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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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  • Fear, Greed And Trading

    What good is a plan, if you can not, or do not, execute it?

    Fear and Trading

    How do you make decisions when those decisions affect something you hold dearly?

    Meaning, your money!

    First, fear doesn't form in a vacuum. It is a learned response. In the case of market timing, when you have a buy or sell signal that goes bad, the regret and frustration can carry over into the NEXT buy or sell. Or worse, the fear is so consuming, that you don't even enter your next trade.

    -- Genius loses money.Of course, Murphy's Law dictates that the buy or sell signal you don't enter is the one you should have entered, which only compounds the fear and frustration.

    This particular problem is made much worse if you enter every buy or sell with the "expectation" that it must be profitable.

    If you believe that, then here is an important piece of information for you - "not every buy or sell will be profitable!"

    Greed and Trading

    Greed creates the opposite problem.

    After several winning trades, the feeling of invincibility supersedes being logical. This will ultimately lead you ignore a successful timing strategy and into trades that you normally would not have entered.

    Successful market timing is only accomplished by sticking to a proven timing strategy. But entering losing trades, and ignoring your trading plan, seems to get much easier after a couple of winning trades.

    Never mistake genius for profits derived from your trading strategy.

    -- Trading plans make money.

    We All Want To Be Bullish

    The difference between being "emotional" and being "blinded" by fear and greed is indeed critical to success.

    Experienced market timers know this.

    A strategy can go for years making profit after profit, and then the markets do what they do best. They frustrate us. We enter a volatile sideways market that is virtually untradable.

    It happens. But it "always" ends. And most importantly, if we don't take the trade that hits the jackpot, it will only re enforce our fears.

    Aggressive timers are unfazed by the ups and downs of an aggressive timing strategy. Every trade MUST be taken. If aggressive trading is taking it's toll on you emotionally, use a strategy that works in all markets, like our Conservative S&P Timer.

    But keep trading. The only way to market timing success is to make the trades.

    -- Fear blinds us to opportunity.

    -- Greed blinds us to danger.

    It's important to recognize your emotions, and more importantly, how they affect your investing approach. In general, we all want to be bullish, and are eager to see any upward market movement as a rally, even when it's not.


    Are fear and greed driving your investment decisions right now? If you are trading the aggressive Bull & Bear Pro Timer strategy, but in reality you are just looking for a timing strategy to keep you invested during advancing trends, and protected from bear markets, then you are in the wrong strategy!

    Aggressive market timing is for "aggressive" timers. Those trying to wring as much profit out of the market as they can, and willing to accept short term losses as the price for achieving above average long term profits.

    If you're not sure, or you are concerned about frequent trading, I'd recommend using the Conservative S&P Timer, or possibly our Diversified Timing Strategy, which has some aggressive and some conservative positions, is the answer for you.

    Whatever you do, whichever strategy is right for you, stick to the plan!

    Aug 21 12:45 PM | Link | Comment!
  • Wishing Upon A Star

    If you had a million dollars, what would you do?

    You wouldn't have to ever work again. You could just sit on the beach and relax. You could pay all your bills and set your family up to live comfortably forever.

    What else could you wish for?

    When you wish upon a star, if you're like most people, financial freedom is one of the first things on your list.

    A crystal ball, perhaps. Or tomorrow's newspaper, just like on the television show "Early Edition." You would be able to know what the masses were going to do tomorrow. You could anticipate their every move with unfailing accuracy.

    Think how easy trading would be? Wouldn't it be nice to be able to predict the future?

    In The Wishing Mode

    It's fun to wish that we could trade more profitably, but beware, wishing "could" be a sign of desperation.

    When you are in wishing mode, you may passively wait instead of taking decisive action. Hoping for miracles and wondering if you'll ever see huge profits.

    But if you take proactive steps, you won't have to wonder. Profitable market timers do not "wish" or "wonder." They act. What is the number one proactive step? Following a tried and true timing strategy.

    Many novice market timers have trouble following a strategy. They make the decision to follow the plan, but when the time comes to execute a buy or sell signal, often at odds with current market sentiment, they find reasons "not" to make the trade. Or they delay executing the trade, and sometimes make a late entry after watching the trade work.

    But the consistently profitable market timer maintains discipline, and that means not only deciding to follow a solid timing strategy, but also trading it through thick and thin.

    With a tested strategy you can trade without fear. You do not need a crystal ball. A good timing strategy works across a variety of market conditions. It may not win on any single trade, but its methods give those who follow it that all important trading "edge."

    Murphy's Law

    When trading the markets, do you often feel that Murphy's Law says it all: "Whatever can go wrong, will go wrong."

    Have you found yourself saying, "When I take a bullish position, the market always reverses and goes down."

    Or, "When I am certain the market has topped and pull all my funds out, you can bet that will be the day a new rally starts."

    Surprise! This is "not" Murphy's Law. This is simply a trader who is trading by the emotions of fear, greed, hope or wishful thinking. He or she is not following a plan.

    A market timer who follows a good timing strategy may not always have a winning trade, but they know that the odds place them on the profitable side over time. Murphy's Law does not apply to those who follow a plan.

    Predicting What The Masses Will Do

    Can you predict what the masses will do? Sometimes, but not always. Profitable market timers, however, rely on their strategy. They do not try to predict.

    A timing strategy removes emotion from the trading equation, and emotions, as we know, are the single most common reason that timers and traders lose.

    All market timers should be students of the markets. They should study the markets and develop an intuitive feel for how they move. It is common sense to develop a good knowledge base when investing your money.

    But unless you have magical powers of prediction, a time proven crystal ball or a star to wish upon, be sure follow a time tested and unemotional timing strategy for profits.

    Crystal balls are great toys and fun for party games, but they are not tools for investing your money. Wishing upon a star worked for Jiminy Cricket in the Disney movie Pinocchio, but it does not work in the financial markets.

    Aug 14 3:57 PM | Link | Comment!
  • Controlling Impulses Key To Market Timing Profitability

    Winning market timers have learned to control their impulses. They can follow buy and sell market timing signals effortlessly. They show extreme self-control.

    Rather than give into their urges, they stick with their timing strategy knowing there will be days when they are in the red, but that over time they will be profitable and also (importantly), they will never suffer a big loss.

    Depending on your personality, you may have difficulty controlling your impulses. But whether you find discipline easy to control or difficult, there is much that can be done to ensure you follow your timing strategy.

    Regret Comes Later

    The most common way market timers act impulsively is by abandoning their timing strategy.

    Once you decide to follow a specific timing strategy, it is vital to follow it. But this can be difficult to do. Even though we have years of experience here at Fibtimer, that does not mean we do not have the urge to change a trade.

    Those years of experience have not dulled our emotions, but they have taught us to stick with our timing strategy. Like anyone else, we learned the hard way. We exited strategies with the best of intentions and with great conviction. We also lost money almost every time.

    It seems easy when you first start following a strategy, but while in the midst of a bullish or bearish position, it can be hard to stay with it.

    At any given point, you may look at the market action and think, "there's no way this trade can work."

    If you are an extremely seasoned timer, you have the experience and judgment to stay with the strategy. Novice market timers, in contrast, tend to abandon their plan prematurely, and regret it later when they find that had they been able to stick it out a little longer, they would have made a greater profit, or avoided a big loss.

    It may be hard, but novice market timers must fight the impulse to exit a position prematurely.

    The Big Picture

    The first step to gaining impulse control is to identify the "reasons" you want to control your impulses... in other words, the downside of abandoning the timing strategy.

    The obvious reason market timers desire to stay with a strategy is to maximize profits. The profits on winning trades must compensate for losses on losing trades.

    Following a well-defined timing strategy usually insures profitability overall. You will have an easier time sticking with your plan if you frequently remind yourself that in the big picture, following the strategy is the key to profitability.

    You may even want to write it down on a post-it note and stick it on your screen, so that while you are struggling to fight an impulse, you'll remember why you are doing it: The more discipline and self-control you achieve, the more profitability you'll achieve in the long run.

    Fear And Greed

    Many times impulses are difficult to control because of emotional states.

    The emotions of fear and greed are the two most compelling urges that trick market timers into abandoning a perfectly good timing strategy. Exiting a timing strategy may give you a good feeling for a day or two, but you will have joined the "herd," of millions of investors. And overall, the herd loses money.

    By self-monitoring your emotions, you can identify how they lead to impulsive decisions. By identifying how fear and frustration precede impulsive decisions, you can control these emotions and remain disciplined.

    It takes time to control emotions. Don't give up. Staying with a timing strategy through a difficult period, and then realizing you have not only beaten the market, but also your own emotions, is very rewarding.

    Staying with a timing strategy for several years, and looking back at the huge up and down market swings caused by the emotions of investors (the herd) and realizing that you not only avoided them, but steadily achieved a profit when most have lost money, is incredibly rewarding.

    Aug 07 8:34 PM | Link | Comment!
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