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Trade just one day of the week for a 75% chance of big profits!

by , 27 November 2014

I've got a friend that's a great trader and very passionate about the equity markets. Whenever he has a brilliant trade, he immediately sends me a screenshot of his amazing profits. And, when he has a bad trade he'll let me know about his disappointment.

However, these last few weeks he's been very quiet. As a matter of fact, he only let me know of one trade each week. And, I realised he contacted me on the exact same day each week…
So, I did some research and I saw that the market went up by more than 3% on that specific day, three out of four weeks in a row!

That means, if you trade the market on only that specific day of the week, you'll have a great chance of making big profits.

So, let me explain how you can use this market anomaly to give you a 75% chance of trading profits.

The stock market anomaly on the JSE you can cash in on

Market anomalies appear when there are certain re-occurring events in the market that is not attributable to any fundamental or technical reasons.

For example, the January effect is where shares usually perform very well in January. And, shares are known to perform badly on Mondays. We call this the Monday effect…

However, there are also statistically good days to trade.

When I studied the JSE’s overall results for the last month, I saw that the JSE went up between 2% and 3% three out of four of the last
Fridays. Now that’s a market anomaly we can benefit from.

The Friday phenomenon is actually a well know market anomaly. Markets around the world are known to perform better on Fridays.
And, as we are looking for good opportunities to profit in the markets, this is a market anomaly with good profit potential to keep our eyes on…

But I don’t want you to just jump right in and buy the whole market on Friday mornings, we need a plan…

How to approach the Friday phenomenon for a 75% chance of profits

Because market anomalies are not attributable to any specific technical or fundamental reason, it happens randomly but regularly. So we
are going to need an identifier to determine when we can take advantage of this phenomenon and make money.

It’s well known for the JSE and the US markets to be positively correlated. So, to know what to expect on any specific trading day in the market, you need to look at the Dow Jones index of the previous day. If the Dow Jones Index performed well you can expect the JSE to perform well, and if the Dow Jones Index performed badly, you can expect the JSE to perform badly too.

This is not always the case but it works most of the time…

Take a look at the table below and see how the JSE follows the Dow Jones every Friday:

Last four Thursdays Dow Jones Performance Last four Fridays JSE Performance
30/10/2014 +1.17% 31/10/2014 +2.2%
06/11/2014 +0.51% 07/11/2014 +1.0%
13/11/2014 +0.15% 14/11/2014 +0.0%
20/11/2014 +0.22% 21/11/2014 +3.2%
 
Use JSE ALSI futures to take advantage of the Friday effect

If you combine the current Friday effect with a good performing Dow Jones Index on a Thursday in the US, you’ll be stacking the odds on your side of a good performing Friday on the JSE.

So, look at the previous day’s performance of the Dow Jones every Friday morning. If the Dow Jones Index performed well, buy JSE Top 40 ALSI futures early Friday morning.

Then, close your position at the end of the trading day on Friday…

Follow this strategy and you’ll have a good chance of making some good profits.


Trade just one day of the week for a 75% chance of big profits!
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