Market timing—the science or attempt at harnessing some predictability in the stock market. Some believe the notion of market timing directly opposes the actual personality of the market altogether. Then there are those investors who would have it no other way.

What Is Market Timing?

Market timing is an investment and stock market strategy in which investors and those working for them attempt to speculate, even forecast imminent market behaviors in order to make the most of investments. Especially important to market timers are the ups and downs of the market cycle. This cyclical biorhythm of the market, though natural, is unpredictable with any consistency, opponents of market timing say.

Strategies

Market timers and experienced investors rely on many different market indicators, both technical and otherwise, to suggest and indicate potential trends in the market or in a specific stock or set of stocks. Technical indicators along with other more general barometers such as current economy, political environment, business sectors, job growth, even environment, are all subject to comparison and contrast by market timers. Using the overlays of multiple market histories and price indexes along with competitive technical analyses that offer timely buy and sell signals, market timers make it their business to deliver information on investment-critical ups and downs before they occur.

The ability for an experienced market timer to be able to predict a stock’s low point, with the knowledge beforehand suggesting that the investment will increase in value, is the attraction to investors looking for a significant investment advantage over most others.

Market Timing Versus Long Term Investing

Financial advisors are quick to emphasize the relative flash-in-the-pan aspects of market timing. Yes, there are those professionals whose business it has become to study trends and current technical analyses in order to provide up to the minute sources of market wavering. However, many experts believe their successes might be based on the general cycle of the market more than the proposed skill of soothsaying.

Risks

Market timing is one of the more high risk investing strategies. The attempts at forecasting imminent market behavior are definitely not for novice investors or for those whose investment portfolios might otherwise be compromised with a big loss. The word “timing” itself implies volatility when applied to the stock market.

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