Handling Stock Market Hardballs

As a market timer, the one thing we must always remember is that the markets can, and most definitely will, throw every possible hardball, curve ball, fast ball, knuckle ball, etc. at us.

The reason we invest in the stock market is because we recognize the huge potential for profits. But we are timing in a freely traded market that is subject to the emotional whims of traders. And when money is involved, those emotions can, at times, be extreme.

We became market timers because we have realized that not only is there no easy money but also that the stock market will do all it can to relieve us of our money.

We are more than uncomfortable with the buy-and-hold approach to investing, and realize that although buy-and-hold may be fine if you are willing to wait 20-30 years, it can lead to huge losses over shorter time frames. The most current example being 2008 when the S&P 500 and the Nasdaq Composite gave up 50%. Huge losses.

The stock market is the ultimate of Big Leagues, and there are traders who understand the psychological warfare you are facing, and know how to use it to take your money.

Understanding those Big League rules, will put the winning odds back on your side. The timing strategies at Fibtimer are designed to identify and follow trends. They allow profits to ride and cut losses short. This is what the professionals do, but most individuals have great difficulty doing.

Market Timing is Unique

Market timers face psychological battles that very few people ever face in their entire lives. There are so many differences between the emotions experienced in trading the financial markets, and what we experience in our lives, that it can easily interfere with our ability to trade.

If we can identify those emotions we can take steps to protect ourselves from them, stop them from influencing us, and become winning (profitable) market timers and traders.

For example, in the workplace, working hard and expecting to be justly rewarded for it are part of the American dream. Who would argue with the logic?

But in the stock market, work as hard as you can and the markets will still reverse on you and give you losses. Make the perfect trade and it can still go bad.

This is because timing the markets is not about our work ethic. It is not about genius or luck. It is about numbers and probability.

Numbers and Probability

Toss a coin 50 times and you can expect 25 times it will land heads up, and 25 times it will land tails up. But there is no rule that says the first 7 tosses will not all come up tails.

Once we realize that over time the numbers "always" add up in our favor, we can more easily endure the short term swings. The market "hardballs."

By trading "all" trends, we keep losses small because we do not stay with a losing trend. If the trend changes, we reverse position or go to cash according to the strategy used.

The reward is that we will never miss a trend, and since the markets are in trends more than they are not, and we make larger profits when the markets trend than the small losses from trend failures, we are profitable more often than not.

It is the in-between times (trendless markets) that require market timers to understand this logic. Stay the course, make all the coin tosses, and over time, you win.

Conclusion

Scary ideas are no longer frightening after you've acknowledged them and know not only to expect them, but that they are will not harm you if you hold true to your course.

The more you can identify the scary aspects of market timing (or any trading), and prepare for every possibility, the more likely you'll be able to persist in the face of adversity.

Market timing is challenging. Many who start fall by the wayside after they realize that it is not going to make them rich in days or weeks (amazing, but some really do expect that), or after one or two small losses.

Remember, there are many timers out there who have met the challenge and have the winning track record to show for it.

Look at Fibtimer's historical trading numbers. No emotion is involved so they look great over the years. But in the short term, there were some small losses.

There are some years when profits match or are less than those of the indexes we track. But when there is a bear market, timing shines brightest. Not losing 50-80% of your savings in a single year is worth years of underperforming sideways markets.

Focus on the war, not the small battles along the way. Stick with the trading plan and you will be successful.

Recent articles from the Fibtimer market timing services;

• Discretionary vs. Mechanical Market Timing
  Strategies. Which Is Best?
• Aiming For The Moon!
• Want High Performance In Bull Markets
  Plus Safety In Bear Markets?
  Sector Fund Timing May Be Just For You.
• Following A Market Timing Strategy
• Market Timing, Do You Have What It Takes?
• Markets Go Up, Markets Go Down
• Fear & Market Timing Paralysis
  
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