Putting the Monthly Seasonality Map to Good Use
The culmination of that effort is the Monthly Seasonality Map where I quantify bullish/bearish biases for each day in the coming month.
It’s too early to get too excited about, but since launching in April, the Seasonality Map has called the closing direction of the S&P 500 correct 60.0% of the time with winning predictions 1.03x losing ones.
I’m pleased with that and I think it’s time to put the Map to use in my own actual trading.
As I’ve repeated ad infinitum, I don’t think seasonality alone justifies making a trade; however, I do think it justifies NOT making a potential trade.
So for example, if our strategy calls for being long 100% on a given day but the Seasonality Map has tagged that day as having a -50% bearish bias, I’ll reduce the trade to say long 75% (note: this is a fictional number and not quite how I’m actually adjusting for seasonality, but it’s similar in spirit).
Again, the idea isn’t to take a position based on seasonality, but use it to possibly reduce the aggressiveness of a position.
That’s all for this post (a rare non-geeky one). I just wanted to share my own thoughts about how I intend to apply seasonality to my actual trading.
The Monthly Seasonality Map (like everything I do) is a perpetual work in progress, and reader input in always invited.
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