Full Moon and New Moon: Investor Psychology, and What We Measured

The lunar market claim is unusual because it is properly testable, so we tested it and we are publishing every number. The idea that returns differ between the new moon and the full moon has a genuine academic history and it is repeated constantly in financial-astrology material. Below are our own results: one indicator, nine assets, two holding periods, eighteen tests, all corrected for multiple testing.

What the claim is

In its academic form the hypothesis comes from work by Dichev and Janes in 2003, which reported higher returns in the roughly fifteen days around the new moon than around the full moon across a range of markets. Our own engine cites that paper as the source for the indicator and labels it evidenced-weak, which is our tag for a hypothesis with real literature behind it that has not held up robustly.

In its Vedic form the framing is different. The lunar month runs from Amavasya, the new moon, through Purnima, the full moon, and back, and the tithi, the lunar day, is one of the five limbs of the panchang. The waxing fortnight, shukla paksha, is treated as growing and favourable, and the waning fortnight, krishna paksha, as diminishing. That is a statement about auspiciousness for beginning things, not about price.

How we tested it

The lunar phase indicator runs through the same pipeline as every other indicator in our research engine:

• Nine assets: NIFTY50, BANKNIFTY, GOLD, MCXGOLD, SILVER, MCXSILVER, CRUDE, USDINR and DFMGI (Dubai), each with roughly 3,000 to 3,900 trading days of history.
• Two holding periods: one day and twenty days, because a monthly claim cannot be answered by a daily test.
• Transaction costs of 5 basis points per unit of turnover.
• Deflated Sharpe ratio, which penalises the result by the number of strategies tried. Our honest trial count is 42 to 46 per asset.
• Probability of backtest overfitting via combinatorially symmetric cross-validation, and a fixed out-of-sample split.

Every result, unedited

Asset	Hold	Annualised Sharpe	Deflated Sharpe	PBO	Verdict
NIFTY50	1 day	-0.142	0.001	0.27	Indistinguishable from luck
NIFTY50	20 days	+0.235	0.048	0.27	Indistinguishable from luck
BANKNIFTY	1 day	-0.291	0.000	0.66	Indistinguishable from luck
BANKNIFTY	20 days	-0.050	0.005	0.66	Indistinguishable from luck
GOLD	1 day	-0.137	0.003	0.67	Indistinguishable from luck
GOLD	20 days	-0.299	0.000	0.67	Indistinguishable from luck
MCXGOLD	1 day	+0.263	0.000	0.51	Indistinguishable from luck
MCXGOLD	20 days	+0.262	0.000	0.51	Indistinguishable from luck
SILVER	1 day	+0.217	0.169	0.73	Indistinguishable from luck
SILVER	20 days	-0.370	0.001	0.73	Indistinguishable from luck
MCXSILVER	1 day	+0.240	0.190	0.61	Indistinguishable from luck
MCXSILVER	20 days	+0.142	0.105	0.61	Indistinguishable from luck
CRUDE	1 day	-0.317	0.000	0.69	Indistinguishable from luck
CRUDE	20 days	+0.279	0.038	0.69	Indistinguishable from luck
USDINR	1 day	-0.158	0.000	0.29	Indistinguishable from luck
USDINR	20 days	+0.353	0.007	0.29	Indistinguishable from luck
DFMGI	1 day	+0.183	0.006	0.17	Indistinguishable from luck
DFMGI	20 days	+0.357	0.029	0.17	Indistinguishable from luck

Eighteen tests, eighteen identical verdicts. The highest deflated Sharpe anywhere in the table is 0.190, against a bar of 0.95. Nothing came close.

The most revealing thing in the table

Look at the sign of the Sharpe ratio rather than its size.

• NIFTY50 is negative at one day (-0.142) and positive at twenty (+0.235).
• SILVER is the exact reverse: positive at one day (+0.217) and negative at twenty (-0.370).
• CRUDE flips from -0.317 to +0.279.
• USDINR flips from -0.158 to +0.353.

A real effect does not reverse direction when you change the holding period. Noise does exactly that. This table is what an absent signal looks like when it is measured carefully, and it is far more informative than any single number in it.

It also shows how an accuracy claim gets manufactured. Quote only the four assets where the sign happens to be positive at one day, or only the six positive at twenty days, and you have a case. Report all eighteen and you do not.

Why the belief persists anyway

Three reasons worth naming, none of them requiring anyone to be dishonest.

1. The cycle is salient. The moon is visible, its phase is memorable, and a bad trading week that coincides with a full moon is easy to encode and hard to forget. A bad week under a waxing moon leaves no marker.
2. The academic finding was real and weak. Dichev and Janes reported something. Later work did not reproduce it robustly. Both facts get repeated separately, and the first travels further.
3. Nobody corrects for multiple testing. Anyone can find a lunar rule that worked on one asset over one window. Our own trial count is 42 to 46 strategies per asset, and the deflated Sharpe exists precisely to charge for that.

What the Moon is genuinely for

Dismissing the market claim does not dismiss Chandra, and it would be a mistake to conflate the two. The Moon does an enormous amount of work in Vedic astrology, none of it about price:

• Your entire dasha sequence derives from the nakshatra the Moon occupied at birth. Nothing else in the chart carries this much timing weight.
• Your rashi is your Moon sign in the Vedic system, not your Sun sign.
• The panchang is built around the Moon's relationship to the Sun, which is what tithi measures.
• Financial temperament. The Moon governs the mind, so it describes how you decide under pressure, which is genuinely useful self-knowledge. See the Moon's role in financial decision-making.

And there is a real psychological point underneath the folklore, which is that your own state affects your decisions far more than any market cycle does. That is worth managing. Structure beats sentiment: an automated instruction does not consult your mood on the day.

How to read this honestly

If someone shows you a lunar market study, ask four questions: how many strategies were tried in total, what happens at a different holding period, what happens on a different window of years, and what the out-of-sample result was. Our own myths guide shows what happens when those questions are asked, including a case where changing only the window length moved the best deflated Sharpe from 0.145 to 0.659 and swapped the winning strategy.

The full methodology is on our technology page, the wider argument in is financial astrology real, and the retrograde equivalent in retrograde planets and market volatility.

Frequently asked questions

Does the full moon affect the stock market?

Not in our data. We ran the lunar phase indicator across nine assets and two holding periods, eighteen tests in total, each corrected for multiple testing with a deflated Sharpe ratio and an overfitting check. All eighteen returned indistinguishable from luck, and the highest deflated Sharpe anywhere was 0.190 against a 0.95 bar.

What about the academic research on lunar returns?

The best known paper, Dichev and Janes in 2003, did report a difference between the new-moon and full-moon halves of the cycle. Our engine cites it as the source and tags the indicator evidenced-weak, because later work has not reproduced it robustly and our own testing does not either.

Why do the results flip sign between holding periods?

Because there is no underlying effect. A genuine signal does not reverse direction when you change from a one-day to a twenty-day hold, and in our table Nifty, Silver, Crude and USDINR all do exactly that. Sign instability across horizons is one of the clearest markers of noise.

Should I avoid trading on a full moon?

We publish no trading guidance and we are not SEBI-registered. Our own measurements found no effect worth acting on. If your own state of mind is worse on some days than others, that is a real consideration, and the answer is to automate decisions in advance rather than to consult a calendar.

Does Amavasya or Purnima matter in Vedic astrology?

Yes, for muhurta, which is the selection of auspicious timing for beginning something. The tithi is one of the five limbs of the panchang and the waxing fortnight is treated as favourable for new undertakings. That is a statement about tradition and auspiciousness, not a claim about market returns.

Why publish results that undermine your own subject?

Because they are the results, and because a site that only publishes flattering findings has told you nothing about its standards. Our position is that the framework has genuine reflective value and no forecasting power, and we would rather show the working than assert either half.

Important disclaimer

Educational and awareness purposes only - not investment advice and not a recommendation to buy or sell any security or commodity. AstroCapitalX is not a SEBI-registered investment adviser. Markets carry risk; please consult a SEBI-registered adviser before investing.