What is seasonality?

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Seasonalities are regular and predictable patterns that recur every calendar year. Every industry exhibits unique seasonal trends, based on solid fundamental drivers. The best-known seasonal drivers include harvest periods, the timing of interest payments, tax or balance sheet deadlines, earning reports, the weather, investor sentiment at certain times of the year, as well as traditional patterns, such as the year-end rally in the stock market.

Introduction

Some seasonal effects are stable over the decades.
Let’s start with a simple example which you probably know – the “Sell in May” Effect.

The seasonal chart on the right depicts the return of a Dow Jones investment since 1960 based on the season of the year. As you can see winter months are much more profitable than summer months. To be more precise winter season outperforms the summer season significantly by 3374.2 percent!

This is a strong evidence that seasonal trends do exist in the financial markets. Identify many more seasonal patterns for the instruments that you want to trade. Achieve better performance, reduce your risk and back your decisions statistically.

Seasonal chart of the Dow Jones - winter months are much more profitable than summer months

5 examples of seasonal patterns

Give your trading a statistical edge! Select an instrument below.
Move left/right to see either seasonal chart, performance distribution or the detailed statistics.

200+ years study concludes: Seasonality is the best investment strategy for a multi-asset portfolio.

Not only we consider seasonality to be a profitable trading approach, but also professional economists. Researchers from Erasmus University in Rotterdam have examined several investment strategies in 68 individual markets over up to 217 years of market history. Note how the best strategy beats the others across the main four asset classes.

Read more about the study

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More about seasonality - Give your trading a statistical edge!

Dive deeper into the world of seasonality and watch the latest webinar hosted by our Head Analyst and Founder Dimitri Speck. The webinar was created in cooperation with the International Federation of Technical Analysts.

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