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It's All In How You Play The Game
There is an old saying, "It's not whether you win or lose but how you play the game."
Few realize just how relevant that saying is to profiting in the financial markets.
The Only True Measure Of Success... Is Long Term Profits
Typically, those new to stock market timing work under the assumption that winning is all that matters.
Obviously winning (being profitable) is the ultimate goal, but winning over the "long term," which is what really counts, eludes many.
Yes, a new market timer may develop what he or she feels is a great timing strategy and immediately have a short term gain from it. Or they may exit a winning strategy and take
a trade based on emotions or a news event. But they will quickly find it's difficult to continue winning.
The stock market is a tough playing field. Being profitable over time is the only true measure of a market timer's success and such success requires discipline.
It is of absolute importance to follow a market timing strategy. If you trade by the seat of your pants, you may get a win here and there, but you will not accumulate profits.
You will not win over the long term.
Paying A Psychological Price
How do you approach market timing? Do you try to follow a detailed and disciplined timing strategy such as the strategies available here at FibTimer? Or do you rely on luck and hope all your trades work out the way you want?
If you rely on fate, you may pay a psychological price when it comes to your ability to trade with discipline.
Making a quick profit without a market timing strategy may provide short-term pleasure, but these kinds of winning trades can adversely influence discipline in the long term. That one short term
profit may cost you a great deal more over time.
Rather than using a well defined market timing strategy, following it, and getting rewarded by trading it, an undisciplined market timer puts on a trade haphazardly and may be coincidently rewarded.
In this case, a lack of discipline is rewarded, and this "unjustified" reward may increase a timer's tendency to abandon timing strategies in the future because he or she has been rewarded for doing so in the past.
However, the positive outcomes are usually short lived, and a lack of discipline ultimately produces losses. Trading without a plan makes you part of the "herd" that
follows their emotions over cliffs, over and over again. Don't be one of them.
The stock market is filled with investors who are trading by their emotions.
Emotional investors are what makes the stock market so profitable for those who understand what the majority of investors are doing, and use this information to profit.
Justified Vs. Unjustified
It's useful to distinguish justified wins from unjustified wins.
A justified win is when a market timer follows a timing strategy and over time generates a nice profit. A win resulting from following a timing strategy is justified and reinforces discipline.
An unjustified win occurs when a market timer (or any trader) doesn't follow a well defined strategy or exits a strategy because of emotions (fear & greed). He or she may be rewarded that time, but the outcome occurred by chance. The win is unjustified and can reinforce undisciplined trading.
That chance win can cost a great deal of money over time. The easier it is to abandon a sound timing strategy when emotions are running high, the more
money will be lost over time. You will have become part of the emotional "herd."
Discipline Is Crucial
Discipline is crucial for market timing success.
Successful market timers execute a proven trading strategy, over and over, so that across a series of buys and sells, the strategy produces a solid profit. Taking every trade
ensures when the big trade occurs, the one that makes most of your profits for the year, you will be onboard and profiting from it.
Consistency is key. One must follow the timing strategy consistently and execute each and every single trade.
Don't let an unjustified profit interfere with your ability to maintain discipline.
Follow the timing strategy and reinforce the idea that if you follow it, you will end up with excellent profits in the long run.
If you abandon a timing strategy, and get an unjustified win, you may feel good in the short term, but you'll pay a long term price when it comes to your ability to maintain discipline,
and that price is losses.
Recent articles from the FibTimer.com market timing services;
Predicting The Future
It's Different This Time
A Closer Look At "Price"
Investor vs. Trader...Which Are You?
The Other Side Of The Trade
Market Timing And The Presidential Election
Let Your Profits Ride...Rules For Successful Market Timing
Critical Issues For Market Timers
Disappointment And Regret
Job Search: Market Timer Needed
Discipline and Market Timing
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All Rights Reserved.
FibTimer reports may not be redistributed without
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Disclaimer: The financial markets are risky. Investing is
risky. Past performance does not guarantee future performance.
The foregoing has been prepared solely for informational
purposes and is not a solicitation, or an offer to buy or
sell any security. Opinions are based on historical research
and data believed reliable, but there is no guarantee that
future results will be profitable. |
