# January Effect

January Effect is an indicator on [Vela](https://vela.luxalgo.com/chart), our next-generation charting platform, written in Pine Script®.

Measures the January seasonal on the chart symbol or on its ratio to a benchmark: average January return versus the other months, the January premium in percentage points, and a January barometer hit rate graded against an always-up baseline. January windows are shaded by direction, completed Januaries are labeled, and five alerts track the seasonal calendar.

- Indicator in the LuxAlgo Library, by LuxAlgo, published May 13, 2026.
- Access: free.
- Concepts: [January Effect](https://www.luxalgo.com/library/concept/january-effect/) (primary)
- Open on Vela: https://vela.luxalgo.com/chart?pineScriptCodeId=tc381qm96ospk35n6le7vixf
- Page: https://www.luxalgo.com/library/indicator/january-effect/

**January Effect** measures the January seasonal on the actual chart instead of asserting it, bringing the [January effect](https://www.luxalgo.com/library/concept/january-effect/) into the library as its first dedicated study. A dashboard reports three sections from completed months: the effect itself (average January versus the other months, their difference the January premium), the January barometer (hit rate against an always-up baseline), and the current year's status. January windows shade by their running direction, and each completed January is labeled with its return and barometer outcome.

## How to Trade the January Effect?

- **January premium row**: the average January return minus the average other-month return on this symbol. Positive means January has actually been the stronger month in the sample shown.
- **Barometer call**: January's direction calls the February-December window by default; only the edge over the always-up baseline is information. The dashboard prints both.
- **Relative mode**: run a small-cap index over a large-cap benchmark to study the size spread where the anomaly was originally documented.
- **Calendar alerts**: January opening, closing higher or lower, and the completed year grading the barometer call as hit or missed.

## January Effect Settings

- **Measure Relative To Benchmark** (default disabled) with a benchmark symbol (default SP:SPX): study the chart symbol divided by the benchmark instead of raw price.
- **Barometer Target** (default Rest of year (Feb-Dec)): the Full year option matches the almanac phrasing but contains January itself, which flatters the hit rate.
- **Sample Window (Years)** (default 0): 0 samples every completed year on the chart; a positive value grades only the most recent years.
- **Highlight January** and **January Return Labels** (default enabled).
- **Dashboard** (default enabled) with position (default Top Right) and **Dashboard Size** (default Small).

## Frequently Asked Questions

### How does it differ from the Turn-of-Month Effects study?

Different calendars. The [Turn-of-Month Effects](https://www.luxalgo.com/library/indicator/turn-of-month-effects/) build examines the recurring days around every month boundary; this one isolates a single month's premium and adds the year-ahead barometer question on top.

### What timeframe does it need?

Anything monthly or lower: quarterly and yearly bars cannot isolate January, and the dashboard says so. Daily charts give the cleanest boundaries.

### Does the dashboard prove the effect exists?

No. It reports what the sampled chart did: counts, averages, positive shares and hit rates, with the always-up baseline shown so a mere tendency of years to finish higher earns the barometer no credit. Use the sample window to check whether the pattern held recently.

## Related indicators

- [Buy Sell Calendar](https://www.luxalgo.com/library/indicator/buy-sell-calendar/) (Day-of-week Effects): markdown at https://www.luxalgo.com/library/indicator/buy-sell-calendar.md
- [Buyback Blackout Windows](https://www.luxalgo.com/library/indicator/buyback-blackout-windows/) (Time, Sessions & Seasonality): markdown at https://www.luxalgo.com/library/indicator/buyback-blackout-windows.md
- [NFP Price Zones](https://www.luxalgo.com/library/indicator/nfp-price-zones/) (Macro Event Days): markdown at https://www.luxalgo.com/library/indicator/nfp-price-zones.md
- [Day Of Week Price Distribution](https://www.luxalgo.com/library/indicator/day-of-week-price-distribution/) (Day-of-week Effects): markdown at https://www.luxalgo.com/library/indicator/day-of-week-price-distribution.md
- [Periodic Activity Tracker](https://www.luxalgo.com/library/indicator/periodic-activity-tracker/) (Day-of-week Effects): markdown at https://www.luxalgo.com/library/indicator/periodic-activity-tracker.md
- [Seasonality Chart](https://www.luxalgo.com/library/indicator/seasonality-chart/) (Month-of-year Seasonality): markdown at https://www.luxalgo.com/library/indicator/seasonality-chart.md
- [Seasonality Widget](https://www.luxalgo.com/library/indicator/seasonality-widget/) (Day-of-week Effects): markdown at https://www.luxalgo.com/library/indicator/seasonality-widget.md
- [Weekly Stacked Daily Changes](https://www.luxalgo.com/library/indicator/weekly-stacked-daily-changes/) (Day-of-week Effects): markdown at https://www.luxalgo.com/library/indicator/weekly-stacked-daily-changes.md

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Source: https://www.luxalgo.com/library/indicator/january-effect/ (LuxAlgo Library). Free to use with attribution: https://www.luxalgo.com/library/license/