Right & Wrong Way To Approach Market Timing

I received an email today that nearly made me retire my timing signal. You know, the one that is free of charge on zentrader. What can you do when somebody makes such an astute observation about your work that so accurately describes the results, but retire.

Well no offense, but it looks like your market timing signal does not actually work.

I decided to follow it by also buying a bit of QQQ and now I am loosing money. It looks like your signal turned yellow when things were already changed and had already turned bad. I don’t believe anyone can time the market, especially not this sort of super volatile market. How can any automated process account for Fed meetings and EU meetings?

You can assume that anytime somebody starts a sentence out with “well no offense” that you’re in store for some offensive comments. The fact is that no market timing system is 100% accurate. It can’t be. Nobody can predict the future because of free will and the gazillion factors that can influence the 6 billion individuals on Earth. All you need is 3 things to make consistent money in the markets. Notice that the timing signal is the least important.

1. Money management rules
2. Patience
3. Way to time the market

Here’s what mine has done over the last 6 months. Past six months of market timing signal

Why you lost money is because you happened to try it on one of the whipsaw signals, but had you got long in December you would have made a killing. Or had you shorted the markets in May you would have sent me an email praising my timing. It’s all about perspective.

Stick around for awhile. You signed up for me free (did I say free?) newsletter on June 24th (not even a month ago) and you can declare my timing signal ineffective? If you are going to trade this signal then you have to take every trade. This is not a message just for you but for anybody subscribed to my newsletter.

I like to suggest to traders to use the timing signal as a guide to know whether you should be shorting, buying, or on the sidelines. By all means, trade the signals with real money, that’s what I do, but realize that there are risks when trading and take responsibility by having good money management rules so when a trade goes against you that you can exit and live to trade another day. Capital preservation is always top priority.