Seasonality is the tendency for some markets to behave differently at certain times of the year, month, week or day. Some patterns have real causes; many are coincidences found by looking at enough data. The skill is telling the two apart, and giving them the right weight.
Patterns with a plausible cause
| Pattern | Possible cause | How reliable |
|---|---|---|
| Month-end and quarter-end flows | Funds rebalancing portfolios and hedges | Recurring, but the direction varies |
| Holiday periods (late December, mid-August) | Thin liquidity as traders are away | Reliable for low volume; direction isn't |
| Agricultural and energy seasons | Planting, harvest, driving and heating seasons | Real, but often already priced in |
| Time-of-day patterns | Session opens, data times, fixings | Strong; the basis of killzones |
| Calendar sayings ("sell in May") | Partly behavioural, partly chance | Weak; varies a lot by year |
How much weight to give it
- Use seasonality as background context, never as a reason to trade on its own.
- Check how many years the pattern covers, and how often it actually happened, not just the average.
- Prefer patterns with a clear mechanism, such as liquidity at holidays or flows at month-end.
- Time-of-day patterns are the most useful for intraday traders, which is why sessions and killzones matter so much.
Key takeaways
- Seasonality is a tendency for markets to behave differently at certain times.
- Patterns with a clear cause, such as month-end flows, holidays and time of day, deserve more weight.
- Averages hide wide ranges; check how often a pattern actually occurred.
- Use seasonality as background context, never as a trade signal by itself.