These Are The Best Trading Days For Stocks: Optimal Days for Maximum Returns

We did a backtest where we optimized the month and trading day to find the best trading days for the S&P 500 from the year 2000. We remind you that the TRADING day is different from the calendar day.

We backtested the result by entering at the close of trading day N and selling at the close the next day. In other words, this is an overnight trade.

The table below contains the results.

Row one says that trading day 6 in March (ignore the minus sign) is the best with an average gain of 0.80% from the close of trading day 6 to the next trading day.

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The results are biased toward the strongest period for stocks: from October to the end of April:

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FAQ:

What is a backtest, and why is it important for stock trading strategies?

A backtest involves applying a trading strategy to historical market data to evaluate its performance. It helps traders analyze how the strategy would have performed in the past, providing insights into its potential effectiveness. Backtesting is crucial for refining and optimizing trading strategies before implementing them in live markets.

Can you explain the methodology of the overnight trade mentioned in the backtest?

The overnight trade involves entering a position at the close of one trading day and selling it at the close of the next trading day. This method captures the price movement overnight and is a common approach for short-term traders looking to capitalize on potential price changes between consecutive trading days.

What does the table in the results section of the backtest represent?

The table likely provides detailed information about the performance of the trading strategy on different trading days and months. Each row may present specific data, such as the average gain or loss from entering a trade at the close of a particular trading day and selling it at the close of the next trading day.

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