Equity Volume Drops As Summer Trading Resumes.

Summer trading resumes as volume drops.

As we hit the middle of August, prime time summer for North America and Europe, traders and investors are sitting on the beach rather than moving the markets. Volumes are very low, most European equities are doing 50-75% of their average daily volume so far this week and aside from a few standouts, they’re not raising many eyebrows. Today we saw a nice move up in the DAX, but with the low volumes you have to question the conviction of the market. After the last two weeks of volatility, this week has been summer as usual.

It’s definitely been an interesting month, however, and the moves on the back of North Korea and the Trump White House took most people off guard. I’m sure more than one phone call has been placed to a fund manager while they’re busy in the Greek Islands or by the lake.

Don’t Force Your Trades.

As a trader, times like this can be either very good or very bad for your account. There’s opportunity to make money, but there’s also ample opportunity to lose it. Here’s some suggestions on how to make (or not lose) money until volume steps up again.

1. Choose your battles: Low volumes can mean either a) tight ranges and no action or b) larger ranges and faster action. It sounds a little contradictory…but you’ll often see nice range plays during low volume times and a bunch of fake breakouts. Playing those can be rewarding, however it is pretty difficult. You can also see volatile moves as the book is thinner. There’s no need to speculate on trades that might work during this time of the year, especially if you usually trade breakouts, as the volume to sustain them often isn’t there.
2. Don’t let summer price action deter you: It’s pretty easy to get chopped out during summer. One day is up, the next is also up…but not before running your stops and chopping you out a few times. Choosing your battles, or just don’t trade, that’s the easiest way to avoid losing during this time of the year.

When will regular programming resume?

Often it takes a significant event for the market jolt out of the summer malaise and into regular action. As always, keep an eye on the news. When we see some big volumes coming back into the market, either buying or selling, I’ll be looking to get involved in significant size. Volume chases volume. Until then, I’ll enjoy the sunshine and the warm water.