How to Trade During the End of the Year – Introduction
The year is finally coming to an end. For traders and investors, it has been an interesting year with so much activities in the market. The stocks have rallied, bitcoin and other cryptocurrencies have produced new millionaires while currencies and commodities have seen mixed results. Metals like Copper and Nickel have soared on hopes that electric cars will take over the world. Therefore, as the year comes to an end, here are my recommendations for you.
First, since we are in the final weeks of the year, we can expect that volume across the assets will be reduced. This is as investors exit the positions they held during the year and as they plan for next year. This process is called tax harvesting. It is a process where investors exit their positions for tax purposes. In addition to tax harvesting, many investors will want to start the year afresh with new picks.
Second, while tax harvesting will influence the volumes of assets, the price will see significant moves. This is because, the price of the assets is not influenced directly by volume. For example, there might be many bidders and less sellers for an asset which will lead to a hike in price.
Third, you should pay close attention to news. As the year comes to an end, many news professionals will be out for holidays, but you should not be complacent. You should not ignore the nature and volume of news that will come during the year end. M&A deals could be announced, companies could announce some significant news, and economic data could influence the market movements. Therefore, you should pay close attention to the news. For example, if you are a stocks investor, you should pay attention to Amazon’s announcement on its sales and activity during the holiday season. This is likely to be market moving news.
Fourth, you should focus closely on technical analysis. This week, the Fed will announce its interest rates decision. They will also announce their projections for the coming year. As a result, in terms of economic data, traders should watch closely, but remember that the main data investors needed has already been announced. This means that the main market movers have already been announced. Therefore, technical analysis will be the main trading strategy for the year.
In addition, as I have mentioned before, it is okay to take a break. If you are a full-time trader, chances are that you have had a busy year. It has had its ups and downs and chances are that you have had some good and bad times. Every trader has gone through all this. As the year comes to an end, it is okay to exit your positions and take a break and have a rest. There is nothing wrong with that. In fact, doing it can help you have a better year next year. I recommend that you take a few days off and reflect on your successful strategies and how to improve them.
Fifth, since the market activity will be low, it is a good time to test new strategies for the coming year. If you have had a successful year, you should not be complacent. Remember, it is always good to celebrate your wins but this celebration should not be over-extended. Instead, you should focus on improving your current strategies so that you can have a better year.
As the year ends, remember that the past has ended. It will not be repeated. Therefore, if you have had a good year, don’t be complacent. Don’t assume that the strategies you used in the past year will be successful. Strive to be a better trader and continue working hard.