Seasonality
Seasonality Trading
Seasonality trading positions around calendar periods that have historically shown a lean one direction more often than chance, like the months after October or the last few trading days of the month.
Toggle the pattern, click a cell for the detail
Switch between three well-documented seasonal tendencies below. Each toggle changes which cells light up and what the readout underneath reports. Click any cell for a plain-English note on that specific period.
How it works
- Best Six Months (Sell in May) splits the year in two. November through April has historically outpaced May through October on average, by a wide enough margin over many decades that it shows up in academic studies of major indexes going back to the 1950s. It doesn't mean summer months always fall, it means the average lean tilts one way.
- Turn-of-Month clusters around the calendar boundary. Returns around the last one to three trading days of a month plus the first two to three of the next have historically run stronger on average than the rest of the days in between, a pattern researchers tie partly to routine month-end flows like payroll investing and portfolio rebalancing.
- The Santa Claus Rally is a specific seven-day window. The last five trading days of December plus the first two of January is the traditional definition, popularized by the Stock Trader's Almanac, and it has skewed positive more often than negative across many years, though the size of the move varies a lot year to year.
- None of these are entry signals on their own. They describe an average lean across a long sample of years. A trader using seasonality treats it as one input alongside price action and risk management, not a standalone reason to enter a position.
Where this breaks
Any single year can violate the pattern, and often does
A seasonal tendency is an average taken across decades of years, not a forecast for this specific year. The Santa Claus Rally window has finished negative plenty of times, the "worst six months" have posted strong gains in plenty of individual years, and turn-of-month clusters don't show up every single month. Trading a seasonal window as if it were a rule rather than a lean means sizing risk for an outcome that has real exceptions built into the same data that produced the average in the first place. The honest use of seasonality is as one piece of context layered onto a plan with its own entry, exit, and risk rules, never the whole plan by itself.