Market timing is the most important expertise you must master to become a successful trader. This is where the majority of stock market traders fall by the wayside. Buy too early and you are squeezed out on any temporary falls. Sell short too early and you are squeezed out on any up moves, even if, after a few days or so, you are proved correct in your analysis. Understanding what the volume is telling you; recognising testing, stopping volume, up-thrusts, or no demand, will get your timing surprisingly accurate.
Some investors, especially academics, believe it is impossible to time the market. Other investors, notably active traders, believe strongly in market timing. Thus, whether market timing is possible is really a matter of opinion.
Stock Market Timing
It is very difficult to be successful at market timing continuously over the long-run. For the average investor who doesn’t have the time (or desire) to watch the market on a daily basis, there are good reasons to avoid market timing and focus on investing for the long-run.
When you do decide to short the market do so only on an up-day/bar if possible [see no demand, up-thrusts, ultra-high volume up bar with next bar level or down], and only if there are signs of weakness in background such as lower tops, down trend, high volume on up day/bar with no corresponding up move following, all signs of weakness.
Study your own trading weaknesses then form a plan to combat them. Perhaps one of your weaknesses is to have no plan ready in the first place! It is recommended to write your plan down before you trade. Once on paper you are more likely to adhere to it.
If you are a stock trader, only trade in active stocks that have a history of moving in an orderly manner. Never buy stocks because they look cheap on the assumption they will have to recover one day. Only buy stocks that are acting stronger than the parent Index. A stock needs to be resisting down moves in the Index.