Understanding market seasonality will help you improve your win rate when trading forex, stocks, futures, etc. The market is known to outperform while other months the market is known to underperform. Understanding these changes in seasonality will help you understand why a market and give you insight of how it may perform in future months.
Seasonality is how markets historically perform month to month. For example, you could look at how SPX500 trends in January over the last 10 years. Referring to the chart below, you can see that historically speaking, SPX500's best performing month is November. November is election month in the United States which may explain why November is historically SPX500's best month.
The EdgeFinder takes the 10 year average of different assets and portrays this data into monthly and weekly charts. According to the data in the image below, you can see that the current week, as well as the next week, are historically good weeks for the VIX. Additionally, the month data shows that the current month is a great month for the VIX historically.
Looking at SPX500's performance in 2023, you can see that price was steadily increasing until around September where it saw a decline. In November, SPX500 took off continuing to increase into December. If you compare this to the seasonality data, this aligns almost perfectly. The seasonality data shows that September is historically the worst performing month while November is historically the best performing month.
While seasonality is not the holy grail of trading, it can be very powerful when used in confluence with other fundamental data and technical analysis.