to trade during the hours when the market is most active.
In conclusion, there are many reasons why you shouldn’t trade forex in December. The holiday season, end of the year, economic data releases, central bank decisions, and reduced trading hours can all make it difficult to find good trading opportunities and navigate the market successfully. As a result, it is often best to take a break from trading during this time and focus on other investment options or spending time with family and friends.