Market Timing,
Do You Have What It Takes?

Market timing works, and it works well for people who actually practice it as a discipline. In theory, every investor is capable of following the disciplines of timing. But not everybody has the right emotional makeup to do timing right. In real life, many people who try are ultimately unsuccessful.

Timing puts investors on the front lines, face to face with the realities of the market, every business day. To be a successful timer, you have to buy and sell without flinching even when you don’t feel like it. You have to follow your discipline even when you’re sure it’s a mistake.

You’ve got to do it even when you don’t understand why your timing system is telling you to act.

Perseverance

Timing can get you in real trouble if you try it for awhile, become discouraged and then abandon your plan in favor of something you find more palatable.

If you let your feelings guide you, you’re likely to bail out of a timing strategy at the very worst time, when your investments are down.

Can you adopt a strategy and stick to it for the long term? Can you follow the system regardless of how you feel about it and regardless of what’s going on around you? Can you resist the temptations to act on impulse? Can you ignore the many "hot tips" you may come upon every week?

Accepting Imperfection

Imperfection is one of the media’s biggest criticisms of timing. When you are underperforming and experiencing losing trades, that media criticism may shake your confidence.

The media often says market timing requires you to be right twice: when you buy and when you sell, in contrast to a buy-and-hold approach in which you have to be right only once: when you buy.