They Say - You Cannot Time The Stock Market - Part 2

Some people are adept at making money at investing in the stock market. Not many people have a stock market trading system built into their soul, but they are rare. However, most of us mortals, don't have this ability. Most of us struggle and make a little money here and there and then lose a huge amount of money on one or two trades.

Investing is counter-intuitive. You cannot win at trading the stock market, based on your emotions. That is how most human beings trade. The competent traders know that you are trading emotionally, and they take advantage of that information. Trust me, they aren't trading emotionally.

So what is the average feller, with retirement coming up soon, supposed to do?

See previous article that discusses principles #1 & #2: Safety & Diversity, and,Ease of trading.

We discuss Principles #3, #4 and #5 in this article. actually Principle #3: Time the Stock Market I know. You have read many articles that say that you cannot time the stock market. If you have a stock market trading system, you can time the market.

You need something simple like: The market is bullish. Or, the market is bearish. Or, who knows? Get out of the market until it trends, again. You have to be in tune with the market. Never short a bulish market. Never go long a market that is crumbling. These principles sound so simple, who would ever disregard these principles? Many people do. I know I have.

The trick is getting in on a trend. You don't care whether it is an up-trend or a down-trend You just need to get in the the stock market when it is trending.

Will you get into the trend at the very kickoff of the trend? Probably not. But you will get in timely enough to get a good piece of it. Will you get out in advance of the trend changing direction? One can assume not. But, you won't be holding, and hoping, as most or all of your gains vanish into some professional trader's billfold.

When the stock market is consolidating. Sell your holdings and mark time - this is very wearisome for some traders, by the way. Many people are so eager to make money, that they determine that they have to be in the market most or all of the time. They over-trade, and get a little buzz cut here and a little haircut there, as the market goes up and down back and forth. Pretty soon, if they do this long enough, they end up bald.

Does a good stock market timing system get it right all the time? I have never found one. But there are several satisfactory stock market trading systems available that make more money than the average Joe can make.

If you are able to get the timing services trade dates, you will look at them and think, "Well, I could have done better than that." Actually, you probably couldn't - or you wouldn't be reading this article. You might inspect the trades and think, why didn't they get in there? See the market was trending up. They could have made a great deal more money if they had gotten in earlier. If you think like that, you are afflicted by 20-20 disease. Or, perhaps, you should be loaning out your time machine, or crystal ball instead of investing in the stock market.

Principle #4: Many strategies are useless. Stock market timing services are not precise. Let's accept that fact. In fact, gurus have stipulated that "buy and hold" is the way to invest. Well, let's look at the last ten years. You would have lost about 28% if you bought and held. If you had bought into almost any mutual fund, you perhaps would have lost almost as much. Check out several of our other blog posts that consider these facts.

Perhaps you should simply "dollar-cost-average". That means you buy a fixed dollar amount of stock every month, or every year whether the market is going up or down. This method has been a failure over the last ten years, too.

How about somehow finding a stock that is advancing and keep buying more shares of it as it goes in your direction. Trust me, that doesn't work either. Does General Motors bring memories back? Does Novell or Cisco do anything for you?

Ok then. What about following the maket gurus? They are TV all day long. There are countless investing blogs. There are services, I won't mention any names, that disseminate poor, thinkly traded, stocks to buy. If they have myriad of subscribers buying, the stock, that stock will go up. Then, of course, they sell before you do. You are left holding a stock that only the market maker will buy from you.

Here it is!. Buy a stock that has taken a big fall and is at the bottom and ride it back up. If you have been investing for a while, you will have learned this lesson, too The complication is this. Where's the bottom. Stocks routinely go down further than the charts would indicate. They can break support and go down in fantastic, gut wrenching strides. If you buy at what you think is the bottom, you might find that you are now a "long-term investor". You convince yourself that If you hold it long enough, the stock will have to come back up - but it doesn't have to come back up.

Principle #5: Money Management Isn't that what the old Merrill Lynch, advertised as their accounts - money management accounts. I had one of those. That is not what we are going to talk about, here. If we are going to have a stock market trading and timing system, we need to employ money management.

We desire to by some means know when to "take the money and run"! We cannot go into all the particulars in this article, but to give you the basic principle, you have to take profits as the stock, or broad-based index is going in your favor. When you have the precise amount of profits, which is defined by the money management system, then, you should harvest them. Sell your holdings and put the money into your account, before the market reverses its direction and takes your profits away.

If you do follow a defined, tested, money management system, you will find that you don't have to be wounded as much draw-down. Draw-down is defined as how much you are willing to lose from where you bought, before the investment goes back into the positive direction - or, in many cases, you abandon the trade. However, if you take the gains when the trend is very likely to end, you improve your account balance.

In summary: You need to gain security by diversification. You have to have an easy to follow stock market trading system that doesn't take a great deal of your time. You have to have a way of knowing whether the market is bullish, bearish, or should you sell and be out of the market for a while. You need to know when and how to take profits as they present themselves. And, finally, you need to know doesn't work.


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It sounds too good and simple to be true, but it is real. You can make money in the stock market if you employ a stock market trading and timing system that follows the above mentioned principles. Take a look at our actual trading results using the SPXTimer with its designed-in money-management system. You can trade bullish and bearish markets - even in your IRA. Visit SPXTimer