It seems everyone is in on the big secret to success.
Everywhere you turn there is another proprietary stock market timing system being sold. Let’s take a few minutes to review these claims against common sense.
First of all, if these proprietary systems, books, software and other information were as great as claimed then why are they hawking their wares on the Internet and late night infomercials instead of joining the ranks of Bill Gates or Warren Buffet?
Do a search on the guru behind the hype before investing in their system.
Next, stock market timing sounds easy in theory but so does alchemy as in changing lead into gold. The fact is that every winner requires one or more losers in the investment arena; where do you think that money is coming from if not someone else’s loss?
If you are going to compete in the stock market then be prepared to take on the challenge. You wouldn’t enter a boxing ring without having trained so don’t expect to win at the stock market without discipline, dedication and determination.
Trends are your friends… if you understand the basics. Identifying a market trend is something every serious investor should be able to do but that is not always the same as the ability to correctly time the market.
Buy low and sell high based upon your own criteria. Don’t get greedy by trying to buy at the lowest point or sell at the top; it disproportionately increases risk.
In order to properly identify the current trend, it is necessary to establish a specific set of criteria. To put this into plain language… garbage in, garbage out. The market doesn’t move in perfect patterns so the system is only as good as the assumptions forming the foundation.There is a lot of information about how to identify a stock market timing signal but each and every market timing system requires at least three fundamental assumptions that every investor should understand.
- 1. Conflicting signals sometimes cancel out one another and sometimes not. For example, let’s assume the industrial average indicates a “buy” but the transportation average points to a “sell”…don’t simply select which suits your preference at the moment but rather take all information into consideration.
- 2. Remember, it is easier to win when tracking a stock market trend rather than attempting stock market timing. This is one of the most common mistakes made among new investors; using stock market timing signals as a forecast tool. The primary purpose is to identify the present trends of the market – not forecast the future of the market.
|Book: Timing The Market: How To Profit In Bull And Bear Markets With Technical Analysts|
|Book: Spotting Price Swings & Seasonal Patterns: Techniques for Precisely Timing Major Market Moves|