Article written by Charli and published at Finance Feeds, Forex Live and Finance Magnates
As traders prepare to return to their desks, brokers are reviewing that all-important September checklist.
Traders may be daydreaming in hammocks right now, but when the mercury drops, they’ll be ready to trade again, so being on top form is crucial. Here’s your September checklist to plan for increased acquisition and trading volumes in September.
But First … The September Effect
No one really knows why, but the stock market typically performs worst during the month of September. Stock analysts will tell you that September is the month when the stock market’s three leading indexes usually do their worst.
Since 1950, the Dow Jones Industrial Average (DJIA) has seen an average decline of 0.8% in September. Likewise, the S&P 500 has suffered a 0.5% decline on average during the ninth month of the year. Lastly, since 1971, Nasdaq’s composite index has fallen an average of 0.5% during September trading. Those numbers really help to show how bizarre this historical fact really is. Because of this correlation, the month of September is now notorious as a non-trading month, with some dubbing this the “September Effect.”
This isn’t a purely US-only phenomenon either, it affects markets all over the world. It has led many analysts to attribute the negative effect of September on the markets as seasonal behavioural bias, with investors changing their portfolios at the end of summer to cash in.
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