As an investor, it’s essential to keep track of stock market holidays to manage investments wisely. The stock market doesn’t trade every day of the year, which can impact your buying and selling decisions. Holidays help us break from our daily routines, but they can also affect our investment decisions. In this blog post, we’ll discuss everything you need to know about stock market holidays, their impact on investments, and how to plan around them.
Understanding Stocks Market Holidays: What They Are and Why They Matter
The stock market has a predetermined holiday calendar, and it’s closed on these days. In the United States, the NYSE (New York Stock Exchange) and NASDAQ (National Association of Securities Dealers Automated Quotes) follow a similar holiday schedule. However, the stock market observes some holidays that the government doesn’t, such as Good Friday.
When the stock market closes, regular trading stops, and investors can’t buy or sell securities. Holiday-shortened weeks often have lower trading volumes and volatility compared to regular weeks. On the other hand, trading volumes increase just before holidays as investors scramble to close their positions before closure.
The Significance of Stock Market Holidays and Their Impact on Investments
Holidays can significantly impact stock prices and trading volumes. For example, a shortened trading week, such as before Thanksgiving, usually sees low trading volume, leading to more significant price swings. Investors should also watch out for how holidays affect global markets, particularly as active trading in one region influences other markets; this is known as a ripple effect.
Holidays also affect options trading. In the US, equity and index options expire on the third Friday of every month, except holidays. When that happens, the contracts will end on the preceding Thursday instead. Naturally, the market is more active when options expire. So if the expiration date is on a holiday, expect more volatility the day before.