During the Christmas period, stock markets typically experience lower trading volumes, reduced volatility, and a, often positive, trend known as the "Santa Rally". Major exchanges close on Christmas Day and Boxing Day. The, often, quiet, holiday period is, also, frequently, associated with, a, Santa, Claus, rally, which, usually, runs, from, the, end, of, December, to, early, January.
Typical volumes start to recede in mid-December, and continue at lower levels through year-end. Historically, Christmas Eve and Boxing Day are the quietest days of the year, with volumes roughly 20% of normal. The week between Christmas and New Year's is typically 50-70% of normal volumes.
The latest Sevens Report states that December has been “one of the stock market's best months of the year,” citing data from Carson Group's Ryan Detrick showing the S&P 500 has averaged a 1.4% return over the past 75 years and finished higher 73.3% of the time.
This might be the most important part of holiday risk management. Some days, especially around Christmas Eve, Christmas Day, and the period between Boxing Day and New Year's, simply aren't worth trading. Conditions are too thin, too unpredictable, or too sluggish. Most markets and brokers take the day off altogether.
The 3-5-7 rule in stock trading is a risk management guideline: risk no more than 3% of capital on a single trade, keep total exposure across all open trades under 5%, and aim for a profit target (like 7%) that is significantly larger than your risk, ensuring winners cover multiple losses and promote capital preservation and discipline. This framework protects against large drawdowns, reduces emotional trading, and provides clear, simple parameters for consistent decision-making in the market.
Is it better to sell stocks in December or January?
If you are only a few weeks away from hitting that one-year mark, waiting for January may create meaningful savings. This is why many tech workers revisit their equity strategy as December approaches. A year with heavy RSU income or large bonuses might make delaying a sale appealing.
December can be a good month for trading, though there's a noticeable decrease in market activity in the second half of the month. Any holiday period naturally leads to a decrease in trading volumes.
Big investors like mutual funds and Foreign Institutional Investors (FIIs) often rebalance their portfolios in December to meet annual performance goals. This rebalancing usually involves buying more stocks, which increases demand and pushes prices higher.
What month is the stock market usually the lowest?
Since 1945, August and September have historically been the weakest performing back-to-back months for the S&P 500, with the average return for both months in negative territory. These are the only two months that share this back-to-back trend. (The only other month with an average negative return is February).
Analysis of multi-year trading data reveals liquidity typically drops across asset classes from November to early January, often leading to wider spreads, slower execution and higher trading costs.
A Santa Rally is stock market phenomenon where equities across developed markets see a short-term positive effect around Christmas. Many analysts think that a rise qualifies as a Santa Rally if it gets going in the week before Christmas, with the effect ending around the start of January.
History has shown that the best rolling 6 months for stocks is from November through April. Investors that actively manage some part of their investment mix might explore a sector rotational strategy into cyclicals.
No, a 70-year-old shouldn't necessarily get out of the stock market entirely, as they still need growth to combat longevity risk (outliving savings), but they must rebalance to a more conservative allocation with bonds, cash, and safer assets to protect near-term income needs, often using strategies like the 120 minus age rule (80% stocks, 20% bonds/cash) or cash-flow wedges to fund living expenses, avoiding panic selling during downturns by having a diversified, long-term plan with a financial advisor.
In fact, while the Santa Claus Rally is typically defined as the last few days of December, IG analysis suggests the FTSE 100 often sees the biggest rises from 14 to 16 December. As a result, some investors might opt to buy shares if values rise. However, it's worth noting that this isn't always the case.
In a bear market, some say the market is at its most volatile on Monday and Tuesday, when stocks tend to fall the most. In contrast, some say Thursday is a good day for selling because stocks tend to rise.
Historically, December has been a strong month for US stocks, with the broad S&P 500 index sporting an average (price-only) return of +1.3% over the last 35 years. After a mid-month swoon, November finished essentially flat, keeping the post-Liberation Day uptrend intact heading into December.
What is historically the worst month of the year for stocks?
The bar chart shows monthly average performance from January 1970 through July 2025 for four equity indexes: the S&P 500 (U.S.), S&P/TSX (Canada), FTSE All-Share (UK), and Hang Seng (Hong Kong). December and January are historically the best months, and September is historically the worst month.
A Santa Claus rally is a calendar effect that involves a rise in stock prices during the last 5 trading days in December and the first 2 trading days in the following January.
While a December purchase can behoove any buyer, it might prove particularly advantageous to first-time buyers, buyers on a tight budget, buyers looking for a quick move-in, and buyer with flexible move-in schedules.
Our analysis of over 6,200 trading days shows that Tuesday has historically produced the highest average daily returns at 0.062%, while Friday and Monday show the lowest average returns at about 0.009% each.
The 90% rule in Forex is a cautionary saying that roughly 90% of new traders lose 90% of their capital within the first 90 days, highlighting the high failure rate in retail trading due to lack of discipline, education, and risk management, rather than a fixed statistical law. It emphasizes that Forex is a difficult skill requiring a business-like approach with proper strategy, patience, and emotional control to succeed.
The 7% sell rule is a risk management guideline in stock trading that advises selling a stock if it drops 7% (or 7-8%) below your purchase price to limit losses, protect capital, and remove emotion from decisions. Developed by William J. O'Neil (founder of Investor's Business Daily), it's based on market history showing that strong stocks rarely fall more than 8% below their ideal entry points before recovering, preventing small losses from becoming major ones.
The S&P 500 has advanced an average of 1.8% in November since 1950, according to the Stock Trader's Almanac. And in the year following a U.S. presidential election, it typically rises 1.6%. But it's not been a typical post-presidential election year.
