Timing The Market

You must have heard the oft-repeated advice, “Timing the market is not important, time in the market is”. Well, let us admit that this holds true for long term investments and, therefore, it makes a forceful case for long term investments. But if timing the market is not important, then how does one make money in the short term?

The fact remains that timing the market is everything, both in the short term as well as long term. The stocks and stock market move in short term and long term cycles and getting the know the level on the cycle can make a difference between great returns and total loss. Catching the short term or long term cycle near about the bottom of the curve requires professional experience and expertise and technical knowledge in the game of investing. It is by no means an easy task and it is certainly not the beginner’s and amateur’s cup of tea.

Discerning the short term or long term trend of the stock or the market makes the task of catching the bottom of the cycle relatively easy. For this, one needs to be adept at technical analysis of the stock or the market and be able to read and correctly interpret the signals emanating from the indicators of the stock or the market. One needs to know the support and resistance levels of the stock or the market to be able to catch the stock or the market on the bounce-back. This is a crucial difference between a novice and market-savvy investor. The market savvy investor buys at the support level and sells at the resistance level, while the novice investor ends up buying at resistance level and selling at support level. As a result, the former rakes in the moolah, while the latter loses his shirt!