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Fundamental analysis guide

Seasonality Trends

Markets are never easily predicted by anyone. Sometimes, the forethought can be mixed, even with the use of fundamentals and technical analysis. However, over time there is always certain data that will create patterns over time. By looking to past market moves, traders can identify periods of congruence in price patterns. This is known as seasonality.

Data Averages

By averaging different ranges of any kind of data, a recurrence can likely be found. This data can be anything from the number of times something happens and when it tends to happen. The results are measured throughout a specific timeframe (one year) to get an average.

In our terms of data seasonality, we focus on yearly price averages. By averaging monthly, weekly or even daily average gains/losses, we can better deduct the direction of any market.
Monthly market seasonality from the A1 EdgeFinder
Image 1 shows the monthly seasonality of XAUUSD over a 10 year average. From this data it can be concluded that over the last 10 years, gold has averaged a 2.62% gain in the month of January. 
On the Seasonality feature EdgeFinder, traders can see seasonality trends from 10 year averages of price moves. Users can compare current price behavior with previous data to see when price is likely to go up or down. This is partly due to statements or events that occur at certain times in the year. But whatever the cause, it’s nice having some reassurance from history to gauge market direction.
EdgeFinder Seasonality Weekly Chart
Image 2 shows the weekly seasonality of EURUSD over a 10 year average. 
This EdgeFinder feature portrays monthly and weekly averages from the past 10 years. But like all data, results are likely to change over time. These averages don’t provide a concrete answer to directional trading, but they do have a significant impact on trading analysis and can help increase the odds of win rate.

More Seasonality Resources

Learn more about trading with seasonality
How to trade seasonality like a pro
Trading Seasonality with the edgefinder
Market Seasonality: What Seasonality Can Tell You About The Markets

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. […]

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There is a significant degree of risk involved in trading securities. With respect to foreign exchange trading, there is considerable risk exposure, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you can afford to take the high risk of losing your money.
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