Investor or Trader... Which Are You?
Most market participants consider themselves to be "investors." But if
you look at a list of the really big winners on Wall Street, you will
see that most of those who make big profits, list themselves as "traders."
By "big profits" we mean doing better than the S&P 500 Index or Nasdaq
100 Index by a substantial margin over any three-year period.
"Investors" put their money into stocks, real estate, etc., under the
assumption that over time, the underlying investment will increase in
value, and the investment will be profitable.
Typically, investors do not have a plan for what to do if the investment
decreases in value. They hold onto the investment in hopes it will bounce
back and again become a winner.
Investors anticipate declining markets with fear and anxiety, but unfortunately,
they usually do not plan ahead of time how they will respond to them.
When faced with a declining (bear) market, they hold their positions and
continue to lose.
We all know investors. In many cases it was us before we realized how
dangerous buy-and-hold investing could be to our savings.
anticipate declining markets with fear and anxiety,
but unfortunately, they usually do not plan ahea
Investors often have some knowledge of trading. But that knowledge is
tainted by how it is all too often described in the financial press. Trading
is risky, dangerous, foolish, bad, involves a great deal of work, etc.
On the other hand "investing" is good, reliable and safe.
Ranked #1 on TimerTrac.com
Bull & Bear
10 Year Results
Fibtimer Timing + 294.2 %
Fibtimer Timing + 65.7 %
nights as your investments are consumed
by a volatile Wall Street?
's trend trading services. Our trading
plans are unemotional and are always
invested with the trend, which
ever way it is headed.
's timing strategies MAKE
MONEY in BOTH advancing & declining
markets. No more sleepless nights.
No more upset stomachs.
We profit year after year after year. In fact, we have been
timing the markets successfully for over 25 years.
Join us and start
We are currently offering 2 or 3
months to new subscribers.
Special Offer - CLICK
Investors had a taste of what buy-and-hold can do to
their capital in the 2000-2002 bear market. They lost again
in the 2008-2009 bear market, and again in 2020.
On the other hand "traders" take a proactive approach to their investing.
Traders have a defined plan and invest with one goal, to put their
capital into the markets and "profit."
They "trade" with a plan that tells them what to do in any situation.
When to enter and when to exit. They never allow large losses.
Being a trader does not mean you must move in and out of the markets
frequently. This is a common misconception. A trader simply is one
who has a plan for entering and exiting. They know what to do if their
trade goes against them, and they know what to do when their trade
Some traders go short (take bearish positions) as well as long (bullish)
positions. Some are unable to go short, or they find short positions
to be uncomfortable. Probably the majority of traders do not ever take
But traders "do" have a plan. This is where they differ from investors.
Every Trader Needs A Trend
If you think about it, you will quickly realize every trader needs
a trend to be successful.
No matter what trading method is used, whether it is pattern trading,
swing trading, long term buy-and-hold investing, fundamental analysis,
technical analysis, buying or selling on news events, IPOs, splits,
you name it. If the stock or mutual fund does not trend in the required
direction after the trade is made, you cannot be profitable.
This also applies to all asset classes. Stocks, bonds, currencies,
commodities. You must have a trend to profit.
Putting Trader & Trend Together
There are two major camps when it comes to deciding what method to
use to plan a trade. There are those who follow a fundamental analysis
approach and those who follow a technical analysis approach.
Traders use both methods to "forecast" future market direction. If
combined with an exit strategy, either can be successful, but debate
has raged for 30 years over which is the most successful strategy,
as well as whether either method truly "outperforms" the markets over
Some very astute market players have said that both fundamental and
technical analysis approaches, though they can be profitable, usually
are "no more profitable than an index fund."
There is a scary thought. All that work when an index fund could do
|"Price is always right.
If prices are moving up, the markets are advancing. Down and
the markets are declining."
But there is another approach that is almost never discussed. Many
hugely successful traders use it though the financial press seldom
mentions it. In fact, many who use it are very quiet about their successes.
They do not try to publicly prove themselves right, they just trade
and make money.
This approach is the use of price to determine trends. Price does
not forecast and it does not predict. Price is always right. If prices
are moving up, the markets are advancing. Down and the markets are
At Fibtimer we are "trend followers." We respond to what "is" happening
instead of predicting or forecasting what might happen. We "follow" price
and allow the changes in price to tell us "when" to enter or exit a
Using price to determine trend does not allow trend traders to enter
at the exact bottom, or to exit at the exact top. In fact, trend traders
do not try to forecast the market, but instead let the market tell
them when to trade and in what direction.
Trend traders wait patiently for prices to tell them a trend has begun.
Then they jump on board. If the trend fails, they exit quickly to control
losses. Price tells them when to enter "and" when to exit. If the trend
continues, trend traders have no predetermined profit goal. They stay
with the trend until it reverses.
Cutting losses quickly and staying with a trend until it ends is how
trend traders realize huge profits in the financial markets. The financial
markets are trending "about" 80% of the time. That means trend traders
are profitable 80% of the time. During the other 20% trend traders
keep losses very small so that they are ready when the next trend starts.
This does not mean 80% of their trades are winners, just that they
are in the plus column for that 80%. If you have three losing trades
of 2% and one winning trade of 18% in a year, you finish with a 12%
gain, even though most trades were losers. This fits the old saying, "cut
your losses short and let your winners run."
Remember that "price" is determined by millions of investors and traders.
By using price, trend traders take advantage of the combined wisdom
of millions of investors and traders to trade a successful and profitable
market timing strategy.
Yes, it takes patience to be a successful trend trader. Yes, it takes
discipline to follow the strategy and make the trades, which many times
go against the prevailing wisdom. This is true of "all" winning market
But trend traders who use price to determine trends have
been quietly "beating" the markets for many years. They will quietly
continue to do so for many more.
Recent articles from the Fibtimer market timing services;
© Copyright, Market Timing Strategies, Inc.,
All Rights Reserved.
Fibtimer reports may not be redistributed without
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.