Following The Crowd...
To Conform Or Not To Conform?
Humans have a natural tendency to follow
the crowd, but when timing the markets, following the crowd
can often result in losses.
Unless you are in the middle of a long term trend, it usually doesn't work
to conform to the masses.
Expert market timers know how to spot trends and they make sure to climb on
board and profit. But often, the very same buy and sell decisions, which must
be executed to jump on board that trend, are in direct conflict with current
market sentiment.
It is not easy to make that trade when it conflicts with what seemingly everyone
else is doing.
Interestingly, your ability to break away from what the masses are doing, from
current sentiment, may have a lot to do with your personality.
Following The Crowd
There is safety and comfort in numbers. In following the crowd. Across the
generations, people learned that survival depended on banding together and
working as a group.
All humans inherited this legacy, and it is shown in the security we feel when
we follow the crowd.
The most successful members of society have seen the virtues in following the
crowd. They have learned to look for rules to follow and to decide which standards
to strive for. Blind obedience to authority may not be beneficial but compromise
is.
"Trends
are created by the masses. Those same masses
who are buying stocks at the top of a rally,
and selling stocks at the bottom of a correction." |
To be successful, it was vital to protect
one's self interests yet also stay within the bounds of
acceptable behavior.
Although you've been frequently warned about the pitfalls of following the
crowd, it's important to recognize that it is a survival instinct that is ingrained
not only in humans, but in most animals too. Think of herds of deer, flocks
of birds, swarms of insects, schools of fish. There is safety in numbers
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Going Our Own Way
Although following the crowd isn't bad all the time, such as during a long term
rally, there are times when a market timer should not follow the crowd.
If all we had to do to be profitable was follow our instincts, we would likely
be making the same buy and sell decisions as the vast majority of traders. But
just as the vast majority of traders are NOT profitable... as market timers we
want to "break away" from their emotional trading and BE profitable.
At Fibtimer, market timers trade market trends. Trends are created by the masses.
Those same masses who are buying stocks at the top of a rally, and selling stocks
at the bottom of a correction.
This means that most of the time, as market timers, we must go our own way. And
right there is the crux of the problem.
As soon as our timing strategy, which is NOT based on the emotions of the masses,
issues a buy or sell signal contrary to the current sentiment, our very human
survival instincts kick in. We want to STAY with the crowd. It is hard to do
what your instincts tell you not to do.
But those market timers who are successful, have learned to do just that.
Breaking Away From The Masses
We WANT to follow the masses. It is comforting.
But if we want to profit when the masses do not, we must learn to push down those
same instincts which have made us successful in life, and refuse to allow them
to control our buy and sell decisions.
It is true that the crowd is often right... until a turning point occurs. But
when the markets turn, the crowd holds on, often until most if not all their
gains have evaporated.
Going against the crowd takes a special kind of person, a person who isn't afraid
of risk but doesn't seek it out, a person who looks inward only, and doesn't
need reassurance from others.
FibTimer has spent years developing and fine tuning market timing strategies
that are profitable. Look at the historical trading results of individual trading
strategies (at least 10 years of real-time trades are posted for each strategy).
These results can be yours, but you must commit to trading the strategies for
the months and years necessary to realize them.
Break away from the masses and you too can realize the profits that we have achieved
over the years.
Recent articles from the Fibtimer market timing services;
© Copyright 1996-2017, Market Timing Strategies, Inc.,
All Rights Reserved.
Fibtimer reports may not be redistributed without
permission.
Disclaimer: The financial markets are risky. Investing is
risky. Past performance does not guarantee future performance.
The foregoing has been prepared solely for informational
purposes and is not a solicitation, or an offer to buy or
sell any security. Opinions are based on historical research
and data believed reliable, but there is no guarantee that
future results will be profitable. |