Broker/Data: Advantage Futures, Ninja/TT and InvestorRT/IQFeed.
Favorite Futures: Treasury futures
Posts: 275 since Nov 2010
Thanks: 161 given,
Be Careful Trading in January
If you don't know who Ray Cahnman is, you should Google him. He's probably mentored as many successful traders as anyone in the business. I cleared my trades through his firm, and he was influential in my early development as a floor trader.
I witnessed the "January effect" every year I was on the floor at the CBOT. The ambition to really do well in the new year influences traders to be over aggressive, including traders who have been around long enough to know better. Not only are these influences creeping around in the back of your own mind, your competitors are experiencing them too, and subjectively I'd say it influences the markets.
If you find yourself really chomping at the bits to dive in next week, sit back, carefully review your methodology, and resolve to be even more disciplined than normal about sticking to the set ups that work for you. The first week of January is no time to experiment with new ideas or to increase the size you trade.
Best wishes for the New Year!
"You don't need a weatherman to know which way the wind blows..."
The following 15 users say Thank You to jstnbrg for this post:
Good advice! Treat it like any other day. However, for the first 2 trading days of the New Year, there is a tremendous bullish seasonality for equities. Notice how they rallied the ES at the end of the day.
Last edited by tigertrader; December 31st, 2010 at 06:43 PM.
The following 2 users say Thank You to tigertrader for this post:
I don't really trade till after the first two weeks pass...at that point I think it's "normal". That guy is definitely correct from my experience, things can get wacky till the markets decide which way they want to go.