A Perspective on the Impact of Weather on Investments
Is There Really a Weather Impact on Your Investments?
Are you a fair-weather investor? That could sound like a ridiculous question but the truth is that there is a definite correlation between weather conditions and market activity. Anticipation of cold weather can impact related commodities such as natural gas and home heating oil as supplies drop and demand increases. This can be significant for day traders looking for short-term swings in prices that present opportunities for quick gains or that also may trigger moves to sell.
Weather analysts predict that the holiday season in the US will be colder than normal, followed by a warmer period into January, then a cold snap is expected from mid-January right into February and even part of March. February is expected to produce lower temperatures accompanied by higher-than-normal snowfalls in much of the US. A side effect of such conditions is reduced consumer spending when shoppers become less mobile and more of their expendable income goes for heating costs.
Weather volatility will likely have the same resulting impact on such commodities as coal and natural gas making prices react in the same cyclical manner. Close monitoring of these weather trends will aid day traders in timing trades to meet those expectations.
Other weather-related implications are analytical studies demonstrating that over a period of time, markets in general perform at higher levels when sunshine is plentiful and contrarily underperform during periods of dreary or bad weather. This observation lends more to the emotional side of investing. Mood has a direct impact on investors’ willingness to accept risk or to be less risk-tolerant.
Emotion of course comes into play more for the casual day trader or investor than the experienced or professional investor who has learned over time to separate emotion from finances.
Evaluating Weather Impact for Your Trades
While weather impacts on trading activity may be emotional or short-lived they introduce volatility in pricing that needs to be considered in trading activities. Moreover it’s important for day traders to recognize their own tendencies to react to such influences and learn to avoid making buy and sell decisions based on psychological aspects. Realizing that these conditions exist at least for some traders is a fact to be considered when making your trades, as you can incorporate that knowledge as part of your strategy.
It’s human nature to be less risk-averse when you feel optimistic regardless of the cause: sunny day, good family news, positive job outlook, etc. When you have a pessimistic attitude about other conditions it can carry over to your trading activities. In either case irrational decisions can be brought on by moods and emotions, and part of that can indeed be related to your surroundings that include weather conditions.
SureTrader is a leading online broker with the tools you need to stay up-to-date on news that impacts your investment decisions. Using market charts and news feeds to determine the investments that are most relevant to your interests will help guide you toward achieving financial success. Stock tickers available with real-time market information keep SureTrader clients aware of evolving indexes that impact your investment decisions. Clients can also analyze trends providing an advantage over other online brokers. SureTrader’s friendly and courteous support is available to our clients on a 24×7 basis to answer any questions and resolve problems. Information from multiple exchanges in national and global markets enables you to make the right investment choices based on current conditions to align with your individual financial needs.
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Disclaimer: SureTrader Blog is not intended for U.S. persons. Stock information is not to be viewed as buy or sell recommendations.