One of the most important factors in becoming a good trader is to know when you should NOT trade. The art of when to do nothing and just sit on your hands is just as important as anything else. So, what are the worst days to trade stocks (when you should sit on your hands)?
Thursdays and Fridays are the worst days to trade stocks during the week. The worst trading days of the month for trading stocks are trading days number 13, 14, and 22, and the worst trading days of the year are 35, 121, 111, 193, and 56.
In order to backtest the worst days to trade stocks we need to make some trading rules. In this article, we’ll make three backtests: one where we look at weekdays, one where we look at the trading days of the month, and the final backtest is when we measure the performance of the trading days per year.
In the backtests we use the S&P 500 as a proxy for the stock market. For simplicity, we backtest the oldest ETF still trading: SPY. It started trading in 1993 and we backtest all the data all the way back to the first trading day.
- SPY ETF trading
- What Are The Best Days To Trade Stocks?
Table of contents:
What are the worst days to trade stocks?
The worst days to trade stocks are Thursdays and Fridays.
Let’s start by looking at each weekday: we look at the performance from the close of one trading day to the close of the next (separated by weekdays).
| Mondays | 0.04% |
| Tuesdays | 0.08% |
| Wednesdays | 0.05% |
| Thursdays | 0.02% |
| Fridays | 0.02% |
Thursdays and Fridays are the worst days to trade stocks during the week! Albeit the worst, both are still profitable because they benefit from the tailwind of the overnight edge:
- Night Strategies Trading (Overnight Trading Strategies)
Opposite, if you buy at the close of a Monday and sell at the close of a Tuesday, you would have made 0.08% per week from 1993 until today. Because of the profitable Tuesdays, we have developed a Turnaround Tuesday trading strategy.
Related reading: How Many Trading Days In A Year?
What are the worst days to trade stocks? Trading days of the month
In the table below we have in chronological order the performance of each trading day of the month (not calendar day – which we think is pretty irrelevant).
| Trading day # | Avg % Profit/Loss |
| 1 | 0.25% |
| 2 | 0.07% |
| 3 | 0.08% |
| 4 | 0.06% |
| 5 | 0.02% |
| 6 | -0.05% |
| 7 | -0.01% |
| 8 | -0.05% |
| 9 | 0.07% |
| 10 | 0.06% |
| 11 | 0.17% |
| 12 | 0.17% |
| 13 | -0.06% |
| 14 | -0.11% |
| 15 | 0.04% |
| 16 | 0.04% |
| 17 | 0% |
| 18 | 0.07% |
| 19 | 0.02% |
| 20 | 0.06% |
| 21 | 0.06% |
| 22 | -0.09% |
| 23 | 0.2% |
The first trading day is the best (from the close of the last trading day to the close of the first trading day).
The worst trading days of the month to trade stocks are trading days number 13, 14, and 22.
The latter is a little surprising because it’s at the end of the month (most of the time number 22 is the last trading day of the month) and historically the last few days of the month are pretty bullish for stocks.
A strategy called the turn of the month trading strategy is based on both the end and beginning of a month.
What are the worst days to trade stocks? Trading days of the year
There is a max of 253 trading days in a year. When we backtest all of them (max 29 per trading day for the period back to 1993) we find out that the five worst trading days are number 35, 121, 111, 193, and 56.
However, because of the small number of trades, we would take these results with a pinch of salt.
What is the significance of identifying the worst trading days for stocks?
Identifying the worst trading days for stocks is crucial for investors as it allows them to be aware of historically challenging periods. This knowledge can inform trading strategies, risk management, and decision-making to potentially minimize negative impacts on portfolios.
How was the backtest conducted to find the worst trading days for the S&P 500 from the year 2000?
The backtest involved optimizing the month and trading day, considering the trading day as distinct from the calendar day. The results were obtained by entering trades at the close of a specific trading day and selling at the close the next day. This strategy specifically focused on overnight trades.
What are the worst days to trade stocks? Conclusion
The worst days to trade stocks are Thursdays and Fridays, and the following trading days of the month: 13, 14, and 22.
In our own trading, we rely on the results from the first two backtests. We are always reluctant to initiate trades on these two specific weekdays, and we are rarely happy if we get a signal on the second last trading day of the month.
These two effects seem to hold up pretty well during all times of the trading year. Thus, as a rule of thumb, we rarely trade on Thursdays and Fridays, and additionally, we try to avoid mid-month (trading days 13 and 14, and the last trading day of the month.
FAQ:
What days are considered the worst for trading stocks during the week?
Knowing when not to trade is crucial for risk management. Avoiding specific days with historically lower profitability can help traders minimize potential losses. Thursdays and Fridays are identified as the worst days to trade stocks during the week, based on historical performance analysis.
Why are Thursdays and Fridays considered the worst trading days?
The analysis involved backtesting using the S&P 500 as a proxy, with a focus on weekdays, trading days of the month, and trading days of the year. The content suggests that Thursdays and Fridays have lower average profitability, although both days are still profitable. The analysis highlights their performance in comparison to other weekdays.
Why are trading days 13, 14, and 22 considered the worst days of the month?
Analyzing trading days of the month helps identify specific days with lower average profitability. In this case, trading days number 13, 14, and 22 are identified as the worst. Based on historical data, these days show lower average profitability. The content mentions the surprising nature of day 22, considering its position at the end of the month.
