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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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  • The Impulsive Trader

    The Stereotype

    We are all familiar with the stereotype of the impulsive trader. Traders who are impulsively looking for trading thrills, while telling themselves they are doing it to make a profit.

    The rush of adrenalin that comes from making the "big" trade and then watching to see if it is followed by a "big" win.

    It is not so different from betting at the race track. It is far removed from what is required for successful market timing.

    Impulsive market timers take trades because of emotional responses to news events, market rallies, or market sell offs, because they "feel" they know what is going to happen next in the markets.

    They take trades not because the trade is required, but for the thrill of the trade itself. All risk controls are ignored, no logical trading strategy is followed, and no exit strategy is prepared ahead of time.

    Of course anyone can act impulsively at times. But in the investing world, impulsive trades are almost always losing trades. Impulsive trading has led to the outright ruin of many traders.

    Delaying Gratification

    An interesting test was once run to measure a person's impulsive tendencies:

    Participants were asked to decide between taking an immediate, small monetary reward (that is, $100 right now) or a larger reward given later, $500 in six months.

    There is little harm in impulsively going for a latte instead of your usual morning coffee, black with two equals. Impulsive people tended to take the smaller, immediate reward. They have difficulty delaying gratification. They can't wait for the larger reward. They want what they can get as soon as possible.

    Even disciplined people can act impulsively when the conditions are right.

    Yet while some impulsive decisions may have little effect on one's life, impulsive decisions made when trading the stock market can have major negative consequences.

    Compulsively Impulsive

    Market timing, and all successful trading for that matter, requires that investors clamp down on emotional impulsive behavior. Market timing is possibly "the" perfect example of unemotional, non-impulsive and non-compulsive planning. Timers look far ahead in time, planning for gains that may not be realized for months. If in cash during a bear market, actual profits may be postponed years.

    Instant gratification is the exact opposite of what market timers must expect. Those who think that long term buy-and-hold investors hold the edge in long term planning are not correct. It is market timers, following a plan that takes years to unfold but offering gains far in excess of a simple buy-and-hold, who have the real long term strategy.


    Impulsive traders will have great difficulty being successful (profitable) market timers. Market timing is the non-impulsive execution of a planned strategy, that can only be successful over time.

    Market timing requires adherence to a trading strategy that requires trading not when you feel the urge, but only at specific points in time when your trading strategy tells you to do so. And, those times are often in direct conflict with the prevailing market sentiment.

    Impulsive personalities face many difficulties. But in investing, be sure to hold those impulses at bay if you want to successfully beat the markets.

    Sep 25 12:22 PM | Link | Comment!
  • The Grass Is Not Greener On The Other Side

    As market timers who trade trends, we are always on the lookout for a new indicator or strategy that might give us a better edge and improve results. Education and research never end.

    Many hours are spent testing every conceivable timing method. We study suggestions submitted by subscribers (always appreciated), ideas garnered from analysts seen on TV, books offering trading strategies and sometimes spend hours just trying to improve current strategies.

    You name it and we have read it, studied it and spent many hours researching it.

    Changing Methodologies To Meet Current Market Conditions

    A good friend emailed the following, "A trader puts himself a great risk of failure trying to guess what the markets are going to do and changing methodologies to meet current market conditions."

    How true. Yet so many investors do just that.

    They will follow a timing strategy, but when the strategy makes a move they are not comfortable with, or the strategy takes a loss, they either hold back on that buy or sell signal, or search for another market timing service that agrees with how they feel at the moment.

    They search for someone who will "promise" huge gains. Who will say they have achieved unrealistic profits over previous years. Who will promise them the world (just send your hard earned dollars).

    We emphasize "promise" because so many services will do just that to entice you to subscribe.

    We personally watched a new market timing service, who's owner asked us for advice (and who's service will not be named here), post years of incredible gains, all achieved by back-testing. Gains averaging 60% to 80% a year every year!They are out there. We have seen so many websites offering guaranteed profits of 50%, 75%, 100% (or more) a year we have stopped looking at them.

    Some actual statements copied from market timing websites, "up over 1000%," "gains averaging from 61% to 263% annually," "Up 1500% in 4 Years," "annual returns above 100% with only few trades a month," "up over 900%," "97% Winning Trades."

    They started their new service and by the year's end had achieved a loss. Real time trading is completely different than back-testing. Anyone can back-test and achieve wonderful results, but real-time pits you against the real world.

    Every time we are told of a new service that has achieved spectacular results, we check how long they have been in business. Usually it is less than a year. But they are posting trades going back many, many years. Is this not a bit suspicious?

    Getting back to that new website, at the start of the new year, those losses disappeared.
    I looked. They are nowhere to be found. All I could find were beautiful charts showing how much you would have made, had you followed their strategy for the last ten years.

    It is so easy to make your results look better than they are.

    Please do not fall for such scams.

    Making money in the stock market is not easy. It takes hard work and patience. Anyone who says they have the key to easy money is lying. We received an email recently from a service advertising 288 winning trades with only 3 losing ones. Sure... There are people still buying the Brooklyn Bridge too. At FibTimer we tell all our subscribers that losses are inevitable in trading. The trick is to keep them as small as possible.

    We also post every trade, and keep those trades posted on the website for years. Every strategy has a link to a "Trading History" page with complete trade history and details for that strategy.

    If achieving profits in the stock market were no more difficult than going shopping at your local supermarket, everyone would be a billionaire.

    FibTimer offers solid results by trading "all" trends, for subscribers who "stay" with our strategies and do not exit at the first small loss or inconvenient news event.

    The Grass Is "Usually" Greener During Drawdowns

    Typically, market timers experiencing a drawdown are most tempted to change methodologies. If the grass is always greener, it makes sense that it appears vivid green when your strategy is experiencing a loss.

    But changing methodologies mid trade is almost always a losing proposition.

    Traders who change strategies during a drawdown are attempting to "forecast" what the market will do next. There is no way to do this consistently, so the odds are, the change is a mistake. ALL strategies have periods when the markets move against them. If traders think otherwise, they are headed for losses.

    You can always find an indicator that worked perfectly over the prior weeks or months. It is easy to find an accurate forecaster "after" the fact. It is an entirely different matter being accurate in real time and then doing it consistently.

    Emotional decisions are almost always losing decisions.Emotions are the primary reason for changing a good strategy mid trade. We have written so many commentaries about emotions, this may be repetitive to many of our subscribers, but it is extremely important.

    Trends are where the money is made. They last longer than anyone expects, and usually no one believes them when they start. They last months, or a year or more. Take a look at a long term chart of the markets. One that covers ten or more years. See any trends in there?

    Don't Be Misled By False Promises

    Because no one can accurately forecast the future, some trends will fail. But at FibTimer we exit those failed trends quicklyl.

    As long as "every" trend is traded, trend followers will "always" be fully invested in every real trend. They will "never" miss a trend!

    Those who stayed the course with Fibtimer during the 2008-2009 bear market realized solid gains. And over following years those gains have multiplied to become huge gains.

    Trend trading is the sure path to consistent long term profits. Strategies based on any of the many, many indicators are subject to periods of time when those indicators fail. Do not be misled by anyone who promises he or she has found the perfect indicator. It does not exist.

    Use common sense and stay with the trends to ensure you are "never" left behind in any rally, and are always protected during a bear market or prolonged decline (or profiting in a bearish position).

    Sep 18 12:04 PM | Link | Comment!
  • The Desire For Immediate Success

    While the desire to succeed in market timing is perfectly fine, the desire for immediate profits and winning trades is not.

    The desires that motivate your trading could mean the difference between success and failure. We market time the financial markets to make money, not to satisfy our emotional needs.

    Motivated By Immediate Rewards

    Very simply, the market is unlikely to hand them to you. Although market timing is all about being profitable, it is not about satisfying our emotional needs. Rather, it is the following of a rational plan to create wealth over time.

    A winning market timer must tirelessly execute a trading strategy that will often come into conflict with the timer's emotions. The outcome of any one buy or sell may not produce a profit. It's quite possible that the overall outcome of a series of buys or sells may not produce a profit. It's essential that these possibilities be acknowledged.

    People are motivated by rewards and in modern society that usually means money.

    The more money we are offered, the harder we work. Perhaps you were attracted to market timing because of the large potential profits you can make over time. It's natural to want to receive a reward for your hard work.

    But if you expect an immediate reward for your effort and it isn't forthcoming, you'll be frustrated and disappointed. And when it comes to market timing, immediate rewards aren't always there.

    For example, everyone expects to get paid on the date their paycheck is due, but have you observed what happens when a paycheck is late? Everyone is quite frustrated and some people can get very angry. People were expecting a hard earned reward but received no reward.

    Unless one has the right perspective, market timing can feel that way also. One may put in an enormous effort and receive no "immediate" reward for it.

    If one is "expecting" an immediate reward, it can be frustrating and disappointing when it does not appear. That is why it is important to take the proper perspective with market timing, and the proper perspective can only be based by looking at timing results over a long time frame.

    The Big Picture And Laws Of Probability

    It is essential for a market timer to think in terms of the big picture, and in terms of probabilities. You must realize that the outcome of any one buy or sell signal is not significant. It's the outcome over time that matters.

    The more trades you make with a winning trading strategy, the more the law of averages will work in your favor, and across the series of trades, you'll be profitable.

    Market conditions, as we all know, are not always conducive to our plans. This is a reality of market timing and it's necessary to prepare for it. If you are aware of this, you'll be less likely to react emotionally to losing trades, and also less likely to make bad decisions when they occur.

    Seeing the big picture, and sticking to the trading plan, are the keys to timing success.


    If you anticipate that you won't win on a single buy or sell signal, you will not feel disappointed when it happens.

    If you acknowledge that you may not profit even after a series of buy or sell signals, you will similarly be able to deal with it, bounce back, and be ready to take the next trade.

    But on the other hand, if you aren't prepared for these possibilities, you'll feel frustrated and disappointed. You may feel like giving up on timing.

    Some market timers hit the jackpot and start timing right at the beginning of a profitable trend.

    Those who started in mid 2008 and took our bearish positions made immediate huge profits. Those who started in early 2009 made profits in excess of 50%. Those who started in 2010 through 2013 are nicely profitable but those who started in 2015 are dealing with, potentially, the beginning of a bear market and the volatility has so far negatively affected profits.

    But, typically, we start our market timing during difficult market conditions. Certainly the conditions right now would be labelled as difficult.

    Our strategies identify and trade trends. When a trend is in place, then we profit.

    The right perspective goes a long way in coping with the inevitable hardballs that the market throws at us. Those who stay the course reap the rewards over time.

    How do we post the excellent trading results that have been attained in our various timing strategies? Because the reports follow a disciplined plan. They follow the buy and sell signals without question. No if's, and's or but's. Accordingly, over time, they show the profitable results of sticking to the plan.

    We do not leave after a loss and then return after a large gain, thus locking in the loss and missing the gain. Those who allow emotions to rule their trading tend to lose money in both up and down markets, an amazing but common feat.

    Over time, disciplined trading becomes easier. But be careful not to minimize the importance of self-control and discipline. The more disciplined you can be, the more profits you will realize.

    Sep 11 2:56 PM | Link | Comment!
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