Monday: A Trader's Nemesis?
Why Mondays Can Be Tricky
The Monday Effect
Mondays are statistically the worst days for traders… (My sample size is small but it’s a significant theme I see in members). For some reason, Mondays are just a trader‘s nemesis. I’m not 100% sure why but I have some theories…
It could be the weekend effect
You’re raring to go after the weekend, all prepared, and looking forward to trading. That impatience gets the better of you and you dive into the first chart pattern you see. The trade is inevitably a loser, which throws you off balance. You start getting frustrated at starting the week on the back foot and having to play catch-up.
It could be a calibration issue
You know as well as I do how crucial it is to be aligned with market conditions. Buy breakouts in a range-bound market = death (not death death, death to that beautiful equity curve). Sell fresh highs in a strong trend market = death again
You get the point…
Calibrating to conditions is essential.
The rotations, the rhythm, the feel. On Monday we have nothing to go on. Last week was so far away and this week is fresh price action and new conditions. Perhaps on Monday, we struggle to calibrate quickly. Maybe we are bringing biases over from last week. (Oh that worked last week, let me just…. Dam stopped!)
Today, just be mindful of the Monday effect in your trading.
The reason why Mondays can be tough almost doesn’t matter, they just are. So be smart and take steps to avoid diving in, consider taking smaller size, a feeler position. Just to get yourself in the groove.
And then you can swing the bat.
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Calendar Effects of Stock Returns
This interesting (but old) research PDF highlights some interesting day of week themes