When Should I Consider Stock Market Timing Strategy?
There are several stock market strategies that have been tried ever since the stock market opened. One strategy is to buy the stock and hold it through thick or thin. Try to pick value stocks which are performing poorly today but will turn around sometime in the near future. You can also use stock market timing as a stock buying strategy.
Stock market timing strategies for buying stocks does not advocate buying stocks and just letting their portfolios gather dust. Some stock market investors do not hold back during lows and sell on highs; they avoid the lows and only plan to sell when prices are at a peak. Playing the stock market depends on an erroneous idea that stock prices are highly predictable. Those who believe in market timing insist that trends in the stock market can be applied to specific times, specific stocks and predictable price fluctuations. Analysis and data is used to predict market fluctuations and prices and these types of analysis involve both fundamental and technical strategies.
Fundamental analysis concentrates on all information of a specific company. This includes financial statements, competitors and percentage of available market as well as management, debt structure, sales, and growth potential. This same fundamental thinking also applies to penny stock trading. Technical analysis looks at historical prices for stocks of specific companies and uses that information with other variables in order to make a decision. Stock market timing is used to predict future patterns on trading prices of specific stocks.
Those who are proponents of stock market timing strategies for buying stocks like technical analysis which draws correlations between current market conditions and historical stock prices. Many spreadsheets, data analysis, and charts are used to find potential trends in the market. The Down Jones stock market report is also a tool used by timing strategists. This index shows how thirty large and publically owned companies based in the United States trade during a standard trading session in the stock market. It is one of the most closely watched benchmarks that track certain high profile companies’ targeted stock market activity. The Dow’s importance is to gauge the performance in the industrial sector but is highly influenced by domestic and foreign political events and natural disasters.
Market timing can also be applied to commodity trading. There are over thousands of potential stocks and funds but only about forty commodity futures. The potential to make large profits in a short period of time is timing leverage. Watch the markets, follow historical trends, and buy when commodities are low and trade when the prices rise. It is a matter of timing.
Stock market timing sounds good, but has a fundamental problem. It is pure fantasy according to investment experts. If you have the ability to see the future of stock prices fluctuations with any degree of certainty then all of us would be billionaires. Market timing will always be a strategy however with the advent of timing software, historical records and data pundits. There is no sure way to predict the viability of any stock for any company; you can only go by historical records, yes timing, and current world economic situations.