Trading During the Holidays? Think Small

As the year draws to a close, volumes typically drop off as traders step away from their desks to spend time with friends and family. Despite the lack of liquidity, ITG Analytics finds that average trading costs in North America are actually lower by 24% in the last two weeks of the year relative to overall costs in the fourth quarter.

The reason? Smaller order sizes. While getting big blocks done in the run-up to the new year can be costly, trading costs in the holiday season for orders < 50% of MDV are comparable to costs for the fourth quarter as a whole. Those smaller orders are more prevalent in the last trading sessions of the year, reducing overall costs. Trading nimbly in small size can help you finish the year on the right note.