Sell in May: Equity Folklore Meets the Currency Market

[Shadow Trader]

The phrase "sell in May and go away" comes from equity markets, where the period from November to April has tended to outperform the summer months in many historical studies. Currency traders sometimes ask whether a similar half-year rhythm shapes the dollar, the yen or commodity currencies.

A link can be argued indirectly. If equities weaken in summer, safe-haven currencies might gain and risk-sensitive pairs might soften. In practice, the equity pattern itself is inconsistent across countries and decades, and currency moves depend on rate differentials, growth and policy at least as much as on equity direction. A weak premise passed through a loose channel produces an even weaker conclusion.

Calendar rules of this kind also suffer from timing ambiguity. Switching dates, choice of index and chosen start year all alter the results. Individual years often contradict the rule, and a few strong episodes, such as a crisis that happened to begin in summer, can dominate averages.

Folklore can still be useful as a prompt for measurement. A trader can test whether summer sessions on a particular pair show lower volume, narrower ranges or different spreads, then adapt position size and targets accordingly. The honest use of the saying is to inspect conditions, not to predict direction.