If you closely follow the markets, you may have noticed an intriguing pattern: Mondays — the first trading day of the week — often bring more volatility than other days. This phenomenon isn’t unique to Vietnam; it’s observed in major financial markets worldwide. But what causes it?
Even though exchanges are closed on Saturdays and Sundays, economic news, financial reports, and global events continue to unfold. Over the weekend, investors have more time to digest earnings reports, analyze market trends, and assess macroeconomic developments. When markets reopen on Monday morning, the surge in buy and sell orders — driven by decisions prepared in advance — often leads to bigger price swings.
The weekend is a natural point for fund managers, institutional traders, and retail investors to review their portfolios. Many choose Monday to make adjustments — selling underperforming stocks or increasing positions in promising ones. Large-volume trades from institutions in the early hours can significantly shake the market.
The Monday effect isn’t just about fresh information. Markets also respond to trends or events from the previous week. For example, a company announcing stronger-than-expected earnings late on Friday might trigger a buying frenzy on Monday morning. Conversely, negative geopolitical news could prompt a wave of selling. Since global markets operate in different time zones, late-week developments in the U.S., Europe, or Asia can ripple into Monday trading in other regions.
Investor psychology plays a significant role. The so-called “Monday Effect” — well-documented in market research — suggests that stock prices tend to dip slightly on Mondays due to caution after a weekend of digesting news. However, during bullish periods, this effect can reverse as optimism fuels aggressive buying at the start of the week.
For seasoned traders, Monday’s volatility can be an opportunity:
Monitor weekend news closely: Focus on economic releases, earnings reports, and major geopolitical developments.
Reassess your portfolio: Determine which holdings are likely to benefit or suffer from the latest news.
Trade short-term trends: Take advantage of sudden surges or dips to secure quick gains.
Manage risk carefully: Use stop-loss orders to limit losses if the market moves against your position.
This expanded explanation not only reveals why Mondays can be more turbulent but also gives actionable strategies to navigate the volatility — turning what many see as uncertainty into opportunity.
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