An individual investor needs to safeguard money even when the markets fall back. One should master the techniques to "to time" the market when the market downturns, due to unpredictable, market-spooking world events. Successful market timers are those who know how to invest for the market as a whole, not for its varying phases. Such investors know what is security and long-term market safety.
Market moves up and down and it is the never-ending cycle. The important issue is at what time you begin your ride and the time you decide to disembark. When you trade with wrong sense of timing, and if in the meantime the bubble bursts, you will be one of those investors battered by the market.
Some of the beliefs of the successful market-timer are:
Analyze the advice of the financial media; consult the broker, before finalizing the strategy for entry and exit for the trades.
Knows the value of outside guidance like financial consultants and avails it at the right time.
Knows why markets behaves the way they do. Will not question it unnecessarily:
Has a realistic expectation for investment returns.
Discipline is absolutely necessary; it is not a dispensable tool as per the imaginary beliefs of the investor. Undisciplined investor will pay through his capital and the day is not far off when it will be totally wiped off.
Every strategy will have an element of loss. Incurring loses is part of the trade.
Has knowledge about the underperforming shares; believes over the years, they will substantially gain.
There is no permanent good time or permanent bad time for an investor. Only permanent effort on the right lines is the truth.
Some investments are deliberately done for a long haul. Retain confidence in them, when the scenario in the market is discouraging. The market will prove worthy of your trust soon.
Good decisions are hard to take. But once taken, they will end up in huge profits. Ignore print and electronic media, especially those channels which cater to the emotions of the investors regularly. Let them do their business; I will do mine and not execute any trade that does not stand the test of analysis.
While executing a timing strategy, frequent trades are necessary. A series of small losses may happen. That is part of the game.
Will not regret for the lost opportunity! Market has enough of them. Will cultivate forward looking approach, instead of worrying over the spilled milk!
Need not rush through the trades all the time to gain profits! Will not change the strategies too often! Trade with patience!
Forgets the losses immediately and only learn lessons out of the mistake committed. Will not waste precious energy and brood unnecessarily.
Luck lies in bed; labor works hard. Never cultivate the feeling that one is unlucky.
Will not allow mind to settle in negativities! Never imagine that something tragic will happen and the trades will go against. No difficulty in accepting the reality of being wrong. Faces challenges with equanimity. Will not blame others; the strategy, the market volatility etc. Accepts responsibility! Knows the importance of timing strategy and provides cut loss limits to each share in the portfolio.
Giving up midway is not the right approach for a good market timer. Timing strategy requires patience and foresight. Paper trading is good but it achieves the limited objective. You are relaxed when you do this activity, as you know that you are neither gaining nor losing in real terms. Real trade will add to the sharpness and toughness of the market timer.
Successful market timer does not play only the game; he plays the game to a plan. He maintains the perfect level of psychological balance.