Day by day, we move closer to 2020’s conclusion. DayTradeToWin’s John Paul, for many years, has used a technique called the January Effect to determine whether or not the year will be an “up year.” Determining whether 2020 will be an up year is determined fairly easily.

In preparation, it’s best to switch to an ES (E-mini S&P 500) daily chart. After doing so, scroll back in time so January 2020 is in full view. Compare price at the beginning of the month with the end of the month. Did price close higher at the end of the month? If so, the January Effect says the year, meaning by the end of December 2020, price will be higher than in January. This was the case for 2020, so we can say the January Effect says that 2020 will be an up year.

The January Effect is a predictive technique. There are no guarantees of its accuracy. John Paul, for many years, has vouched for the January Effects accuracy, however. As with any trading method, strategy, technique, etc. use your own discretion and read disclaimers on this day trading site and any other.

Well, what’s the use of an “up hear?” Well, my friend, if you have a strong indication price will move up during the year, could you not look for buying (long) opportunities? Indeed and that’s what’s described in the video above. In fact, John Paul relays an exact method for identify these long opportunities. According to him, they occur after price has dropped and regained at least 50% of its prior high. Once the 50% value is surpassed with requisite closing bars/candles, that is the entry opportunity.

Wait a second, are you talking about holding a position through multiple days? Exactly – this is not intraday trading as you have commonly seen associated with DayTradeToWin’s other techniques. This free trading strategy focuses on much larger profits over longer periods of time. The common term is “swing trading.” Generally, brokers require a larger account size to allow overnight trading.

We hope you find this compelling, if not useful!