Why Should Retail Traders Not Trade on Fridays?
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Liquidity : One of the main reasons why retail traders should avoid trading on Fridays is due to the lack of liquidity in the market. Many institutional traders and investors tend to close their positions and reduce their exposure to the market on Fridays. This can lead to lower trading volumes, wider spreads, and increased volatility, making it difficult for retail traders to execute trades at their desired prices. -
News Releases : Another reason why Fridays may not be the best day for retail traders to trade is due to the high number of news releases that are typically released on Fridays. Economic reports, such as Non-Farm Payroll (NFP), GDP, and Consumer Price Index (CPI), are often released on Fridays, and these reports can have a significant impact on the markets. This increased volatility can make it challenging for retail traders to manage their positions effectively, and they may be more likely to experience significant losses. -
Weekend Risk: Retail traders who hold positions over the weekend may be exposed to significant weekend risk. The markets are closed over the weekend, and unexpected events, such as geopolitical tensions, natural disasters, or unexpected news releases, can occur, leading to significant market gaps when the markets open on Monday. This gap can cause traders to experience significant losses, and it can be difficult for them to manage their positions effectively. -
Fatigue: Finally, retail traders may experience fatigue towards the end of the week, which can lead to poor decision-making and trading mistakes. Retail trading requires a significant amount of mental and emotional energy, and traders who are tired or stressed may be more likely to make errors and take unnecessary risks.
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