Market Timing Hidden Traps

Traders that implement a market Timing strategy attempt to make predictions about the future movement of the stock price applying different fundamental and technical analysis tools. They are after profits that can be generated over a short period of time.

Timing the market, however, can be dangerous for investors that are making their first steps in the stock market.

On the hand, being able to predict the future movement of a stock price can be valuable since you can purchase a stock before its price starts to rise.

The mottor of market Timers is "buy low, sell high". The most extreme market Timers are those who make such frequent trades that can take place within hours or even minutes. Market Timers' major goal is to inform obtain small, frequent and in dozens profits that are generated on daily basis.

If an opportunity for making a profit is noticed by a market timer. She/he will hurry to seize it by moving in and out of the market.

Many opponent of market Timing claim that accurate prediction of market movement is very risky and in itself represents a from of gambling.

On the other hand, defenders of market Timing state that there are cases in which accurate prediction of market movement is possible. Determination on whether the stock is undervalued or overvalued is achievable through the use of different instruments. The latter are applied in order to decide whether the price of a stock is about to change its direction.

However, for the greatest disappointment to investors, stock price are sometimes changed because of illogical reasons. Additionally, unexpected events can occur, which the will quickly change the price when least expected.
 
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