Following A Market Timing Strategy
When it comes to making decisions, our minds tend to perceive
and react to the information available to us, each in its
own particular way. This is not something we think much
about. It is a part of each of us. Trying to change this
process is almost impossible.
This is usually not of any consequence in our everyday lives, but in the realm
of investing, our perceptions and reactions, and the emotions they generate,
are very often the opposite of what is needed to be successful.
How do we start making consistently correct trading decisions? How do we make
decisions without emotions interfering? How do we trade with confidence?
The answer is simple. We follow an unemotional timing strategy which keeps us
on the path to profitability. Strategies that have been profitable for many years
in real-time trading. Strategies that keep us with the current trend.
Many traders, market timers, investors have no plan at all. They are like the
proverbial Gunslingers of the Old West. A news event causes the market to decline
and BANG, they go short. An economic indicator comes in better than expected,
the market rises, and POW they go long.
Trading by emotion, they make trades that seem solid at the time, and they hold
that position until it becomes more painful to hold it than to not hold it. They
may even make an occasional profit.
But that lack of focus...lack of planning, will ultimately
lead to poor performance, and to outright losses.
do so many traders sell at bottoms, and buy at
Why do so many traders sell at bottoms, and buy at tops?
It is such a well known fact that it is almost funny,
except when you are the person at that top or bottom.
Have you (or someone you know) ever said, "well, I finally decided to go long
(or short), so expect the market to reverse on me, again." Actually expecting" ahead
of time" that the trade will be unprofitable.
You will not hear that from someone following a timing strategy.
He or she knows that following the strategy will avoid
emotional trading errors, and lead to long term profits.
Strategy Equals Long Term
Trading requires discipline. Some have it, and others that wish for success
must learn it.
The benefit of of following a proven trading strategy is twofold.
First - If you have a trading strategy, you'll be able to ignore all
the data that doesn't affect your trading. The media is rough on traders -
at any given time, you could find ten reasons to buy and ten reasons to sell.
That emotional roller coaster is a nightmare, but if you are following a trading
strategy, you won't talk yourself out of good trades, nor will you keep yourself
in bad ones.
Second - Our emotions cannot cause us to make unprofitable decisions
if they are not involved in decision making. We have a trading strategy. We
know it works. All we need do is follow it. Never second guess the trading
strategy. That is allowing your emotions to come back into play, and emotions
result in losses.
Only through following a proven market timing strategy will you save yourself
a great deal of frustration, and successfully grow your investments.
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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.