The market provides us with opportunities to make money in different ways such as trading in stocks and bonds, Forex, securities and more. Due the global nature of these markets, a lot of forces are at play at any given time. This can lead to periods of volatility and uncertainty. Because of this, some traders and brokers have devised methods of cornering the market that’s known as timing.
Emotional Thinking is a No-No
Timing the market is a set of strategies used to ensure that one profits from the market’s bullish trend and gets out of the trading platform when the market turns bearish. This is essentially about preservation and making sure to mitigate risk and capitalize on profit. The first tip if you’re looking to time the market is not to lead with emotions such as greed and fear. Emotional thinking usually leads to on-the-spur snap decisions that can cost you in the long term. For instance, following the announcement that a profitable company is about to go public, many people will be tempted by the prevailing emotion of excitement to buy company shares. You’d do best resist the temptation to go all out and purchase a large amount of stocks since things may take a turn for the worse without warning.
A lot of financial experts are always looking for ways to corner the market. This could be in the form of well-written books outlining complicated formulas or simply coming up with a computer program that seeks to take out the guesswork from any investing decision. As a savvy investor, you should be wary about listening to and using largely untested methods to base your investing decisions. Take everything you read with a grain of salt, and only stick with tried and proven methods that have been used for years to turn a profit. The latest market-cornering trends should be the last thing on your mind given their inherent risk-carrying profiles.
Mix Some Realism into Your Optimism Cup
Even when the market is bullish, you should think about the long-term performance of a piece of trading stock. At the same time, timing the market may put you at odds with the prevailing market sentiment, making you feel like you’re being left out of the profits. That being said, staying realistic and optimistic takes practice, so don’t beat yourself up if you don’t get the hang of it the first couple of times.
Choose Longer Trading Time Frames
Day traders are seen as a crazy bunch because of their ability and courage to jump into a volatile market and make a profit. The truth is that on average, 90 percent or more of day traders lose money in the first year of trading. If you’d like to time the market efficiently, opt for longer investment time frames such as a week, or a month, or even 6 months to a year. You can fortify your patience by making sure you have a structure that you can follow on a daily, weekly, monthly or yearly basis.
By stepping back, you’ll be able to see the bigger picture which will in turn make it more likely for you to time the market without the attendant anxiety and stress investing.