Simple, Effective Market Timing Approach
As detailed in the link below, here is a simple market timing approach that could prove to be quite effective for you. Stock-Net takes a look at this published market timing method that could be easily applied to your investment accounts.
The market timing system described in this article is very simple, and, as described, is applied to the NASDAQ market: Sell at intervals of 25% gains, and buy on intervals of 10% market drops. On the surface, this system may seem too simple to be effective, however, beneath the surface of this system, there are some positive investing fundamentals.
For one thing, this system enforces the “buy low, sell high” philosophy. While “buy low, sell high” sounds good, it goes against what emotions may tell you while watching the market. For example, many investors feel the excitement of a market advance or of watching a hot stock climb day by day. When they finally succumb and invest based on their ‘good vibes’, the stock or market is often near its peak. Similarly, the pain of watching a stock you own decline day by day, watching your losses steadily increase, can become too much, causing many investors to sell out, usually close to a bottom. Following your emotions in these cases typically lead to ‘buy high, sell low’, the opposite of what should be practiced.
To resist emotions-based investing requires strong discipline, and a systematic, objective, market investment approach helps provide structure. So, as we now reconsider the simple “Buy 10% dips, Sell 25% gains” approach, we now see that it fits very well within the “buy low, sell high” fundamental philosopy, and could be a good approach to adopt for your future investments.
Read the full article here.
