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What Is Stock Market Timing And How It Can Help You Trade Stocks?

Stock market timing has to be on of the least understood terms in stock trading. Some people have even thought that stock market timing was illegal. Obviously this was based upon incorrect information.

Whether you are a short-term, intermediate-term, or long-term trader…whether you use fundamental or technical analysis or both you use stock market timing. Unless you buy a stock and hold it until death, you use some form of stock market timing…and even then you may have had to make the decision of the best time to buy the stock.

Stock market timing is simply deciding two things:

1) When to get in a stock

2) When to get out of a stock

That’s not to say that the decision process involved is not more complex than that. A trader will use their preferred analysis techniques to time the stock.

The whole purpose of stock trading analysis is stock market timing. If you use fundamental analysis you may see a company that you would like to buy Wal-Mart stock the P/E ratio is more in line with your analysis. In this case you would be using stock market timing because you would be waiting for the time when the P/E ratio was to your satisfaction.

A stock trader using technical analysis might wait until Wal-Mart stock price is greater than a certain moving average before buying the stock. This is an example of stock market timing as well.

Have you heard the saying, “Timing is everything”. It is of true of trading stocks as it is of many things in life. That doesn’t mean that you have to have some kind of super-human, split-second accurate timing to make money in the stock market. When you trade using stock market timing you are simply trying to maximize the return on your investment. Where would you have rather bought Google, at the $100 a share price or at today’s price?
So as you see stock market timing is a way for you to seek out greater than average returns when trading in the stock market.

Stock market timing is not some skill you learn overnight. Like any skill worth having it is important to study your craft and hone your skills. The most important stock market timing tip of all is to become as knowledgeable as you can before you actually trade stock.

How to Day Trade the Stock Market – Tips For Beginners

When people want to learn how to day trade the stock market they generally think of loads of charts, technical analysis. You can learn many different ways and techniques to day trade the stock market but general concept is get in and out quick. The average trade may last anywhere from a few seconds to minutes. Occasionally a day trader will have a trade that lasts for hours but this is quite rare.

How do you know when and what to trade?

There is no simple answer but I think that having a water tight trading plan and strong mental toughness are two of the main factors that separate the successful day trader from the unsuccessful. If you want to learn how to day trade the stock market you simply must take the mental ‘mindset’ side very seriously.

Do you need to have 5 computer screens on all day long?

There are a few different ways that you can approach day trading. Do you need 5 computer screens? Absolutely not but you will need to do some work and research. Alternatively you can use a full service broker and let them do all of the work. They will normally call you when they have a suitable trade lined up. Is this really day trading? No. I would call this investing. Personally I think day trading suits the type of person who is willing to put in an hour per day on average. If this is too much of a commitment then there are plenty of trading strategies that you can implement without putting in that much time. There are strategies that can earn you 2-8% per month with very little risk. If this sounds more like your investment style then I would focus on some more long term strategies.

Is day trading risky?

Yes, like all all investing there are elements of risk. In fact day trading would be considered one of the more risky investment styles. The pure fact that within a few seconds your position can turn against you makes it risky. Whilst this is the case, in some ways day trading can be quite safe. If you have a proper trading system in place and set your stop losses before you place the trade then at least you know what the maximum you can lose is each trade. If you compare this to a long term investor they often let their trades run and run even though they have lost more than 50%.

“Trading is knowing when you are going to get out before you get in”

If you have a limited amount of capital to invest day trading can be a great option because you can get some big leverage. Of course leverage is a double edged sword and if used incorrectly without the proper systems in place it can be very dangerous.

What is the most important thing to know when you are learning how to day trade the stock market?

Quite simply you need to have a set of rules that you always follow. You do not want to be persuaded by your emotions. Back test a system, paper trade a system and then start trading with a small bank roll. Even if you only have a few hundred dollars on a trade you will get used the feeling of good and bad trades. Most importantly keep learning, increasing your knowledge and keep practicing. Even professional traders had losses when they started but importantly they didn’t give up.

Strategies for Stock Market Success

Strategies for Beginners

If you are a new player looking to invest in the stock market, there are 2 things you need to keep in mind to begin with:

1. Timing is extremely important.

2. ‘Buy low and sell high’.

The concept behind these strategies is simple; to buy (or sell) at the right time in order to increase the profit margin, which is the difference between buying and reselling stocks. A shrewd investor will follow the stock market strategies mentioned above as a rule of thumb, in pursuit of increasing his profit margin and maximize his profits respectively.

In contrast, the most common mistake made by investors who have recently begun is that they are prone to react on impulse and rely heavily on the so-called investment tips. In reality, there is no such thing as an investment tip. All investment tips are derived from another persons opinion and can either be accurate and/or inaccurate and may prove to be a gamble at best.

Focusing on the low-risk stock market strategies that follow the concept mentioned above and steering clear of ‘get rich fast’ kind of investment tips is the ideal start for any investor wanting to build long-term wealth. In addition, investors should combine and use a mix of; research, experience, intuition and composure, to make the best use of the money they are investing.

Strategies for Intermediates

Investors who have been in the share market for a longer period of time have a relatively better understanding of the market as opposed to those who have recently started. An advanced stock market strategy suggestion for these experienced investors is to efficiently manage trade and portfolio risk. There is no reward if there is no risk and since risk cannot be eliminated, it must be managed. Risks are managed by protecting investments; either by hedging or applying other financial tools of the sort. Efficient management of risk will help retain profits and minimize losses.

Investors who are capable of managing risks will typically invest in dividend stocks, or low-risk stock option strategies as a part of their profit maximizing strategy.

A dividend is a fixed amount of profit paid to the shareholder by the stock issuing company, depending on the amount of shares the investor owns. However, sometimes the stock issuing company may not turn a profit in a given year, in which case the shareholders are left holding the stock, but are empty-handed in terms of a dividend.

Alternatively, experienced investors can choose income generating Stock Option Strategies such as Covered Calls and Credit Spreads. These type of strategies are a good investment since they are a low-risk stock market strategy and usually provide a steady means of income, and depending on the investors risk tolerance, can that can also be hedged, providing peace of mind and a foundation from long-term wealth creation.