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SEASONALITY EXPLAINED

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What is a seasonal chart?

Seasonal investing capitalizes on the notion that specific return patterns occur at particular times of the year or during specific phases of the economic cycle.

These patterns often stem from recurring events that consistently influence asset prices, leading to predictable movements.

At the heart of analyzing these patterns lies the seasonal chart, a fundamental tool in understanding market dynamics.

A seasonal pattern chart provides a visual depiction of historical price movements over a defined time frame.

In contrast to traditional price charts, which track price movements chronologically, seasonal charts focus on identifying recurring trends or patterns that manifest at specific times of the year.

How do seasonal charts work?

A seasonal chart designed to uncover specific return trends over the course of the year utilizes an averaged approach, smoothing out the normalized price development or returns of an asset across multiple years.

Displayed as a blue line, this averaged representation encapsulates return data spanning the past 30 years, providing insights into which timespans consistently exhibit the strongest seasonal patterns on average.

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