End of Year Trading

Towards the closing of every year, stock traders find out that end of year trading is a bit different than trading during other times of the year.

During the closing of each year, Thanksgiving comes around and retailers begin to boost advertising in hopes of trying to help boost sales.

Even before that though, there's before Thanksgiving sales and then Black Friday after Thanksgiving sales, Cyber Monday sales and then after that, the flurry continues up into and through Christmas. It seems like it's non-stop advertsing spam.

Besides retail sales estimate figures coming out after the holidays potentially affecting stocks, end of year trading also is accompanied by low volume trading. Here's an example of a headline from December 28, 2011:

End of Year Trading

Many traders and investors take vacation time during the holidays and those who don't, simply start reviewing the year to see what worked and what didn't. It's not usually the time most traders make decisions for opening new positions.

Individual investors and traders (with the exception of those long term investors who re-balance their portfolios at year end) would probably be best suited to take the year end holiday time off themselves and spend it with family and friends. At the least, it can be used for a much needed break from the stress throughout the year of being an active trader or individual money manager.

If you decide to do end of year trading anyway, be aware that there is usually lower volume which means getting in and out of stocks will be different than usual and expect potentially wider swings in the price movements (both intraday and day-to-day) of some stocks for no other reason than having lower-than-usual volume.




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