The Dangers of Market Timing

The Dangers of Market Timing
From Ken Little,

Market timing may be the two most dangerous words in investing, especially when practiced by beginners.

Market timing is the strategy of attempting to predict future price movements through use of various fundamental and technical analysis tools.

The real benefit of knowing what is going to happen is that your return from buying a stock before it takes off is obviously better than if you have to buy the stock on its way up.
Buy Low, Sell High
Market timers are the ultimate �buy low and sell high� traders. Day traders, who move in and out of positions in minutes or hours, are the extreme market timers. They look for small profits by the dozens each day by capitalizing on swings in a stock�s price.

Most market timers operate on a longer time line, but may move in and out of a stock quickly if they perceive an opportunity.

There is some controversy about market timing.
Many investors believe that over time you can�t successfully predict market movements. Market timing becomes more of a gamble in their opinion than a legitimate investing strategy.

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These investors sound like failed traders… successful traders time the market. It’s a difficult [U]skill[/U] not everyone can learn. That’s why only 10% or less of new traders make it.

Thanks for that, tradervlad, it is true, it is a very difficult skill, otherwise people who join this trade would all be rich and many people will benefit. Since it is really difficult, that is why there are many training and education programs and free FX demo account before one does the actual work.

Tradervlad, do you have suggestions on how to become a successful trader?

Invest in your education. I believe education in this business will get you further ahead. :slight_smile:

It’s like any profession. You can’t read a few books and then fly a plane. The more you grind away learning the basics and practice trade, the more those little brain cells will start to pick up the thread and EVENTUALLY you’ll be a trader.

I’m a b****dy good electrical engineer, but it took 20 years!!!