oes stock market timing software work? That is a question on many stock market traders’ and investors’ minds, as they seek stock market timing strategies that work, so they can gain a critical edge in the stock market. While stock market timing has been the holy-grail of stock trading and investing for centuries and many have put in countless hours trying to come up with systems that effectively time the stock market, the results have often been uneven or unremarkable. The computer age may have finally increased the viability of timing the stock market. There is stock market timing software that is now available. But, does it work as an effective stock market timing tool that can be used beat the stock market averages on a consistent basis?
There are companies, such as Investment Timing Software, Market Inflection Point Signals, Market Detective Indicator, and Market Trend Signal, that claim to have come up with stock market timing software that is accurate enough to increase the chances of timing the stock market to a level at which real money can be made by buying and selling stocks at key market inflection points.
The question is does stock market timing software actually work? The answer appears to be yes, savvy investment professionals have developed market timing software that works. Of course, it does not work 100% of the time and is not fail-proof. However, that is not what a trader or investor needs to make money timing the stock market. They need stock market timing software that is reliable and consistent enough to make money well over 50% of the time, or at least able to get one in and out of the market at critical levels.
Ultimately, the effectiveness of stock market timing software depends upon how well a user understands how to use the timing software and their level of discipline regarding following through on what the software is indicating as far as buying and selling stocks. It also depends upon whether the user is using the software correctly, as some stock market timing software requires users to trade in increments, so as not to commit too much money to the stock market at any given time.
A Look At How Stock Market Timing Software Works
Here is how stock market timing software works in a nutshell. The various types of software that stock market timing firms use and sell as a service to the trading and investment community analyze various stock market indicators and trends. The software then makes recommendations based on its analysis regarding the state of the stock market regarding when to buy stocks and when to sell stocks. Some stock market timing software is designed to focus on finding buy and sell points for individual stocks, so the software can be used to time either individual stocks or the entire stock market.
Due to the inherent uncertainty of the stock market direction, even with the guidance provided by the indicators that they follow, the recommendations sometimes include buying or selling only a portion of a stock portfolio. For example, if you start with $100,000 in a brokerage account that is dedicated to timing the stock market, the timing software may advise that you commit ten to twenty-five percent of your portfolio to buying stocks, as the stock market indicators indicate a near-term bottom for the stock market is imminent. Then, if the stock market sell-offs off some more unexpectedly, the software will wait until the next buy signal is triggered to make a new recommendation to buy another portion of stocks. Eventually, a trader will be averaged into stocks at key support levels. When the stock market bounces, as it historically does based on a statistical analysis, then the trader or investor will profit from the stock market rebounds. As the stock market recovers, the stock market timing software will continue to analyze stock market indicators regarding near-term stock market tops and make sell recommendations on an incremental basis, as levels are reached that trigger sell signals. It may eventually recommended selling all stocks and going all cash, as it waits for a new buy signal to emerge.
You can see why trading discipline is so important on the part of users of stock market timing software. Not going along with the software’s recommendations can completely change trading results, and could result in losses being incurred, when gains could be made by well-disciplined and patient traders and investors. If a trader is impatient and commits all their money to stocks on the first buy recommendation, they may find themselves in at levels too high to ultimately make money in the short to medium term that the stock market timing software covers. However, if they are disciplined and buy in the proportions that the timing software recommends, more often than not, they will come out with winning trades. That is the idea behind using stock market timing software to successfully time the stock market more often than not.
These stock market timing tools operate on the old, yet very true, stock market principle that bulls make money, bears make money, but pigs get slaughtered. The gains to be had using stock market timing software are relatively small over short to medium periods of time and require patience to let the stock market gyrations play out. However, if traded correctly, patience will be rewarded with consistent stock market gains that in the long run add up to significant gains that beat the simple strategy of buying and holding stocks.
Needless to say, using stock market timing software is not suitable for all traders and investors. Buy and hold investing is the best strategy for anyone that does not have the time to use stock market timing software on a consistence basis and follow through on its buy and sell recommendations.