What are trading day effects and trading day adjustments?
Monthly (or quarterly) time series that are totals of daily activities can be influenced by each calendar month’s weekday composition. This influence is revealed when monthly values consistently depend on which days of the week occur five times in the month. For example, building permit offices are usually closed on Saturday and Sunday. Thus, the number of building permits issued in a given month is likely to be higher if the month contains a surplus of weekdays and lower if the month contains a surplus of weekend days. Recurring effects associated with individual days of the week are called trading-day effects. Trading-day effects can make it difficult to compare series values or to compare movements in one series with movements in another. For this reason, when estimates of trading-day effects are statistically significant, we adjust them out of the series. The removal of such estimates is called trading day adjustment.
Related Questions
- Commodity Trading in India: Do I have to pay sales tax on all trades(In case of physical delivery AND cash settled)? Is sales tax registration mandatory?
- For someone just starting to try forex trading, what trends or patterns would be most useful or fundamental to learn about and study first?
- What are trading day effects and trading day adjustments?
