Leveraging Seasonality in Financial Markets and the Importance of Deep Work

Alessio Frateily

Alessio Frateily

Jul 02, 20233 min read

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Leveraging Seasonality in Financial Markets and the Importance of Deep Work

Introduction:

In the world of trading, the term "bias" refers to systems that aim to exploit repetitive behaviors observed in financial markets. Certain futures, for example, exhibit a tendency to move either upward or downward during specific hours, days of the week, or even months of the year. The underlying idea behind bias strategies is to construct trading systems capable of capitalizing on the repetitiveness and seasonality of market movements. These biases are systems that take advantage of regular trends occurring in a particular financial instrument or a basket of underlying assets. When a movement on a chart becomes statistically robust, it becomes possible to build reliable trading systems.

Understanding Intraday Bias:

The most common type of bias is the intraday bias. As the name suggests, these biases involve assessing whether there is a repetitive movement in a financial instrument during specific hours of the trading session. To determine the presence of an intraday bias, one can create a script that buys at the beginning of each hourly bar and closes the position at the end of the same bar.

Exploring Intra-Weekly and Intra-Monthly Bias:

Another type of bias is the intra-week bias, which involves observing whether a financial instrument rises or falls on specific consecutive days or portions of the trading week. Calculating the average price variations for each day of the week allows for the identification of potential biases. Similarly, intra-monthly biases seek exploitable trends within the working month. These biases can be analyzed by calculating the average price variations for each day within the month. The average trend can be calculated using all days of the month or only business days.

Uncovering Seasonal Bias:

Seasonal biases aim to identify regular trends within a year. However, this type of bias is the least common as it only identifies a few signals over the course of an entire year. Analyzing data from the past few decades has revealed limited exploitable occurrences. Nonetheless, Ethereum presents an intriguing intraday bias that can be leveraged to create highly promising automated strategies.

Applying Bias Strategies to Liquid Markets:

Bias strategies can be effectively applied to highly liquid markets such as Gold Futures or Ethereum, which exhibit interesting intraday biases. The Gold Future, in particular, is an extremely liquid market that lends itself well to various types of strategies, including trend-following, reversal, and bias strategies. Similarly, bias strategies can be successfully implemented in markets like Soy, Crude Oil, or Heating Oil, which are characterized by high liquidity.

The Power of Deep Work in Financial Independence:

Financial independence can be distilled into three fundamental principles: earning more, spending less, and investing wisely. However, self-improvement plays a crucial role in increasing one's earning potential. Skills like creativity, lifelong learning, and a growth mindset are the best tools for increasing the chances of earning more. Deep work, or the ability to focus without distraction on a cognitively demanding task, is essential for achieving financial independence. By dedicating oneself to continuous study, reading, learning, and self-improvement, individuals can remove the constraints of financial limitations and contribute to the betterment of themselves and others.

Actionable Advice:

1. Incorporate deep work into your daily routine by setting aside uninterrupted blocks of time for focused, cognitive tasks. Minimize distractions and create an environment conducive to concentration.

2. Continuously invest in your knowledge and skills through lifelong learning. Seek out opportunities for personal and professional development, whether through courses, workshops, or self-study.

3. Cultivate a growth mindset that embraces challenges, persists in the face of setbacks, and sees failures as opportunities for growth. Adopt a positive attitude towards continuous improvement and embrace a mindset of abundance.

Conclusion:

By recognizing and capitalizing on the seasonality and repetitiveness of financial markets through bias strategies, traders can enhance their trading performance. Additionally, embracing the principles of deep work and self-improvement can greatly contribute to achieving financial independence. Through lifelong learning, focused attention, and a growth mindset, individuals can carve a path towards a fulfilling and prosperous future.

Resource:

  1. "Sistemi Bias: come sfruttare la stagionalità dei mercati finanziari | Unger Academy", https://ungeracademy.com/it/posts/sistemi-bias-come-sfruttare-la-stagionalita-dei-mercati-finanziari (Glasp)
  2. "Retire In Progress - Deep Work", https://retireinprogress.com/deep-work/ (Glasp)

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