Summer Trading & Low Volume


Trading over the summer months can be hit and miss at times. Some years it can be great, but many other years it can be slow and dull with low trading volume. Big traders and fund managers etc. will take off this time to enjoy it with their families and recharge their batteries.

Central bankers – those who are currently the main drivers behind market movements – are also likely to take time off.

So in the absence of bigger players on Wall Street and market movers, it makes sense that markets would slow down in what is called the summer doldrums.

Even with summer trading, the markets are still the markets and there are plenty of people about trading. But they are a little different over potentially quiet periods.

Often what you’ll see is they either drift in one direction for much of a session or they move slowly in a very tight trading range with the odd quick move thrown in for good measure. But if you can adapt to these conditions you can make money and it’s usually your mind that has to adapt before anything else can change.

Seeing the markets moving so slowly can be immensely difficult after having some good movement in the preceding months. But ultimately the markets still do what they normally do.


Drifting Price Action

When markets are drifting in one direction in these low trading volume conditions, they’re likely to continue to do so until enough activity comes in to stop them. This is no different from what markets do all the time.

However, the length of time a move takes can be different.

A move when the markets are plodding on in one direction can seem to take forever in the summer. Maybe they do take longer, but the big aspect for me is that pullbacks are shallow. You might not even recognize them as proper pullbacks, but when volumes are lower this is what you can expect. A deeper flush could spell out something entirely different to what it normally would.

Sharp Price Spikes

Then there are the times when the markets are seemingly dead in the water. Nothing is going on at all and ranges/volumes are depressed.

So are most traders.

But here’s the thing: when markets are like this and then something to drive the markets in a direction appears, moves can be sharp. This driver could be news or simply liquidity entering at a technical level.

But because the opportunities are likely to be limited in number, when something does happen, everyone wants in and in as quickly as possible. So if you’re alert to this and anticipate these breakouts, they can provide some excellent opportunities to take a trade.

Markets Are Still Markets In The Summer Trading Months

I’m not trying to predict what trading this particular summer will end up being like – the markets are certainly still jumpy about central bank policies and some big risk event can happen any time. So if you are still here, don’t expect markets to move in exactly the same way as you would usually expect them to, but realize that they are still functioning markets.

I remain on high alert usually during August into mid-September when kids are just getting back into school.

There might be fewer trading opportunities available, but if you change your mindset and stay alert they do still exist. If you know what to expect and you’re willing to adapt, there’s money to be made trading over the summer.

Let the movement of price indicate to you if you should be risking your capital over the summer months.  You never know when trading volume will increase.



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