Best day of the month to trade (buy or sell funds in S&P500)- Best day trading strategy
Disclaimer: This is my own analysis and it may have errors. It is for information or exploration purpose only- use it at your own risk. I am not responsible for any loss or gain.
Last week, I wrote best day of the week to trade. As I continue to explore the data further, I did some more analysis out of my curiosity- See the monthly pattern and find the best day of the month to trade.about
As I stated, this analysis is based on the downloaded historical S&P500 data that represents January 3, 1950 to September 10, 2015. I have downloaded it from the internet so it may have errors that I am not aware of.
Criteria: This analysis is based on the historical closing price of S&P500 data. It may not be valid for other indexes and past stock market performance doesn’t warrant identical future performance. This is just a research article written to help you understand a trend.
- Table 1. Number of days S&P500 closed negative, positive or unchanged compared to the previous close
| Day of the month | S&P500 closed in Negative | S&P500 closed in Positive | S&P500 closed at same (Unchanged) |
| 1 | 192 | 305 | 5 |
| 2 | 219 | 316 | 3 |
| 3 | 229 | 305 | 6 |
| 4 | 230 | 266 | 5 |
| 5 | 235 | 301 | 3 |
| 6 | 251 | 296 | 3 |
| 7 | 280 | 264 | 3 |
| 8 | 266 | 282 | 8 |
| 9 | 272 | 282 | 4 |
| 10 | 264 | 294 | 3 |
| 11 | 245 | 306 | 4 |
| 12 | 261 | 283 | 6 |
| 13 | 256 | 300 | 2 |
| 14 | 255 | 299 | 3 |
| 15 | 243 | 306 | 3 |
| 16 | 236 | 311 | 3 |
| 17 | 234 | 314 | 3 |
| 18 | 265 | 282 | 3 |
| 19 | 288 | 260 | 3 |
| 20 | 274 | 274 | 4 |
| 21 | 282 | 261 | 3 |
| 22 | 265 | 265 | 5 |
| 23 | 280 | 265 | 4 |
| 24 | 256 | 279 | 6 |
| 25 | 248 | 243 | 6 |
| 26 | 234 | 300 | 2 |
| 27 | 257 | 278 | 8 |
| 28 | 231 | 307 | 3 |
| 29 | 246 | 265 | 3 |
| 30 | 232 | 255 | 5 |
| 31 | 131 | 183 | 2 |
- Table 2. Percentages
| Day of the month | S&P500 closed in Negative | S&P500 closed in Positive | S&P500 closed at same (Unchanged) |
| 1 | 38.2 | 60.8 | 1.0 |
| 2 | 40.7 | 58.7 | 0.6 |
| 3 | 42.4 | 56.5 | 1.1 |
| 4 | 45.9 | 53.1 | 1.0 |
| 5 | 43.6 | 55.8 | 0.6 |
| 6 | 45.6 | 53.8 | 0.5 |
| 7 | 51.2 | 48.3 | 0.5 |
| 8 | 47.8 | 50.7 | 1.4 |
| 9 | 48.7 | 50.5 | 0.7 |
| 10 | 47.1 | 52.4 | 0.5 |
| 11 | 44.1 | 55.1 | 0.7 |
| 12 | 47.5 | 51.5 | 1.1 |
| 13 | 45.9 | 53.8 | 0.4 |
| 14 | 45.8 | 53.7 | 0.5 |
| 15 | 44.0 | 55.4 | 0.5 |
| 16 | 42.9 | 56.5 | 0.5 |
| 17 | 42.5 | 57.0 | 0.5 |
| 18 | 48.2 | 51.3 | 0.5 |
| 19 | 52.3 | 47.2 | 0.5 |
| 20 | 49.6 | 49.6 | 0.7 |
| 21 | 51.6 | 47.8 | 0.5 |
| 22 | 49.5 | 49.5 | 0.9 |
| 23 | 51.0 | 48.3 | 0.7 |
| 24 | 47.3 | 51.6 | 1.1 |
| 25 | 49.9 | 48.9 | 1.2 |
| 26 | 43.7 | 56.0 | 0.4 |
| 27 | 47.3 | 51.2 | 1.5 |
| 28 | 42.7 | 56.7 | 0.6 |
| 29 | 47.9 | 51.6 | 0.6 |
| 30 | 47.2 | 51.8 | 1.0 |
| 31 | 41.5 | 57.9 | 0.6 |
- 19th of the month is the best day to buy
Overall, 19, 21, 7, and 23 are the days when S&P500 closed in negative. Historically, On 19th of the month, S&P500 has closed in negative more days more number of days then the positives compared to the previous close.
There may be any number of reasons for this trend. The difference is ~5%. Considering that there are only four days in the month when S&P500 closed lower for more days is significant observation. What this mean is if you have MONTHLY automatic investment plan setup in your IRA or 401k, please select 19th as the day to buy or invest.
- Early in the month S&P500 closes positively for more number of days
of the month, S&P500 has closed in positives for stOn 1more number of days than the negatives. The difference is huge (~23%). If you have automatic investment triggered on the first or even 1 – 3 of the month, change it to the 19th. You will increase the probability favorably for best dollar cost averaging.
Conclusion
The best automatic day trading strategy is that I would update my IRA or 401k investment plan to trigger automatic investment on monthly basis on each 19th and avoid 1, 2, 3, 16, 17, 28, and 31. Combine this pattern with my earlier observation of the best day of the week, one can make a significant impact in overall investment return by favorably adjusting your buying price automatically.
