Trading The Holiday
The infamous stock market crash of 1929 took place in October. Then anther stock market crash took place in October 1989. October is the month in which the most famous crashes historically took place. You must have across the word the January Effect so many times. Do you believe in the January Effect? Markets are all about people buying and selling. What you believe is what you see in the markets. The party starts in December and continues in the early part of January with some hangover effect. So what is the January Effect?
There is usually a significant rally in the early part of January that actually sets the tone for the rest of the month and sometimes for the rest of the year. The January Effect can be quite a rally but much depends on the strength of the economy, how good December was and is there any catalyst to move the markets. So what is this January Effect? January Effect actually starts in the mid December and tends to favor small stocks. The most profitable period as measure statistically has been found to start from December 31st and end around February 28th with an average rate of return of 6.6% on smaller stocks.
January only comes in the beginning of each year. Once it is gone it is gone. You have to wait for the next year January. Now January Effect may happen or may not happen but the turn of the month that is the last day of the month and first five days of the next month form a very good seasonal pattern. Now, you must know this fact that the January Effect is not guaranteed every year. The best example is the year 2007 when the market became bearish and didnt start to look to bottom out until March 2008. Sometimes other events in the markets take over and dwarf these seasonal effects. In the end, the stronger effect holds.
But the end of each month tends to be good for trading. Turn of the month is a very good seasonal pattern that actually holds up more often than not. Chances are you are going to make some profit if you buy stocks at the last day of the month and hold them for the first five days for the next month. This can be a good swing trading strategy. At the end of the fifth day you move your money back into the money market funds.
This system works because the pension funds tend to put new money to work during the holidays and the overall tendency of the market to rise improves. You can do the same on the holidays. Move your money in on the day before the holiday and sell it on the day after the holiday.
Holidays are good for your mood. Everyone is happy to escape the drudgery of their daily routines. People want no worries in the holidays. People start to feel happy when the holidays approach and buy stocks before they run off to celebrate Christmas, the fourth of July, the Labor Day and so on. After the party the reality sets in the stocks are usually sold off. The holidays and those times when people traditionally take vacations often lead to higher prices. Fewer traders lead to lower trading volume which in turn tends to exaggerate price moves.
Thats because these days fall within the most bullish time period of the year, winter! The three days before the New Year Eve and the first three days trading days after the New Year are your best holiday bet for making money. You must learn these patterns in the market that you can use to make good profits when the end of the month comes and when the holidays come. Nothing is guaranteed. But if you follow these patterns you will definitely find something in them. - 23196
There is usually a significant rally in the early part of January that actually sets the tone for the rest of the month and sometimes for the rest of the year. The January Effect can be quite a rally but much depends on the strength of the economy, how good December was and is there any catalyst to move the markets. So what is this January Effect? January Effect actually starts in the mid December and tends to favor small stocks. The most profitable period as measure statistically has been found to start from December 31st and end around February 28th with an average rate of return of 6.6% on smaller stocks.
January only comes in the beginning of each year. Once it is gone it is gone. You have to wait for the next year January. Now January Effect may happen or may not happen but the turn of the month that is the last day of the month and first five days of the next month form a very good seasonal pattern. Now, you must know this fact that the January Effect is not guaranteed every year. The best example is the year 2007 when the market became bearish and didnt start to look to bottom out until March 2008. Sometimes other events in the markets take over and dwarf these seasonal effects. In the end, the stronger effect holds.
But the end of each month tends to be good for trading. Turn of the month is a very good seasonal pattern that actually holds up more often than not. Chances are you are going to make some profit if you buy stocks at the last day of the month and hold them for the first five days for the next month. This can be a good swing trading strategy. At the end of the fifth day you move your money back into the money market funds.
This system works because the pension funds tend to put new money to work during the holidays and the overall tendency of the market to rise improves. You can do the same on the holidays. Move your money in on the day before the holiday and sell it on the day after the holiday.
Holidays are good for your mood. Everyone is happy to escape the drudgery of their daily routines. People want no worries in the holidays. People start to feel happy when the holidays approach and buy stocks before they run off to celebrate Christmas, the fourth of July, the Labor Day and so on. After the party the reality sets in the stocks are usually sold off. The holidays and those times when people traditionally take vacations often lead to higher prices. Fewer traders lead to lower trading volume which in turn tends to exaggerate price moves.
Thats because these days fall within the most bullish time period of the year, winter! The three days before the New Year Eve and the first three days trading days after the New Year are your best holiday bet for making money. You must learn these patterns in the market that you can use to make good profits when the end of the month comes and when the holidays come. Nothing is guaranteed. But if you follow these patterns you will definitely find something in them. - 23196
About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. Try This 1500 Pips A Day Forex Signal Service! Know These Candlestick Patterns!
posted by X - Men @ 2:25 AM
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