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How To Improve Market Timing
If a stock is about to rise, and one buys it right away, one will be rewarded. The same thing is true about selling an asset profitably in a timely fashion. One also looses if one buys the stock that is about to decline and vice versa.
So, improving market timing is a big issue for all market players especially the technical traders. This article will help one to improve the market timing. Let's get started.
What Is Market Timing
The market timing is the activity that aims to buy or sell a financial asset at the right time as it is about to rise or decline.
The more accurate one is, the better is the trade. Market timing is also about knowing when to exit a trade or position.
Imagine, one buys stock X, and one is in a nice profit. After examining the chart and current market environment, one decides to close all those profitable trades.
The next day, behold the asset decline more than 30%. That was an excellent market timing because one has secured or banked all profit before that nasty sharp decline the following day.
I believe, one will celebrate that excellent market timing. Won't one? Market timing consists also of making the right decision about when to cut losses before they double, and adding new extra positions at the right time as the price continues to rise or fall.
Step One To Improve Market Timing
The first step to improve the financial market timing is to wait until there is real valid signal to buy or sell before one engages to trade. Though that is not all, it is one of the essential steps.
Never engage to buy or sell a financial instrument until there is the signal is fired. Ready, Steady, Go. That Go is the signal. Many times, market players just buy or sell for no valid reasons (without a signal).
Step Two To Improve Market Timing
The second step is to buy or sell at the right price or specific price level where there is bullish or bearish value. That value could be a technical or fundamental support or resistance. That consideration to find the best price or value will improve the market timing.
Sometimes, the signal is fired, but one buys or sells at the wrong price. That is why traders have both bullish and bearish watchlists. They are waiting until the price reaches the level where they want to buy or sell.
Third Step To Improve Market Timing
The third step to improve the market timing is to combine the surge in the trading volume with the first higher low (bullish) or first lower high ( bearish) trading setup.
The surge in the trading volume indicates that there is a huge trading order in place. That order reveals its true colour through a subsequent higher low or lower high.
The fourth step to improve market timing is to sow the trading or investing seed in the right season or period.
Here, one can learn a lot from a farmer.
Those who are very bullish when the SP 500 and major indices are bearish are fighting the market sentiment. I admire their stupid courage, but I will not follow them. Indeed, when the market sentiment is bearish, one should pull out a bearish watchlist.
What one will find is that market players do lose more often when they trade against the market environment, sentiment, trend and sector. If a sector is bearish, but not yet oversold, please do not bother to buy in it yet, but wait. The opposite is also true.
First there is a high probability trade setup on a higher time frame. That setup must generate a valid trading signal on the signal time frame.
Do not or sell on that time frame, but use a different entry time frame. It sounds simple, but one only gets good at it if one really learns, practices and keeps going until one becomes perfect. A combination of one of the above steps that I have already discussed with the top-down trading will help improve the market timing.
I will say that a market timing strategy that does not include a top-down trading strategy will surely lack a bit of sharpness. To trade like a pro, one must master the top-down trading. Sorry, I can not apologise for that.
Step Seven To Improving Market Timing
You know it was coming. Yes or no? It is the Elliott wave forecast. An Elliott wave trader is an excellent market timer.
Really, the Elliott wave principle does help to know when to buy, sell and exit. It also helps to manage the trade. The best market timing tool in the financial markets is the Elliott wave principle.
If one is a fundamental trader and one never bothers to become a sophisticated market player, I will recommend that one looks into it because it can only help.
The wave structures and Elliott wave rules will surely boost any mediocre market timing tool.
Eighth Step To Improve Market Timing
The eighth step to improve the financial market timing is to combine the top-down trading and Elliott wave forecast. It is in fact the best way to accurately time the market.
I have noticed that even the expert Elliott wave practitioners are forgetting to apply the top-down trading strategy. Let me put it to you this way. An Elliott wave trader that is combining the top-down trading and Elliott wave forecast is superior to others.
That is my take on that. A technical trader that is using the top-down trading without the Elliott wave forecast can do better than that.
Alright, I can go on and on about other steps that will help the market timing. Nevertheless, what I propose in this article is enough to get one on the right track to improve the market timing.
If you have any questions or comments, please post them under any video at 24stocktrader YouTube channel, and in due course, I will answer them or post an educational video.
The step one to eight will help one to improve the market timing at a faster rate. Better, a combination of the top-down trading and Elliott wave forecast without neglecting the first steps one to six is the best way forward.
A real improvement do occur when one begins to care or do something about accurate market timing. It is a shame that many market players have lost so much money because they do not know how to time the markets.
Just improving the market timing can also help to reduce losses. It will also give one a real peace of mind when one hits buy, sell or exit buttons.
Those that neglect most the market timing are fundamental investors with a fat trading or investing account. I hope they take note of this content.
That will do friends and foes. I hope this article is a good one. If that is true for you then please share and bookmark it. Please remember to say few good words about us in various trading and investing forums. I will appreciate that.