Seeking Alpha

TimerFrank's  Instablog

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:
  • 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!
  • 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.

    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!


    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.

    See our 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.


    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.

    Jul 31 3:33 PM | Link | Comment!
Full index of posts »
Latest Followers


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.