There are many different types of trading that people get excited about. Is it trend trading, value trading, reversions to the mean? However, one type of trading that is relatively unexplored is that of seasonal trading.
What is seasonal trading?
Certain stocks, currencies, and commodities exhibit certain seasonal patterns. Some of these you may have heard of like ‘sell in May and go away’ or that ‘metals tend to start the year well’. Well, seasonal patterns can often be in place for specific reasons. So, platinum tends to do very well at the start of the year. Why? Because purchase managers tend to make the annual industrial purchase for platinum at the start of the year. They either don’t know or care about this seasonal pattern. You can see that platinum tends to gain strongly at this time of year. Search the pattern yourself here.
How to use seasonal patterns
Seasonax is a great tool for exploring these patterns and is exceptionally easy to use. Once a seasonal pattern has been identified it is also good to look at the fundamentals and the technicals of the trade. Is there a key support or resistance level nearby where risk can be carefully managed? Then use the obvious technicals to improve your entry and exits. Are the fundamentals in line with the seasonal pattern? If there is a strong seasonal bias for JPY weakness, but markets are in a heavy risk-off tone then bear that in mind.
The best way to use seasonal patterns is to combine seasonals with technicals and fundamentals. Find a strong seasonal pattern, check the fundamental outlook, then look for key technical levels to use. Remember that HYCM clients can access the Seasonax product in order to analyse over 25,000 currency pairs, indices, commodities, as well as individual stocks. Please contact your account manager for a free trial and get started right away. Look for seasonal opportunities that are starting from today, tomorrow or even in one month.