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;Trading Alert] Beware of New Year False Starts
I published this article (see below) eight years ago and I like to repeat the warning each year as it is one that has stood the test of time. This year is no different, especially given the uncertain economic outlook and the choppy price action to end the year. For me, it is like repeating a public service message.
This is not to say end-of-year trends will or will not continue into the new year. Just be aware that the first week of a new year is often one characterized by thin trading, false starts and whipsaws as markets are not yet trading with a full deck.
So, this is where we stand now as markets open for a new year and look to restore liquidity after long holiday breaks. It may not be until the following week when markets start trading with fuller liquidity so keep that in mind when 2023 begins.
I would be remiss if I did not put in a plug for my Amazing Trader program as it makes sense of price action and offers trading opportunities in ALL market conditions, including whatever occurs at the start of the new year.
Warning: Beware of New Year Whipsaws
January 6, 2015
While this year may turn out to be different given key events later in the month (i.e. ECB meeting and Greek elections), I would be remiss not to give a warning to beware of a New Year whipsaw. I have seen it happen too many times as this is not a typical week and how markets end it may be more important than how they begin.
I can sum it up by posting a trading tip I wrote around one year ago. It was the first one in my series of forex trading tips and I am reposting it now given the time of the year.
As a rule I am wary of start-of-the-year moves and there are times I do not look to trade until a full week is in. One reason may be muscle memory from a long time ago where I got caught in a whipsaw during the first week and it took a long time to dig out of that hole. I have seen too many starts of a New Year false starts not to keep me cautious betting on early trends continuing. So my Tip of the Week is just to be aware of early in the year moves and keep it close to the vest until full liquidity returns to markets.
This can also occur to a lesser extent at the start of a new quarter and after summer ends.
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