Recently we have received many questions from IronTrade traders and investors about the best time and month for trading on the Forex market. Let’s start with the fact that seasonal cycles affect every corner of human life, including the Forex market. It is still not completely obvious why some seasons are preferred for trading than others, but it is a fact. So let’s learn how to use this seasonality to our advantage. Any short-term traders can take advantage of it and make a good income based on the following information. 

Firstly, let’s admit that the most money on stock and Forex markets is gained during the winter months, from November until April. On the other hand, the summer months between May and October are generally not so profitable.

However, is it real? Can the seasons really affect your incomes? Well…in 2012, there were two professors who wrote several articles on this topic, named The Halloween Indicator: Everywhere and all the time, Are Monthly Seasonals Real and A Three Century Perspective.

In these articles, they examined more than 300 years of observation and results from 100 countries. As a result, they concluded that the seasonal division is more than real. The table below shows the monthly average incomes of the stock market.

As we can see, January and December are the most fruitful months. On the other hand, September and October show the worst performance. In general, winter is more profitable than summer. However, keep in mind that each year is different and not the same. When you observe more than 300 years of historical data, of course, there will be inconsistencies. Even though some general patterns observed through the centuries can tell you a lot about seasonal fluctuations and help to make predictions. As usual, it is up to you how you will use this knowledge in your trading work.

How to take advantage of this information?

Well… if you are a bullish market investor (prefer to invest up), then your best time is winter because the market generally goes up. And if you tend to be a bearish market investor (prefer to invest down), then open positions in summer: July, September, and October.

Of course, no strategy guarantees you 100% results, and no seasonal patterns will help you be in profit all the time. Your success will totally depend on your trading strategy and a lot of different factors. So, try to add this knowledge about seasonal patterns to your trading strategy. IronTrade wishes you good luck.