Forex Trading on Thanksgiving Day

Are you trading Forex on Thanksgiving day?

This Thursday, November 22nd 2012, is Thanksgiving day in America. I usually steer clear of Thanksgiving day trading as the day has a reputation for being slow moving and unpredictable.

However, you may want to trade Thanksgiving. So, to help you decide if you should trade on Thanksgiving I have compiled some statistics below. The pair I am using for all examples is EUR/USD.

Average Daily Ranges on Thanksgiving

The chart below shows the average daily range of EUR/USD year by year since 2000 in blue. In red it shows the daily range for Thanksgiving day since the year 2000. The Y axis (left) shows the range in pips. The X axis (bottom) shows the year, from 2000 through to 2011.

EUR/USD average daily ranges on Thanksgiving day vs. yearly average daily Ranges.

So what does all of this tell us?

EUR/USD on Thanksgiving day had much lower volatility than the rest of the year.

The average daily range for 2008 was 185 pips but Thanksgiving day that year was only 108 pips. Both in 2010 and 2011 the Thanksgiving day range was around 50 pips below the average for the year.

In fact for nine out of the last twelve years the pip range on Thanksgiving day has been lower than the yearly average.

The other two years are 2004 and 2009. In 2004 the Thanksgiving day range was in line with the yearly average of 123 pips. In 2009 the pip range for Thanksgiving day creeped 14 pips a above the yearly average.

So it is pretty safe to say that you should expect very low volatility this Thursday. In fact, based on the last twelve year you should expect Thursdays range to be roughly 68% of this years average range. So far the average daily range for 2012 has been 111 pips so I would expect EUR/USD to range about 75 pips this Thursday.

Difference Between Open and Close Price

In the chartbelow you see the move from open price for EUR/USD. The Y axis (left) shows the move in pips. Anything above 0 on the Y axis (left) means price closed higher than open, and anything below 0 means price moved down from open. The X axis (bottom) shows the year, from 2000 through to 2011.

EUR/USD difference Between Open and Close Price on Thanksgiving day.

The graph above shows that there is no consistent bullish or bearish bias on Thanksgiving day. In the last twelve years price closed above open six time, below open five times, and it closed precisely at open once in 2007.

There is one very interesting fact that we can take from the chart above. For eight out of the twelve years price closed 20 pips or less from it’s open. It seems like the open price on Thanksgiving day acts as a magnet most years. Price may range up to one hundred pips away but it always seems to make it’s way back by the days close.

In 2010 price ranged 100 pips from open and came back to close only 9 pips from the open price. In 2011 price ranged 95 pips from open and came back to close only 6 pips from the open price.

Trading Thanksgiving Day 2010

The chart below shows that in 2010 we had two opportunities to enter short trades on the EUR/USD 15 min. If you don’t know how to trade reversals check out my free Forex price action strategy.

EUR/USD range on Thanksgiving day 2010.

This trade could have earned 35-50 pips if you entered at the reversal point, and closed on or after the Thanksgiving day open price.

Trading Thanksgiving Day 2011

The chart below shows that in 2011 we had one opportunity to enter a long reversal and one to enter a short. Both reversals could have earned 30-45 pips if you entered at the reversal point, and closed on or after the Thanksgiving day open price.

EUR/USD range on Thanksgiving day 2011.

Conclusion

Taking everything above, it would seem that trading Forex on Thanksgiving day is not as unpredictable as most people think.

• Ranges tend to be tight which means there is less risk.
• Price seems to be drawn back to it’s open price by the close of the day.
• Large moves are rare and price has only ranged above it’s year average once in twelve years.

That being said I am not a 15 minute chart trader so I doubt I will trade Thanksgiving day. I will be keeping a very close eye on price though and I may switch to 15 minute charts….

…… I mean, it is a special occasion, so why not?

How will you handle Thanksgiving day? Please discuss below. Also, let me know if you found this article helpful.