It’s widely assumed that December is a low-volume month, with traders stepping away for the holidays and markets becoming slow and directionless. While this is partially true, especially in the final weeks, the belief that all of December is low-volume or uneventful is a myth. In reality, December often includes both periods of quiet and bursts of high activity.

Let’s break down what actually happens in December—and how smart traders can navigate it.

Why December Is Known for Low Volume

In the final two weeks of the month, markets often see:

• Reduced institutional participation as desks wind down
• Traders taking time off for holidays and family
• Fewer economic releases, especially after mid-month
• Thinner order books, which can lead to choppy price action

This results in slower sessions, wider spreads, and a tendency for markets to drift rather than trend—especially between Christmas and New Year’s.

But Early and Mid-December Can Be Active

Before the final stretch of the month, December often includes:

• Central bank meetings, such as the Federal Reserve’s final policy decision of the year
• Key inflation and employment data, which influence positioning into the new year
• Tax-loss harvesting and year-end portfolio rebalancing, creating shifts in sectors and stocks
• Early positioning for January flows, especially in institutional portfolios

In some years, this results in surging volume and decisive moves in the first half of the month.

The “Santa Rally” Myth

The last week of December through the first few days of January is often called the Santa Rally. While it’s historically a period of strength for equities, the rally is:

• Not guaranteed
• Often driven by retail flow and thin volume
• Prone to false breakouts or quick reversals

Traders should approach this period with extra caution, focusing on confirmed setups and tight risk management.

How to Trade December with Awareness

To navigate December effectively:

• Expect two different months in one: early December may offer strong moves; late December often requires patience
• Watch for macro catalysts early on, especially central banks and inflation prints
• Tighten your risk near the holidays, as spreads and volatility may spike
• Use the quiet period for review: December is ideal for journaling, backtesting, and setting goals for the new year

Conclusion: December Isn’t Always Low Volume—But It Does Require Adjusted Expectations

December brings a mix of active and quiet trading conditions. Assuming it’s always slow can make you miss key opportunities—or overtrade when conditions don’t support it. Know the calendar, watch the data, and adjust your trading rhythm accordingly.

To learn how to adapt your strategy to seasonal shifts and maximise every market phase, explore our Trading Courses designed to help traders grow with clarity, structure, and confidence—every month of the year.