.

Best Months AND Worst Months To Trade

#1
The whole year can be divided in thirds, starting with the three terrible months of Summer, the four best months of Autumn, and the four decent months of
Winter-Spring.
Thee THREE worst months (Summer): June, July, and particularly, August.
The FOUR best months (Autumn): September, October, November, and December.
The FIVE good Months (Winter-Spring): January, February, March, April, and May

What Is The Reason For This Divide?

Any vacation period represents drying up trading volume, and the months following these vacations represent a refreshing return to trading, like rain after a drought.

The Big Drought: The Summer Vacation Months Of June, July And August

Research data from the S&P indicates that the summer months provide weak returns for most financial markets for many countries in Europe. The old adage traditionally used across London trading floors ‘Sell in May and go away’ still holds its own, according to an analysis by S&P Indices. It is the last four months of the year that contribute most to full year returns. The theory behind this maxim is that the summer months are characterized by sluggish performance or a loss. By selling out your holdings in May, and reinvesting them only when the summer is over, you protect your portfolio and potentially achieve better returns. By analyzing the monthly performance of sixteen European markets in the S&P Global Broad Market Index over the ten year period from January 2000 to December 2009, S&P has shown that this trading strategy still holds good across Europe.

For most European countries, and also for the US, the June-August period averages out to be slightly negative. The preceding Jan-May period averages out to be 3%, with the bulk of the gains falling in last four months of the year (Sept-Jan). The last four months remain the most important for contributing to full year returns, meaning that even after experiencing a poorly performing summer there is still the chance to improve returns.

August Is The Worst Summer Month

Incidentally, August is the worst month of the summer season:
August 2011 was miserable for the S&P 500, falling 10%.
August 2010 was also miserable for the S&P, falling 4.5%.
August 2008 was deceptively good for the S&P, rising 1% before it nose-dived.
The summer, especially August, is the worst period to trade with many institutional traders in Europe on vacation and North America on holidays as well. That leads to less trading and big price swings. The best strategy many suggest is to simply go on vacation and resume trading when September comes around.

I have often traded during the summer and regretted it. The currency markets become very erratic and unpredictable.

If you have to trade during the summer, be ready for the sideways action. Trade a range based system (also called trend fading strategy). Sell a currency at the top of its range, buy at its bottom, rinse and repeat. Or zoom into smaller time frames (M5 or M15) to trade the mini trends.

Sooner or later the sideways trend breaks, and that is usually right after the Labor Day holiday in the US, everyone takes a break and summer is unofficially over after that.

Post-Summer Months (September To December) Offer Up The Best Trading Period, As Markets Rebounds From Summer Drought

The reason why the best months to trade occur just after summer, from September to December, is because these months represent a surge of trading activity after the summer holiday lull. If one were to choose just a few months to trade, these would be it.

Second Vacation Spot: Second Half Of December

There is a "Winter Month" for slow trading. The second half of December has the same low volumes as August. The weeks around and past Christmas are as slow as August and the beginning of January is not that great as well.

Winter-Spring Action Still Good

Just after the second holiday period in December, there is a pick of trading activity that lasts from January to May, 2011. It may not be as powerful a trading period as the one in Autumn, but it does provide many months of excellent opportunity.

https://www.cashbackforex.com/en-us/sch ... s-to-trade
Mark Boucher: 70% of a market's moves occurs 20% of the time
Image


Re: Best Months AND Worst Months To Trade

#2
The most important is to realize what kind of market is prevailing in the moment (choppy or range). Once identify, then appropriate strategy could be applied. During vacation months - counter trend and range strategies. during active trading months trend strategies in the most cases :)

Re: Best Months AND Worst Months To Trade

#4
it depends of what instruments you are trading, I guess. If you focus on one group of Instruments, or monitor several? Liquidity and volume are two totally different things and for sure there is subordination with the part of the year for trading.

Re: Best Months AND Worst Months To Trade

#5
From 1996 to 2015? I'm not sure whether you can compare the market in 1996 with 2015 that easy. A big and growing part of trading is done by algos today (not the EAs of retail traders ;) they don't care whether it's winter or August or whatever. On intraday tfs you have only day and night, not winter and summer.




Who is online

Users browsing this forum: CommonCrawl [Bot] and 7 guests