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Traders and Timing..

Posted by strudy on Oct 14th, 2008

I have been taking a closer look at timing particularly when entering the stock market and also on leaving, but more on that later.

Timing very much depends on what sort of trader you are .For a day trader timing is crucial as there are only the hours available that the market is open today. They very rarely hold any stock positions overnight.

Usually the day traders enter the market around 45 minutes after the initial flurry of orders has gone through. The majority of these trades have been set prior to opening or from the night before by less experienced traders “who must get in at all costs”.

Once the direction of the particular stock has been set, Day traders move in. Usually profits are taken on very little movements. The speculative stocks are very popular for as just a 1cent movement can mean a quick 10 to 20% profit.

An hour before closing of trading will also see a flurry of activity as the Day traders exit their positions for the day, very rarely hanging on overnight.

To the next type of trader timing is still important but not to the same extent as the Day trader. Their timing duration is more often 2 to 4 days. This depends on the momentum and volatility of the stock involved.

The last trader is more for the medium to long term investments, where timing matters very little. The daily fluctuations in price mean very little to this trader as they by experience know that share price drops are transitory and will eventually continue to rise again. Their types of stocks are usually the rock solid Blue Chips which will eventually weather the storm and continue being profitable once more.

Timing plays a important factor when you have decided to leave the market either taking a profit or minimising a loss or breaking even. Leave it too long particularly if you are affected by the emotions of either “Greed or Fear” and you are almost guaranteed to get a result you didn’t want.

Of course the most opportune time to leave the market is when you have reached your preset profit goal and of course you stuck to it didn’t you?

I have learned from past experiences that if I hold on too long, trying for the maximum profit possible that I quite often don’t make as much profit as I should of, because the share price plunged downwards because other traders took their profits causing the share price to drop drastically.

Nobody can time the bottom or the top of the market and if you do well then count yourself lucky. I myself still try to time it right but rarely succeed.

I am a great advocate on buying in gloom and sell in boom. When the market goes down for what ever reason, I take more interest in what good quality stocks have been affected and try to buy in at the lowest price possible. As they invariably recover, again I am out again as soon as my preset profit is reached.

I try not to get too attached to stocks and try to see them only as a vehicle to make money.

And that’s what it is all about after all isn’t it?

Strudy is a keen successful share trader on the Australian Stock Market Visit his weblogs

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