The Turnaround Tuesday Trading Strategy (Setups, Rules, Performance Analysis)
The Turnaround Tuesday Trading Strategy
The Turnaround Tuesday effect happens from the close of Monday’s trading session until (at least) the close of Tuesday’s trading session. The effect is no myth! Let’s do some backtesting to find what seems to work and not work.
This article looks at the Turnaround Tuesday trading strategy. Buying on weakness on a Monday seems like a good trading strategy. The Turnaround Tuesday effect exists, but it improves by adding a filter.
What is Turnaround Tuesday trade?
We have previously written about potential trading strategies based on the day of the week effect, particularly on Mondays: the stock market has a tendency to change direction and move in the opposite direction of the previous move prior to Tuesdays.
For example, if the market is down on a Monday, you are likely to get above-average returns in the next few days. Opposite, if Monday is very strong, the return over the next days is substantially lower compared to a down day.
- Monday Reversal Trading Strategy In The S&P 500 And Nasdaq (Big Move On Mondays – Trend Reversal)
- Monday Overnight Reversal In The S&P 500 (Short strategy)
- Monday/Tuesday trade in Nasdaq
- 10 free swing strategies that work (backtested buy and sell signals)
The mother of all Turnaround Tuesdays
To give you an example of a Turnaround Tuesday just look at what happened on the mother of all Turnaround Tuesdays: the Black Monday on the 19th of October 1987.