When Not to Trade Indices
There are times when you should not trade Indices because at this times the stock indices trading market becomes illiquid an unpredictable. Illiquid means there are fewer traders compared to other regular times. The times not to trade the stock indices trading market are:
News Time
Scheduled economic data reports are released throughout many times of the month. These can be found, in advance on a Indices Calendar
There are 3 categories of news; yellow, orange and red, each category having a different impact. High impact fundamental news can really move the indices trading prices, sometimes causing a spike in both directions, before moving towards one direction. These are high risk times where a lot of people get stopped out.
However, it is not just the announcements themselves that can affect the stock indices trading market. The sentiments and predictions of what the numbers will be can cause the indices trading prices to move in anticipation. It is therefore not a good idea to trade during news hours.
Some major economic news like the NFP and Interest Rates decision can cause extreme volatility which is extremely hard to trade & can cause extreme movements in stock indices markets within seconds.
Economic data can cause a lot of speculation and therefore a lot of stock indices trading price movement.
Weekends
A lot can happen over the weekend leading to the stock indices trading market opening with a large gap. This can cause a big difference in your stock indices trading account.
Market closing times- NY closing
At the close time a number of trading trades are being closed or being swapped. This will lead to volatility in the stock indices trading prices and can cause the stock indices trading price to move erratically.
Asian Market
During the Asian session volumes are very low and the stock indices trading market move in a trading range of about 20 to 30 pips and it becomes very hard to trade because the indices trading prices falls flat. Unless you are trading JPY and AUD instruments it is best not to trade at this time.
Holidays
Don't transact during Holidays. This is because the Banks are closed & therefore less participants in the stock indices trading market. If banks close for a holiday then the volume of transactions carried out is greatly reduced. This can lead to low volatility.
Holidays like Christmas & new year traders should not trade on these days & should take time off during this week of Christmas upto new year, date 2 when banks resume their operations. An Economic Calendar will include a schedule of bank holidays & traders can keep updated: Example of a Financial Economic Calendar.
