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Frank started market timing in 1982 when the Federal Reserve cut interest rates and sparked the 1980’s bull rally. Realizing that this rally could have been forecasted, he began to search for indicators which had similar forecasting ability. Within a year, his first newsletter was launched,... More
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  • Pulling The Trigger

    ...the BUY or SELL signal has been issued. All you need to do is call your fund company or broker, or log into your online trading account and click on the "Trade" button.

    But right at that moment, all the doubt and second-guessing comes to a head, and the buy or sell signal is never executed.

    Sound familiar? It's probably the most common heartache faced by market timers and all market traders, and is only compounded when it turns out that it would have been a profitable trade.

    Decisions, Decisions, Decisions

    Do any of these sentences sound familiar? Have you said these same words?

    1. The timing signal says one thing, but this other indicator I have says another.

    2. There is absolutely no reason the market should move in that direction. Everyone knows it... look at the current market sentiment!

    3. What if the signal is wrong? What are the consequences?

    Suddenly you become very good at second guessing. You can easily find a few dozen reasons not to execute the signal after all. You even feel good about "not" taking the trade... at least for awhile.

    Perfection Does Not Exist

    Uncertainty is a powerful emotion that can weaken the resolve of even the best of market timers. Some things you need to remember are:

    1. At no point in time will all indicators be in agreement. That's just the nature of technical analysis. You are following a timing strategy that makes money over time. It is not always right, but it is profitable and it outperforms the market. That is what you need to focus on. Perfection does not exist in market timing or trading.

    2. The obvious or logical buy or sell signal is not always the profitable trade. Sometimes the market is easy to read, such as during a long trending bull market, but sometimes its true nature is completely hidden.

    3. All actions in the market happen for a reason. We may not always understand the cause, but we really do not need to! All we need to do is execute the trades and the profits will follow.

    4. There is NO tested and proven timing system that is perfectly accurate. As for the consequences of being wrong, that's why you are using the strategy in the first place. FibTimer timing strategies are designed to NEVER allow losses to accumulate.

    Then Again, What If The Signal Is Right?

    The next time you feel uncertainty sapping at your will power, read the below sentences. Print them out and tape them to your computer monitor if it will help....

    1. The timing signal says one thing, but this other indicator I have says another... However, the market timing strategy has a proven success rate over time, and not all indicators will be accurate at all times. So, I will execute this buy or sell signal based on the historical success rate of the timing strategy.

    2. There is absolutely no reason the market should move in that direction... However, there was no real reason that the stock market should have made 50% gains in 2009, and yet it happened. I have to trade what the market is doing rather than what I think it should be doing, even if the reason is not clear.

    3. What if the signal is wrong? What are the consequences?... Then again, what if the signal is right? What are the results if this trade is successful. Remember that no one knows ahead of time when the next trend will begin. If they did, the trend would already have started.

    Pulling the trigger may be the toughest thing to do, but it's also crucial to successful market timing. It's better to take action, than it is to sit back and let the market pass you by. The trade you do not take, will likely be the trade that makes most of the profits for the entire year.

    Sep 26 2:09 PM | Link | Comment!
  • The Perfectionist Trader

    Perfectionism may help some people succeed in many other careers. It is often the difference between success and failure.

    We have all been brought up knowing that we must strive to be all that we can be, and to put everything into achieving our goals.

    But perfectionism can be fatal in market timing (and all trading). Ironically, it leads neither to higher performance nor greater happiness. Anyone who approaches the financial markets with the intention of winning on every trade, or even on most trades, is in for a huge surprise.

    Perfectionism can destroy your enjoyment of market timing. The perfectionist needs to be a winner in all or most of his or her trades. A losing trade may escalate to a panic-like state. It can even cause you to miss buy and sell signals out of fear of the results.

    The drive to be perfect becomes self-defeating, as the individual often places the intense pressure on himself, which can become crippling.

    Fear Of Failure

    Probably the biggest obstacle to overcome as a market timer is the fear of failure.

    If you have a perfectionist mentality when market timing, you are really setting yourself up for failure, because it is a given that you will experience losses along the way.

    If you cannot take a loss when it is small, because of the need to be perfect, then the loss will often grow to a much larger loss, causing further pain for the perfectionist market timer. Holding onto a losing position, in hopes that it will return to break even, is a sure fire path to losses.

    Trying To Control Uncontrollable Factors

    Perfectionism causes timers to attempt to control uncontrollable factors in a trade (examples are; waiting for all the risk to be out and everything to look perfect, hoping or "willing" a better outcome by doubling down on a loser, cashing in on a profitable trade too quickly to be able to assure a gain, and many more).

    When a market timer focuses on such uncontrollable issues, he or she is more likely to tighten up and not be able to pull the trigger when a new buy or sell signal is generated.

    And remember, most buy and sell signals are generated when the prevailing sentiment is the opposite of the signal. That makes them harder to follow. But follow them you must if you wish to succeed.

    Profits Are Achieved Over Time

    We must remember that when timing the markets, it is the "total" gains achieved over a period of time that makes you a winner. Not any single trade. In fact, if losing on a trade is something that will cause you to second guess your next trade, you are very likely to lose money over time.

    Perfectionism will eventually cause you to second guess and skip trades. It will grow into a fear that will hinder your ability to profit.

    The only way to conquer fears. To control the emotions of fear and greed which make most traders lose in the financial markets, is to follow an unemotional timing strategy.

    This is what we do here at FibTimer. Unemotional strategies that follow trends will never miss any sustained trend. This is why committing to a tried and true timing strategy is the only way to win in the financial markets.

    When following a strategy, you are not swayed by fear or greed. You cannot be moved by perfectionist tendencies. The strategy makes the decisions. Emotions are avoided. But you must commit, in order to succeed. Bypassing one's ego and committing is tough to do. But in doing so, you beat the market and profit.

    Sep 19 4:28 PM | Link | Comment!
  • Enhance Gains With Timing Diversification

    As we have written so many times, "market timing is the following of a long term strategy to profit from the financial markets, that also protects us from the inevitable down trends that occur along the way."

    Many investors, who understand the potential of market timing, pay little attention to the potential of diversification. Many novice market timers jump right into an aggressive timing strategy with little thought about how they will handle a period of losing buy and sell signals.

    But there is a way to jump right in, and also realize the long-term potential of even the most aggressive strategies. It does require a bit more work, but not all that much. Just a few minutes a day to check for changes and make adjustments.

    Aggressive Market Timers Can Benefit

    Many market timers already follow well-defined investment plans that include diversification. But as we just discussed above, some do not.

    If you are one of those who do not... consider changing. Diversification is not only for those who are afraid of volatility. It has an important place in even the most aggressive of portfolios.

    We have been market timing since the early 1980s and although we are quite aggressive, we diversify our timing funds, not just for safety, but also to "enhance" our profit potential.

    Those who follow our Bull & Bear Pro Timer strategy will make a great deal of profit over long time frames. Because the markets tend to trend most of the time and the aggressive strategies will catch all trends in "both" directions.

    But non-trending markets can be quite frustrating, and aggressive market timers in our experience, become frustrated more quickly than most.

    Aggressive timers.... try this strategy: Use the Bull & Bear Pro Timer strategy for 20% and no more than 30% of your timing portfolio. Use the Sector Fund Strategy for the other 70% to 80%. Or our Diversified Portfolio (discussed below).

    Although the sector funds go to cash on sell signals, these industry specific funds are big winners when they trend. Often they will trend much further, by 100% to 200%, than the rest of the market.

    When the bear growls, you will make money, but have only a small percentage of your timing portfolio at risk.

    During a bull market, you will be fully invested most of the time, except in those few industry sectors that are not doing well.

    Plus, we have a Diversified Portfolio available that has posted excellent profits for many years. You can also consider this strategy and not even worry about which sectors to select. We have done the work for you!

    Diversified portfolios have a dramatic effect in controlling volatility and drawdowns. Yet they can be extremely profitable over time. The best of all worlds.

    Conclusion

    Consider at least some diversification for your market timing funds.

    Diversification can dramatically help control volatility and drawdowns.

    Diversification, when properly applied to your portfolio, will actually enhance your profit potential over time.

    Sep 12 10:20 PM | Link | Comment!
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