Market timing as an investing approach seems to have a very bad reputation and many adversaries. Why is that? Trend Following seems to be more popular and less refutable. Isn't trend following a type of market timing? What are your thoughts on this?
Results 1 to 4 of 4
Why has market timing such a bad reputation?
Market timing as an investing approach seems to have a very bad reputation and many adversaries. Why is that? Trend Following seems to be more popular and less refutable. Isn't trend following a type of market timing? What are your thoughts on this?
Not the way I see it, no. When you try to time the market, a concept I have had poor luck with, you ANTICIPATE, or try to anticipate, a change in the direction of the stock. A trend trader waits for the trend to actually establish itself and places his bet accordingly.
I agree that you try to anticipate a change in the direction but a prudent trader waits for confirmation before entering the trade. Never catch a falling knife.
Even if you are a "trend" trader you can time your trades accordingly through bounces off the established trend and a break of short term downtrends (ie confirmation)
I think it is because so many traders lost money when they try to time the market. The main cause I think is because of psychological reasons and they are not discipline enough to make it a profitable strategy.
