The question of whether to keep your algorithms running through the holidays is almost Hamlet-like. And just like Hamlet, the answer isn’t simple. The turn of the year is a strange, timeless zone where the market stops behaving like a rational mechanism and starts acting… let’s say, creatively.
🎄 When the Big Players Head to the Mountains
The first thing to understand: the market loses its real muscle during the holidays. Experienced bank dealers and portfolio managers have closed their books for the year, and the terminals are manned by substitutes — or by no one at all.
And what happens when liquidity disappears?
Butterfly effect: A medium-sized order that would normally go unnoticed can now move the price by dozens of pips.
Algorithmic hysteria: Bots calibrated for normal volatility start overreacting.
The Christmas sweater effect: Spreads stretch like grandma’s wool sweater — warm-looking, but itchy and dangerous for your account.
Imagine a forgotten algorithm that was supposed to watch a technical level, but its author left for the holidays without turning it off. The market twitches, the bot interprets it as a signal for a massive counteraction, and suddenly your chart looks like an EKG after five espressos.
📘 Year-End Accounting: The Silent Killer
The end of the year isn’t just about gifts — it’s also about balance sheets. Funds and corporations engage in window dressing, adjusting their portfolios to make annual reports look as good as possible.
But in an empty order book, this creates price jumps that make no sense — technically or fundamentally. And the worst part?
Price continuity collapses. The open of one candle may not connect to the close of the previous one. And we’re not just talking about weekend GAPs — this can happen in the middle of a regular trading day.
🤖 Murphy’s Laws in Code
This is also the time when “new and guaranteed” algorithms suddenly appear. Some were created only because a shareholder meeting is coming up, or someone needed to show activity before a deadline. And then you find gems like:
// Critical section: Christmas logic
if (x == 1) y = 1;
else ; // Statistically, this should never happen…
// Murphy smiles from afar and orders another eggnog.
🎁 So — Turn It Off or Let It Run?
The turn of the year is not a normal market. It’s a market without supervision. It’s like letting a tractor plow a field while knowing someone moved the borders overnight and dug a trench across the path.
If you decide to trade, remember three things:
Rules don’t apply: Technical analysis becomes coffee-ground fortune telling.
Liquidity is an illusion: Seeing a price doesn’t mean you can trade at it.
Murphy celebrates Christmas every day.
My conclusion? I prefer to use this time for deep data analysis and preparing the tech for the season that starts in January. Because sometimes the best trade is the one you don’t take.