Timing the Stock Markets

The adage about investing in financial markets is that stocks should be bought low and sold high. This is obviously sound advice, but it doesn't provide all the necessary information to make wise money decisions. Transactions are completed every day by a variety of individuals and financial firms, but they are not always performed at the best time to complete those trades. Timing the stock market is clearly the ideal, but can it actually be done on a regular basis?

Even experts get it wrong sometimes

Before investing in stock markets, individuals and groups should remind themselves that they could make a variety of mistakes. Even seasoned veterans who have many years of experience make honest errors in judgment that can cost a great deal of money. Therefore, any thought of timing the stock market should include a measure of caution and humility so that reckless decisions are not made.

Be prepared

Timing the stock markets is often about doing preparatory homework. The savvy investor will look at a variety of stocks on a regular basis and study their patterns of growth and decline. In addition, metrics should be investigated to assess whether they would make a sound investment. When investors conduct an adequate amount of research, they will be in a far better position to make an informed decision about the opportune time to buy into the market.

Is there a good time?

At some point, investors must make a decision and move forward. People can experience the so-called paralysis by analysis, which means that waiting for perfect time may result in no decision at all. Some decisions may lead to eventual regret, but there comes a point when the investor must simply decide that he is going to enter the marketplace and close a deal. The date of the transaction may not be perfect, but it could be better than others. In many cases, that is good enough.

Related Life123 Articles

Derivatives, which are contracts derived from an underlying asset's value, can add an extra dimension to your investing, providing you with more tools to manage risk and potentially profit from market volatility. 

What are derivatives?  Many beginning investors are not clear on what derivatives are, as they have to do with speculation and future performance of a certain market. 

Frequently Asked Questions on Ask.com
More Related Life123 Articles

Exploring financial derivatives can be a tricky prospect. The term "derivatives" encompasses many different types of financial instruments, so truly understanding derivatives requires you to understand all these underlying instruments. The two main types of derivatives that the average investor is likely to encounter are options and futures.

As a financial professional or investor you may have heard about credit derivatives but may not understand exactly what they are. An attempt will be made to outline derivatives in a manner such that it will be adequately understood.

Investing in options can seem difficult but understanding the basic definitions is a good start toward making a profit in options trading.
© 2015 Life123, Inc. All rights reserved. An IAC Company