In the investment world, many people want to find certain seasonal patterns and capitalize on them. One such period is called the January effect.
This is a calendar anomaly seen in the market when stock prices tend to rise in the first month of the year.
Some traders believe that the January effect is a reliable "calendar pattern" that can be used for trading strategies. In their opinion, it provides an opportunity to buy shares at a low price in December and sell them after the effect of January works and prices rise. Others simply consider the effect of January when they want to buy or sell stocks at that time of the year.
It is explained by the fact that at the end of December prices decrease due to tax optimization (unprofitable positions are closed). Also, the bonuses that managers receive at the end of the past year enter the market.
Wall Street Education
"January effect" in the stock market
In the investment world, many people want to find certain seasonal patterns and capitalize on them. One such period is called the January effect.
This is a calendar anomaly seen in the market when stock prices tend to rise in the first month of the year.
Some traders believe that the January effect is a reliable "calendar pattern" that can be used for trading strategies. In their opinion, it provides an opportunity to buy shares at a low price in December and sell them after the effect of January works and prices rise. Others simply consider the effect of January when they want to buy or sell stocks at that time of the year.
It is explained by the fact that at the end of December prices decrease due to tax optimization (unprofitable positions are closed). Also, the bonuses that managers receive at the end of the past year enter the market.
2 years ago | [YT] | 0