Timing plays a very important role while investing in stock markets. Buying or selling stocks at the right time can make people very rich overnight. This is true in respect of stocks of every company. If the timing goes wrong the investor or speculator would lose money irrespective of the fact that the company has shown substantial profits, consistent growth, paid dividends consistently, and has several large orders on its hands. Effectively such positive aspects of the company cannot correct the problem of timing and the investor may lose substantial amounts.
By the same token, a company can’t be wrong if you buy or sell it at the right time. You, too, can have that result. With this kind of market timing, it’s possible to do a wonderful job of making a profit in the stock market.
All you have to remember is that there are good and bad times to trade a stock. Knowing that, you can look for sites that offer you indicators of what the trends are doing and what a good time to buy or sell might be. On our site there are more than 160 indicators that you can use for your own awareness of these trends. All you have to do to get this information is to subscribe by the year.
The indicators usually are contrarian in nature. The stock market sentiments are usually low when the investors and traders are in a fear grip and markets are at higher levels when the there is no fear among the investors and they are very upbeat about the market.
Investors are now able to identify and understand these indicators and use them for investing. Traditionally, only traders used such indicators. Unlike investors traders invest larger sums, and they invest for shorter term. They are therefore satisfied with smaller swings. Traders may even borrow to invest in this fashion.
Investors tend to invest small sums of money periodically. They invest this money for longer term and expect that such money would earn them reasonably high returns. Traders find this attitude incomprehensible as they cant understand why anybody would want to leave monies for such long time in the market, especially since stock markets are prone to crashes. So traders think investing for long term is a risky proposition. Investors, on the other hand have a similar disbelief about investing strategies of traders. They are unable to understand how traders can expect market to give them returns in such short time. But the fact is, there is merit in both ways of investing. It is just a question of timing it right.
Investors obviously have to earn on their investment, however small. By investing regularly such small sums of moneys for a longer period, they are able to reduce the risky part of the market timing. This method of reducing risks is referred to as “Dollar Cost averaging”. Effectively, investor succeeds in avoiding a major loss by not investing when the market is at its peak. Had the investor chosen to invest at that point of time, in some aggressive stocks, he could’ve lost almost 50 percent of his money. By opting for systematic investment, the investor stands to get the instruments or stocks at average cost.
Ultimately for both a trader and a investor, the goal is to maximize the profit by making proper use of market timing.
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