as we embark on another year of endless trading opportunities? Was it Bitcoin, or maybe Nvidia, both markets performed well for sure but were they the best to trade?
. Most will say best is the market that went up the most, and there is no doubt that the goal for most traders is to find markets that ‘go up big’. The problem with markets that go up big, is volatility is also typically up big,
While I do of course look for big winners, a market that I will say is the ‘best’ to trade is one that is ‘predictable’. The simple reason being is that
if a market is behaving in a more predictable manner, it makes it much easier for me to A,
identify an entry, and B,
know where to exit. Both are not that easy in a market that is racing higher very aggressively.
So, if predictability is the best feature of a market, what was the best market to trade. You might be surprised to learn
there were quite a few predictable markets last year but right up there at the top was, drum roll…..
Natural Gas. It may have only finished the year up almost 40% (although it did have multiple +100% rallies through the year),
but it moved very predictably all year as we can see from the chart below.
For those of you not familiar with seasonal charts. The chart above shows the
20-year seasonal average (orange line) of Natural Gas. What this means is the orange line
represents the typical price path Natural Gas takes in an average year. The yellow line is the path price took in 2024, and you can see
it tracked its average price remarkably closely, only diverging in the last few weeks of the year. This is incredible, and when I look for ‘the best’ market to trade,
this is a trait I will choose above any other when looking for markets to trade.
Don’t trade Natural Gas, well a quick look at our
top performers lists and you will see many different asset classes on there, at least one of which I’m sure you do trade. The list on the left are the markets with the strongest correlation to a seasonal pattern. In other words, which markets are currently the most predictable. This is huge.
We are the only platform that will not only give you seasonal patterns but will also
tell you
which markets are actually following these patterns. One of the most crucial elements to seasonal trading. On the list you see markets like Imperial brands, Bitcoin, Coffee, Disney, and the Canadian dollar. Definitely something for everyone on that list.
The list on the right shows
the number of successful seasonal patterns that market had and the % gained from those patterns. Right at the top we have Natural Gas, followed by coffee, VIX and everyone’s posterchild right now, Nvidia.
The point I want to get across here is to not always be chasing big winners. Big winners are nice, but they might happen once or twice a year (if we’re lucky) but we need to trade each day or week or month so what do we do outside of those one or two big winners,
look for predictability.
Use the tools that are out there now to help you find these markets, markets that won’t always be the sexy names on most websites or forums that everyone is obsessed with trading, but markets that are just
boringly doing exactly what they should be doing.
Nothing could be less sexy than EasyJet (people in the UK and Europe will know what I mean) but look at its chart below from last year. It went up in January when it should, it went down in March, May and June when it should and went up from September to December when it should.
Not a sexy name but this is a market I can trade, timing great entries and exits in.
Or how about something a little more mainstream.
Disney historically performs best in February and October/November (did you know that?) and last year again it did just that. Those two periods alone saw price increase 46%, this is what I like to trade. The rest of the year also tracked perfectly but interestingly it made its April high and its September low about 3-4 weeks early. Something to watch for when looking at seasonal patterns,
as a market may be following a pattern perfectly, but a few weeks early or late.
Or lastly, how about something completely out of the comfort zone for most traders, Corn. After a January that didn’t follow its typical pattern, it made up for it
by following the exact pattern for the rest of the year.
Many market gurus say it’s
an impossible task to try to predict markets and instead you should focus on being prepared to act when a market moves. If that works for them or you for that matter, then great, I’m happy you have found something that works. Me, I will focus on markets that have at least an element of predictability around them, and they
will always be ‘the best’ market for me to trade. For more info on seasonal patterns,
click here.
Happy trading
Ray Gilmour
Founder & Senior analyst at Markets Made Clear.com