Reliable information is needed to be good at investing. What is stock market timing? It must be one of the most over quoted yet least understood terms in stock trading. Some people believe that to be able to consistently time the market inside information is needed. There is a different perspective to put on this, that is if you understand how the stock market works you can use different strategies to consistently produces good returns dependent on the conditions..
Irrespective of the type of investment strategy you follow, there is some form stock market timing involved. Current stock market information will determine what type of strategy you decide to employ upon utilising the right timing signals to enter the market for what your investment objectives are. So Whether you are a short-term, intermediate-term, or a long-term trader or whether you use fundamental or technical analysis you use some form of timing.
Stock market timing is simply deciding when to buy and when to exit a position, and it should be predetermined before you enter a position.
The whole purpose of stock market information is to help investors understand market conditions and when to trade stocks. Examples of the stock market information that helps when to enter a position may be.
Fundamental analysis: where you may look at a company P/E ratio. You may decide to trade the stock when its P/E ratio drops to a certain level that satisfies your analytical assessment or set of criteria.
Technical analysis: where you assess prices and volume, you may also assess particular “moving averages” and choose to invest in a company when the stock price passes a particular mile stone.
It may also be important to consider the timing of major announcements like profit information. This may be a highly profitable yet much higher risk time to purchase. Earnings reporting may actually be the most important aspect of stock market information to profit from timing the market. Stock prices often have their biggest price surges up or down when companies announce financial results. If earnings exceed what is the stock market analysts expectations it is not uncommon for stock prices to soar and the time that huge profits are made.
Being able to consistently profit from stock market information is not a skill you learn overnight. It takes time and practice to understand your strategies and to be able to master your emotions. This is what the stock market is all about, using your experience to analyse stock market information to maximize your return on investment.
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