Why Traders Need to Approach Quarter Ends with Caution

4 min read

Hi Traders,

usually we try to send our analysis for the upcoming trading day or week. Although sometimes we cannot resist writing an educational piece (like candles for breakouts) here and there as well 🙂

Now is a special trading days because is the last trading day of the quarter soon and this has the potential to create larger volatility. This article explains why and also how traders can approach such trading days.

Increased Volatility with Month and Quarter Ends

You might be wondering: what is so special about the last trading day of the month or quarter?

In our experience price action tends to be more volatile during these days. One of the reasons is probably because traders and investors of hedge funds and banks are closing open trade positions to lock in profits for their own and their client’s accounts.

Friday is already known by traders as a “profit taking” day but the end of months and quarters tend live up to that reputation even stronger. This is something that we (Nenad and Chris) have noticed during 10+ years of trading the markets. However, be aware that this is a general rule of thumb, not a fixed rule.

Here below you see an EUR/USD chart of June 30, the end of the 2nd quarter 2017. Of course, each situation is unique and will be impacted by the fundamental and technical situation. But you can see how the EUR/USD uptrend slowed down, retraced and then went sideways during the day with some ups and downs. This is not untypical for a quarter end and represents what we wanted to explain with this article.

EUR/USD 1 hour chart

How to Tackle Analysis and Trading

What is the best approach for this specific trading day?

It depends on a couple of factors such as:

  • Your risk appetite. Larger volatile could create trading opportunities for those that like risky trades.
  • Your trading style. If you like to close the trades before the weekend, then skipping this last day of the month or quarter could make sense. Take some time off and do some extra Forex learning or practicing on the charts.
  • Your trading results. Traders that are around break even for this trading week might still want to take well calculated trades to boost their results while traders that are at, close to or above their profit targets for the week might just want to walk away with profits in their hands and enjoy the weekend.

In any case, be on guard because price could change directions quickly. Also realise that support and resistance levels could act less reliably.

In any case, we at Elite CurrenSea are looking forward to helping you achieve smashing results in the 4th quarter of 2017. Soon we will be launching a service that, in our view, will really provide the support that traders are looking for, from A to Z.

So please keep an eye out on our site and if you are not trading today, here below is an interesting educational video that could be a good learning point for today: the Wizz tool.

Cheers and good trading,
Nenad and Chris
Elite CurrenSea Twitter: @EliteCurrenSea
YouTube: Elite CurrenSea

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