Once In A Blue Moon: Is Moon Phase Trading Effective?
According to NASA, the moon will be opposite the sun at 9:36 p.m. EDT on Wednesday, Aug. 30, resulting in a blue supermoon, one of the biggest and brightest moons of the year. For lunar enthusiasts, this will be the last blue supermoon until 2037, so this is not to be missed. The moon is the earth’s constant companion, influencing our climate, tides, and human and animal behavior. For investors who incorporate lunar phases into their decision making, August 30 is an auspicious investing occasion.
We took a look at the two main types of lunar investing to find out more.
Moon Phase Trading is a strategy that involves analyzing and timing trades based on the moon’s different phases, such as the new moon and full moon. Traders may use specific moon phases as signals to enter or exit positions.
The Lunar Buy-Sell Strategy involves buying on the new moon and selling around the next full moon, which typically spans 14-16 days. The idea is to align trades with lunar cycles.
The Royal Bank of Scotland said in a 2010 report: “If an investor had invested £1000 in FTSE in 1984, by now he would have approximately £5,130 by holding the index, which represents index performance, whereas trading FTSE according to moon phases would make a big difference. First, consider buying FTSE on the new moon and selling on the full moon, this would result in £12, 116 overall figure for the same period. It means more than double the profits.”
While fascinating, these strategies are not widely supported by scientific evidence and are often considered speculative or superstitious. Some traders believe that lunar cycles can influence market behavior, but it is important to note that markets are complex and influenced by a wide range of factors.
Traders interested in lunar cycle strategies should conduct thorough research, consider risk management and assess the strategies’ historical performance before incorporating them into their trading approach.
And finally, to answer the biggest question, are blue moons only seen once in a while? Just 3% of full moons are blue moons, so, yes, they are as rare as we are led to believe.