Stock Market Timing, or simply, Market Timing is one of the most important terms we come across not just in the Australian Securities Exchange, but almost in all exchanges in the world. However ironically, though this is so important, but the fact remains that very few people actually understand what this exactly is, and even fewer know how to time the market. So what exactly is this Stock Market Timing anyway and how can you become an expert in this?

Understanding Stock Market Timing

Stock Market Timing is nothing but an attempt to time actions taken in the market to the best of one’s ability – the actions being buying and selling. In other words, it is an attempt by the investor to predict the future movements of the market and act accordingly. For example, if the investor has reason to believe that the price of a stock might escalate in the future, then he or she will obviously want to buy it so that it can be sold off later to register a profit. Similarly, if the investor holds a particular stock and believes that its price might nosedive for some reason, then he/she will surely want to get rid of it to avoid losing money.

The stock market is a very funny place. No matter what the stock, no matter whether it is a blue chip company or a penny stock, no matter whether the company is making a profit or loss, the experiences of two people can be exactly opposite. From the same stock one person can make a profit and another person can make a loss. Then again, the same person may have earned a profit some months back from one particular stock, but this is no guarantee that he/she will not register a loss in the future from it.

It is all about timing it correctly. The ability to analyze the market conditions – the performance of the industry and the company, Govt. regulations and policy change, economics as well as market sentiments and take the correct decision at the appropriate time.

Not being able to time the market correctly can be disastrous. Selling the stock just before it began to climb surely means an opportunity lost for profit. And holding it too long and allowing it to slide means the return on investment will be lower, and in many cases the investor ends up losing money even.

The fact is, correct and incorrect Stock Market Timing can make or break the investment made. And this is why it is so important.

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