If you’ve been involved in financial trading for any length of time, you’ve probably come across unusual trading strategies. In the following article we will describe just five such strategies, ranging from weather analysis to pip milking and up to the Super Bowl.
- Trading according to the weather.
Do you get up every Monday and look at stock or currency forecasts for the week? Well, you might want to consider looking at the weather forecast instead. Trading according to the weather is based on the assumption that the financial markets perform better on sunny days than on cloudy or rainy days. Oddly enough, there is some evidence to support this. According to a couple of recent studies, stock markets do indeed perform better on sunny days. Although the reasons are purely psychological, sunny days do in fact impact market activity positively when analyzed over time.
- Trading according to the seasons.
This one is like the weather theory, but much easier to see. If you pull up a monthly chart and highlight the month of April, you will quickly see that it is historically a very good month. So are November, December, January and March. Several investment theories have emerged out of this finding, which is based on a 62-year study of the stock markets. One strategy called the Six Month Switching Strategy is to trade in the six months beginning November 1 before switching to safer investments in the remainder of the year.[1]
- Pip milking strategy.
If you’re a forex trader that is trading in 15-minute or higher intervals, the pip milking strategy might be for you. The “milking process,” as described by analyst and creator Navin Prithyani, is all about picking the right support or resistance level. To be successful at it, you need to identify at least two swing highs during an uptrend and at least two swing lows in a downtrend. You then place your buy/sell entries at the first high or low in the swing. If that’s too complicated to understand, just use a “U” shape to identify the swing highs and lows.[2]
- Use the Super Bowl to predict the market.
This strategy might sound silly, but it is actually supported by university professor George Kester, whose hypothesis is that American stock markets go up if an original National Football League team wins the Super Bowl and subsequently goes down if an original American Football League team wins.[3] The American Football League was a major US football league that operated between 1960 and 1969, when it merged with the National Football League.
- Play the exchanges.
Do you monitor the junior exchanges? Well, you should, according to Wealth Daily, which in 2010 outlined this unique trading strategy. First of all, it’s worth mentioning that there are junior exchanges, like the Pink Sheets, and senior exchanges, like the New York Stock Exchange and the NASDAQ. This strategy contends that you should buy companies that go from a junior exchange to a senior one because moving to the latter allows investors to drive up the company’s volume and value.[4] According to the proponents of this strategy, you can make stupendous short-term gains by simply picking stocks that switch exchanges.
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[1] David Cragg (March 19, 2013). “Best Month for Stocks.” How the Market Works.
[2] Navin Prithyani (February 2, 2012). “Pip Milky Strategy.” Urban Forex.
[3] John Dobosz (January 9, 2012). “Own Stocks? Root For Tebow.” Forbes.
[4] Nick Hodge (March 16, 2010). “Unique Trading Strategies for Today’s Markets.” Wealth Daily.
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