That phrase is a well known saying in the finance world. It’s based on stocks’ historical underperformance between May to October.
This idea was popularized by the Stock Trader’s Almanac, which found investing in stocks as represented by the Dow Jones Industrial Average from November to April and switching into fixed income the other six months would have “produced reliable returns with reduced risk dating back to 1950.”
The theory has held up in recent years, with the S&P 500 index gaining an average of about 2% from May to October since 1990, compared with an average of approximately 7% from November to April.
While history speaks for itself and even often repeats itself, the style of trading we’re doing really isn’t too concerned with seasonal data.
We’re watching multiple markets on a large enough timeframe to find consistency, yet a small enough timeframe that even minor moves can be wildly profitable.
After about a dozen years of studying price action, I’ve learned that the timeframe is only relative to the objective set forth.
I’m never going to profit 6-Figures during a single morning session. But I’m likely to profit several thousand dollars, that exceeds 6-Figures on an annualized basis.
Whereas longer term, swing style position trades have yielded 6-Figures for me, some in a matter of only a few days.
The approach you take to the market is solely up to you. The tools and techniques I will teach you can be applied to your timeframe of choice.
We only want to enter low risk, high probability trade setups that meet our criteria. We quickly want to take some profits at our very first support or resistance objective and move our stop to breakeven.
If the trade continues to favor our intended move, we’ll remain in it to take more profits at various objectives. If the trade decides to turn against us, we want to have taken a little pay and be out of harm’s way.
If you’d like to learn more about the analysis employed, the systematic approach and my ultra conservative nature, I encourage you to watch this video training where I walk you through it step by step.