When Not to Trade Stock Indices

There are times when you should not trade Stock Indices because at this times the stock index 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 market are:

• News Time

Scheduled economic data reports are released throughout many times of the month. These can be found, in advance on a Stock Indices Trading 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 stock index 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 stock index prices to move in anticipation. It is therefore not a good idea to trade during news hours.

Some major economic news like the NFP & Interest Rates decision can cause extreme volatility which is extremely hard to trade & can cause extreme movements in stock index trading markets within seconds.

Economic data can cause a lot of speculation and therefore a lot of stock index price movement.

• Weekends

A lot can happen over the weekend leading to the stock indices market opening with a large gap. This can cause a big difference in your stock index 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 stock index prices & can cause the stock index price to move erratically.

• Asian Market

During the Asian session volumes are very low and the stock indices market move in a trading range of about 20 to 30 pips and it becomes very hard to trade because the stock index prices falls flat. Unless you are trading JPY and AUD stock indices 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 index 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 and 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 and traders can keep updated: Examples of a Financial Economic Calendar.