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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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  • 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.

    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.

    Jul 17 3:15 PM | Link | Comment!
  • Is Volatility A Four Letter Word?

    Considering the week just past, with triple digit Dow point swings almost a daily occurrence, we thought this article on volatility to be timely. The majority of investors see volatility as not only dangerous, but something to be avoided at all costs. They equate volatility with risk. But volatility and risk are two entirely different things.

    To market timers, volatility is the precursor to profits. To have no volatility would be to have no profits.

    In addition, to single out one period of time when volatility is causing losses, is to miss the big picture which shows that, over time, volatility is the main ingredient to making huge profits.

    Controlling Profits?

    Consider this example of volatility.

    Let's say that you enter the market with a starting sum of $10,000 and the market enters a substantial uptrend and you are ahead by 30%. Your original $10,000 is now worth $13,000.

    Then the market reverses and you drop down to $11,500. Is this a reason to panic?

    If the trend is still intact, it is not.

    As trend followers, if we are still in the same trend, we may very well now move up to $15,000 or higher in short order. This is what trend following is all about... riding a trend to the end, not exiting at the first retracement.

    But many traders would be devastated at dropping from $13,000 down to $11,500.

    Too many market timers get upset for the wrong reasons. There is no way to control how profits are made. We can only ride the trends, as far as they will go, when they occur.

    Market timers who follow trends have greater upside volatility than downside volatility because they exit losing trades quickly with small losses and stay with winning trades until the profitable trend ends.

    The important thing to remember is that we stay with profitable trends, often for a long period of time.

    When we start a profitable trend, we often make our profits in quick bursts of "volatility." That is why volatility is our friend, not our enemy.

    We generate strong profits by correctly determining profitable trends and minimizing the cost of failed trends with quick exits.

    When we have periods of sideways, non-trending markets, where there is no long term trend, we do not allow losses to accumulate.

    When the market does break out into its next big trend, whether it be to the upside or to the downside, that is when we make our profits. And we do not exit the trend early. Exiting to protect profits assumes you "know" ahead of time when a trend will end.

    No one knows ahead of time.

    So we must allow the trend to complete before we exit. That means we will catch the "majority" of the trend, when it occurs, as profits.

    Huge Volatility Equals Huge Profits

    Invariably, the best profits come with the highest volatility. That means as trend followers, we must react to changes in trends, stick to our guns and make all the trades.

    We may have some small losses when trends fail, but when the market finally breaks out (or breaks down), we make huge gains by riding the new trend as long as it lasts, to the upside in our bullish only strategies, and in both directions (long and short) in our more aggressive strategies.

    By following a set of rules, we do not have to agonize over protecting an open profit, nor do we need to constantly change our strategies to find ways to reduce volatility.

    The question is not how to reduce volatility, but how to manage it with proper risk management. This means not allowing failed trends to accumulate losses, and not exiting profitable trends early.


    Skeptics mistake volatility, used by trend timing strategies to make profits, as negative. But the opposite is true.

    There is a big difference between volatility and risk.

    Many investors see them as the same. But embracing volatility while controlling risk (cutting losses) is the key to successful trend timing.

    We may see periods when profits are nonexistent for months or more. We may have several failed trends that generate small losses. But successful trend timers see these periods as the base for the next huge profitable trend.

    In fact, we know extremely successful market timers who get excited when they see periods of sideways, non-trending markets as they know what comes next. The next huge trend is right around the corner! The longer the sideways market, the more profitable is the coming trend.

    Unfortunately, many who do not understand the logic of market timing by trading trends are not around when the big trends occur. They are sitting at their computers trying to find a new strategy that will guarantee gains while never allowing losses.

    This is an impossible goal.

    Losses are inevitable. But so are the gains that are achieved by trend following strategies, taking the trades, minimizing the losses when trades (trends) fail, and riding the inevitable big trends for all they are worth when we get them.

    Jul 10 3:47 PM | Link | Comment!
  • Being Right? Or Making Money!

    When a market timer (or any trader or investor) makes a trading decision based on a news event, fear of losing out on a rally or of losing money in a sell off, or even the stock broker neighbor's trading tip, he or she is trading on emotions.

    Wishing Your Were Right

    Trading on emotions, news events, market rallies, etc. is basically trading on a WISH.

    There is no basis for the trade, at least none that can be counted on to last. There is nothing but "the moment." The trader wishes he or she will be right.

    Odds of winning? Slim.

    Trades made on wishes have no plan behind them. There is no exit strategy. Invariably, the trade is held until losses become painful enough to force the trader to emotionally sell at a loss.

    In fact, probably the worst thing that can happen is for a market timer to make a trading decision based on such an emotional event, and then be profitable the very first time!

    Not that there is anything wrong with being profitable. But very soon that same trader will be looking at a losing trade, and the confidence of that first win is likely to cost him or her dearly.

    Making Money

    No one makes money on Wall Street without a trading plan. No One!

    Sure, the person with an initial profit can feel great for awhile. And really, really long term investors, those who can afford to watch several bear markets whack 50% to 80% off their savings every 10 years or so, will eventually make money.

    When we say long term, we mean 20 to 30 years! If you sit tight, you will likely make a profit. That is, as long as you do not panic and sell at a bottom. or become greedy and "double up" with margin (almost always at market tops). And, as long as you do not reach retirement age at the same time a multi-year bear market starts.

    There is only "one way" to be certain of being profitable.

    By having, and following absolutely, a finely tuned trading plan that capitalizes on "trends" in the stock market.

    Market timers who have a strategy for entering and exiting positions, and who follow their rules, on a timely basis without hesitation, make money.

    Those who trade by daily news events, daily or weekly rallies & declines, and TV hype, will "always" end up losing money. Remember, for every winning trade in the stock market, there is a losing trade on the other side. Only those who follow a plan consistently make the winning trades.

    One of the most important questions you must ask yourself is:

    Do you want to BE RIGHT for a short time. Or do you want to MAKE MONEY for a long time.

    Winning Market Timers Know the Secret

    Ignore the news. Ignore the daily ups and downs. You have no control over them anyway. No one knows what the next day will bring. No one!

    Wishing will not help. Watching the financial news religiously will not help. There is just no way to know what will happen tomorrow, or even what will happen next week.

    But a successful trading plan that creates unemotional buy and sell decisions will, over time, make even the most emotional person, a successful (profitable) market timer.

    At Fibtimer, we provide the plans. All you need do is follow the signals.

    But a few simple rules do apply.

    1. Subscribers should make sure they know how each of our timing strategies works. Read the details and trading rules at the bottom of each report. They will help you build confidence in the trading strategy.

    2. Be sure you know your own emotional ability to handle trading. Aggressive strategies require more trading. If this keeps you up at night worrying, consider one of the active or conservative strategies. Remember, you do not need to trade aggressively to do well, you just need to follow the buy and sell signals diligently.

    3. Subscribers who are new to market timing should not jump right into an aggressive timing strategy. No matter how positive you are that aggressive timing is for you, it is better to start with something a bit tamer in the beginning.

    4. Diversify. It is not a good idea to place all your timing funds in one strategy. Consider three or even more. Or follow our Diversified Portfolio strategy that breaks up your timing into five different positions.

    Build confidence by starting slowly. When you are confident, you will follow the signals. And following the signals is the key to being profitable.

    Jul 02 1:50 PM | Link | Comment!
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