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Trading the Measured Move: A Path to Trading Success in a World of Algos and High Frequency Trading by David Halsey

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CHAPTER 9

The Seasonality of Markets and the Best Times to Trade

Many traders find measured moves in the market and become ­extremely excited, and rightly so. They tend to jump right into the market at the very first opportunity that they see, but there's more to it than that. There are safe times in the market to trade and dangerous times in the market to trade. Certain times of the year, month, and day are found to have a higher expectation of successful trades. The goal of this chapter is to help you identify the best months of the year, days of the week, and hours of the day to trade. It will help you plan your entries during the New York Stock Exchange (NYSE) and European market hours. It is important to know when to employ trading techniques that you have learned.

The Big Picture

Historically, the best months to trade give us our big picture for the market. The monthly, weekly, and daily setups give a clear direction and target for long-term investments. In bull markets, price patterns repeat year after year, decade after decade. There are generally, in trading terms, two different seasons of the year to trade. Those two seasons are called risk on and protect profits. It is important to remember that most funds in the market are long-only funds. What this means is that they don't short the market. The best months to trade are also associated with the fast and slow times of the year (see Figure 9.1).

Figure 9.1 The Best and Worst Months to Buy and Sell

The Months

You ...

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