Market timing is both an art and a science. It can contain elements of objectivity sprinkled with a bit of subjectivity. When it comes to timing market trades, the more you know and the greater your experience is, the better chance you have of keeping your risk low and increasing your profit potential.
Recently I read an article where the author stated that 'market timing does not work.' This individual qualifies his statement by saying that he has been involved with market timing for 30 years. Therefore, with those kind of credentials who can argue with this statement?
Interestingly, I have been involved in market timing also for 30 years, and have been teaching it for about 25 years. Perhaps an opposing opinion with similar credentials will provide a more balanced view on this subject.
When it comes to market timing, sometimes it works for some and it does not for others. This appears to be the case when you read online from some that it is possible to time the market and from others that it is not.
Personally for myself and my clients, we have experienced real market timing over and over again. Whether it be by using the simple application of Fibonacci retracement ratios or simple trend line analysis, cycle turn dates or the oscillations of a MACD indicator, finding the right time to enter trades is not only possible, it can work consistently for the skilled chartist.
It should be noted that good market timing does not translate itself into winning trades. This article is not about the complete trade, which includes not only the entry but also the exit strategy. In addition, you need to have the correct mindset (psychology) to deal with the emotions of trading.
No, what we are talking about is the best time to enter a trade … period. From there, it is every trader for himself. Some will manage it wisely, adjusting the stop-loss at the appropriate times. Others will turn a great trade entry into a lesson in self-sabotage. Unfortunately the subject of mental discipline is beyond the scope of this discussion.
Becoming skilled at applying Fibonacci ratios will provide the trader or investor with a very nice edge in trade timing. Following the trend using simple or exponential moving benefits will help greatly in determining which direction trades should be taken.
Charting indicators such as the MACD and the ADX will provide excellent timing signals when correctly applied. Couple these tools with cycle timing methods and you not only come to realize that market timing works, it works consistently!