Seeking Alpha

TimerFrank's  Instablog

TimerFrank
Send Message
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
My blog:
Market Timing Pro
View TimerFrank's Instablogs on:
  • Beliefs Of Successful Market Timers

    Successful market timers, meaning profitable market timers, have several common beliefs that help them achieve consistent profits.

    On the flip side of this, those who are unsuccessful also have a set of common beliefs.

    It is a good idea to know which beliefs will help you to succeed, and which ones you may have, that need to be changed.

    Beliefs of Successful Market Timers

    1. I will not jump into a trade before or after a signal just so that I can be participating.

    2. I recognize that discipline is not a concept, it is an absolute necessity. The markets have a way of removing money from undisciplined market timers.

    3. I realize that what happens today, this week, or even this month, is not what is important. What "is" important is my success over time.

    4. I realize that losses are part of trading. No strategy is without losses.

    5. I accept that sometimes my investments will under perform the market, knowing that over time, they will outperform the market.

    6. I know that following a timing strategy through good times and bad are what will make me successful.

    7. I can follow a strategy for the long haul and stick with it, even when at times it is discouraging.

    8. I accept that following a timing strategy will require me to make frequent trades that may seem like mistakes. A string of small losses will not make me quit.

    9. I can ignore the mass media, which raise emotions and thus increase the risk of not executing a trade. It is often the trade that is hardest to take, that winds up being the most profitable.

    10. The markets provide a constant stream of opportunities. If I miss an opportunity, another one will follow.

    11. Keeping losses small and letting profits ride is not just a Wall Street saying.

    Beliefs of Unsuccessful Market Timers

    1. I must be trading all the time to be successful. I am uncomfortable when in cash.

    2. If my strategy is not doing what I think it should, I will make a change immediately.

    3. If I lose on this trade, I feel like a loser.

    4. If the market is rallying, I must get in even though my strategy gave no signal for it.

    5. I am unlucky.

    6. I get very upset when I miss a rally, or if I am in a bullish position when the market is declining.

    7. I dread adverse news events and constantly worry that something will happen to make the markets go against me.

    8. I can't afford to lose anything on this buy or sell signal.

    9. I can't go broke taking small quick profits.

    10. When this losing trade gets back to even, I'll dump it.

    Final Notes on Unsuccessful Timers

    Unsuccessful market timers tend to see the stock market as a place that will give them future riches and solve all their problems.

    Unsuccessful market timers have difficulty coping with the reality of being wrong. When events don't live up to their hopes, they seek to ignore them.

    "As a successful market timer, you have to move from a fearful mind set to a psychological state of confidence. "

    If their timing strategy gives a sell signal and they have losses in that position, they have a difficult time executing the sell signal and they will hold the position so that they can exit when it gets back to break even.

    When things go bad, they often exit with huge losses and blame the strategy, the timing service, the markets. Everyone but themselves.

    Many market timers give up because they are usually too quick in judging small loses as a system that is not working.

    Giving up is the most common way a market timer can lose. You will win only if you execute the timing strategy. Every trade.

    Paper trading cannot simulate the psychological aspects of trading with real dollars. Once a market timer has experienced what it is like to keep trading through a draw down and how good it feels to follow the strategy through the good, the bad and the ugly days, he or she will not be as easily swayed again by adverse markets.

    Final Notes on Successful Timers

    Successful market timers know how to follow a strategy. They know the stock market is not a game and the only way to succeed is with a plan.

    As a successful market timer, you have to move from a fearful mind set to a psychological state of confidence.

    You must use a strategy that builds confidence by keeping losses small and letting profits ride when the markets trend.

    Do not focus too much on each individual buy and sell signal. It is where the strategy takes you over years of trading that is important.

    Feb 07 10:36 PM | Link | Comment!
  • Quick Profits Vs. The Virtue Of Patience

    It is not enough to have a successful market timing strategy if that strategy is not traded with discipline. It is also not enough to trade with discipline if you are overly aggressive with those funds allocated to market timing, and cannot handle the resulting volatility.

    Many market timers think that the more they trade, the better they will do. But in reality, market timers do not need to trade aggressively to do well. Four critical issues; strategy, discipline, money management and diversification are discussed below.

    When the market has a prolonged down trend, such as the 2008 bear market, a more aggressive strategy, using bear funds, will achieve huge gains. But when the bear is not growling, a less aggressive approach usually works much better. And of course, no one knows ahead of time when that bear market will occur.

    Our very Conservative S&P Timer, which only averages about one trade per year, has a superb long term track record and was in money market funds for both the 2001-2003 and 2008-2009 bear markets.

    So, much depends on a market timer's expectations. Are you looking for gains over a long time frame, during which bear markets are sure to occur, or must you see immediate or constant gains in order to stay with a timing strategy?

    Market Timers Must Have An Edge

    At FibTimer, our "edge" is trading trends. We know that the financial markets are usually in a trend, either up or down. In fact, history shows us that they are in trends about 80% of the time.
    This "knowledge" is our "edge." We know that there are times that the markets are not trending, but that these times do not last long. We keep our losses small during non-trending markets using disciplined risk management. And, by trading every trend that occurs, we know absolutely that we will never miss a trend.

    By limiting losses, and allowing profits to ride, we use our "edge" to time the markets with great success. There is an old saying that applies here; "Limit your losses and the profits will take care of themselves."

    Disciplined Execution

    Once you have an edge, you have to be able to execute. The common trading errors of not taking trades until you see if they are profitable, or jumping the gun and taking trades ahead of time because you "think" a signal will be issued soon, can be a disaster to your profitability.

    By not sticking to a plan, you allow emotions to rule your finances, and that places you right in with the majority of investors. Those who are the cause of the market's volatility. The "herd" followers.

    At FibTimer, all of our strategies are non-discretionary. Emotions are not allowed. Our strategies offer disciplined execution of non-emotional buy and sell signals.

    The reason for following any timing strategy is to "remove" yourself from making emotional trades. To remove yourself from the herd, which is often headed in the "wrong" direction.

    A second reason for following a non-discretionary timing strategy is that is gets you "out" of losing buy and sell signals fast while limiting drawdowns. You are not subject to the psychology of trading. To holding onto a trade in hopes it will come back to profitability. Then exiting, finally, in a panic after huge losses.

    The disciplined execution of a timing strategy avoids all of these pitfalls. You just follow the buy and sell signals with the absolute assurance that your losses will be limited and you will never miss a trend. Over any fair time frame, you will beat the markets.

    Effective Money Management

    Overly aggressive investment allocations can ruin even a good timing strategy with excessive drawdowns, while overly conservative allocations of capital will not optimize your total returns.

    If you are a conservative investor who wishes to use market timing to protect against losses in a bear market, do NOT invest 100% of your funds in an aggressive bull and bear strategy that you are not prepared for. Yes, they make a great deal of money over time, but aggressive strategies do have more frequent buy and sell signals, and more frequent small losses.

    If as a conservative investor you are unable to handle those losses, you are likely to exit the trade, thus locking the losses in, at just the wrong time!

    Stick to strategies that fit your emotions. Market timers should know themselves and use timing strategies that they will be able to stick with over long time frames. Patience is the market timing key to success!

    Diversification

    Even aggressive market timers should not time 100% of their funds in a single aggressive strategy. Diversification is not just a word., it is a prerequisite to having a successful timing strategy.

    At Fibtimer, we rarely invest more than 20-30% of our own funds in bear strategies. The rest is diversified (see the Diversified Portfolio).

    Using at least some diversification takes the stress out of investing, and makes it much easier to follow buy and sell signals with discipline.

    Conclusion

    At FibTimer, we never question buy and sell signals and follow them faithfully. Over the years, our disciplined approach has resulted in superb gains. We hope that we can instill this disciplined trading into all of our subscribers.

    It does not take blind faith. What it takes is a realization that our own emotions and instincts are usually wrong, and that a non-discretionary timing strategy that trades all trends and limits losses in non-trending periods, is the most successful approach to profiting in the stock market.

    Once you realize this, you will relax and allow the strategies to successfully grow your investments as they are designed to do.

    Feb 01 3:37 PM | Link | Comment!
  • Critical Issues For Market Timers

    It is not enough to have a successful market timing strategy if that strategy is not traded with discipline. It is also not enough to trade with discipline if you are overly aggressive with those funds allocated to market timing, and cannot handle the resulting volatility.

    Many market timers think that the more they trade, the better they will do. But in reality, market timers do not need to trade aggressively to do well. Four critical issues; strategy, discipline, money management and diversification are discussed below.

    When the market has a prolonged down trend, such as the 2008-2009 bear market, a more aggressive strategy, using bear funds, will achieve huge gains. But when the bear is not growling, a less aggressive approach usually works much better. And of course, no one knows ahead of time when that bear market will occur.

    Our very Conservative S&P Timer, which only averages about one trade per year, has a superb long term track record and was in money market funds for both the 2001-2003 and 2008-2009 bear markets.

    So, much depends on a market timer's expectations. Are you looking for gains over a long time frame, during which bear markets are sure to occur, or must you see immediate or constant gains in order to stay with a timing strategy?

    Market Timers Must Have An Edge

    At FibTimer, our "edge" is trading trends. We know that the financial markets are usually in a trend, either up or down. In fact, history shows us that they are in trends about 80% of the time.
    This "knowledge" is our "edge." We know that there are times that the markets are not trending, but that these times do not last long. We keep our losses small during non-trending markets using disciplined risk management. And, by trading every trend that occurs, we know absolutely that we will never miss a trend.

    By limiting losses, and allowing profits to ride, we use our "edge" to time the markets with great success. There is an old saying that applies here; "Limit your losses and the profits will take care of themselves."

    Disciplined Execution

    Once you have an edge, you have to be able to execute. The common trading errors of not taking trades until you see if they are profitable, or jumping the gun and taking trades ahead of time because you "think" a signal will be issued soon, can be a disaster to your profitability.

    By not sticking to a plan, you allow emotions to rule your finances, and that places you right in with the majority of investors. Those who are the cause of the market's volatility. The "herd" followers.

    At FibTimer, all of our strategies are non-discretionary. Emotions are not allowed. Our strategies offer disciplined execution of non-emotional buy and sell signals.

    The reason for following any timing strategy is to "remove" yourself from making emotional trades. To remove yourself from the herd, which is often headed in the "wrong" direction.

    A second reason for following a non-discretionary timing strategy is that is gets you "out" of losing buy and sell signals fast while limiting drawdowns. You are not subject to the psychology of trading. To holding onto a trade in hopes it will come back to profitability. Then exiting, finally, in a panic after huge losses.

    The disciplined execution of a timing strategy avoids all of these pitfalls. You just follow the buy and sell signals with the absolute assurance that your losses will be limited and you will never miss a trend. Over any fair time frame, you will beat the markets.

    Effective Money Management

    Overly aggressive investment allocations can ruin even a good timing strategy with excessive drawdowns, while overly conservative allocations of capital will not optimize your total returns.

    If you are a conservative investor who wishes to use market timing to protect against losses in a bear market, do NOT invest 100% of your funds in an aggressive bull and bear strategy that you are not prepared for. Yes, they make a great deal of money over time, but aggressive strategies do have more frequent buy and sell signals, and more frequent small losses.

    "Diversification is not just a word., it is a prerequisite to having a successful timing strategy."

    If as a conservative investor you are unable to handle those losses, you are likely to exit the trade, thus locking the losses in, at just the wrong time!

    Stick to strategies that fit your emotions. Market timers should know themselves and use timing strategies that they will be able to stick with over long time frames. Patience is the market timing key to success!

    Diversification

    Even aggressive market timers should not time 100% of their funds in a single aggressive strategy. Diversification is not just a word., it is a prerequisite to having a successful timing strategy.

    At Fibtimer, we rarely invest more than 20-30% of our own funds in bear strategies. The rest is diversified (see the Diversified Portfolio).

    Using at least some diversification takes the stress out of investing, and makes it much easier to follow buy and sell signals with discipline.

    Conclusion

    At FibTimer, we never question buy and sell signals and follow them faithfully. Over the years, our disciplined approach has resulted in superb gains. We hope that we can instill this disciplined trading into all of our subscribers.

    It does not take blind faith. What it takes is a realization that our own emotions and instincts are usually wrong, and that a non-discretionary timing strategy that trades all trends and limits losses in non-trending periods, is the most successful approach to profiting in the stock market.

    Once you realize this, you will relax and allow the strategies to successfully grow your investments as they are designed to do.

    Jan 25 10:48 AM | Link | Comment!
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.