subject: Market Timing For Beginners [print this page] If you are a beginner and an amateur in the world of mutual fund trading, it is advised for you to start with small amounts of money.
But what escapes media attention and subsequently ours are the stories where people lose most of their life's savings by going for the kill in the stock market. We love success stories and so we choose to close our eyes and turn a blind eye to the not-so-successful ones. Making money in the stock market can be relatively easy if you have perseverance, enthusiasm and more importantly the aptitude and the knack to predict the volatile stock market.
The very first thing to keep in mind is the stock market is always in a flux. To a beginner the movements might be chaotic and unnerving, but once you gain some experience you will realize that in everything else in the world, there is a pattern. However, before you know and get hold of the pulse of the stock market, it is advisable to just play the waiting game. Invest small amounts of money to minimize your risks and make small profits which will help you to stay motivated. Motivation and enthusiasm are required in large amounts to make a success of your stock broking career.
Beginning investors are often misled into believing that there is no such thing as timing the stock market. This fallacy has been passed down on Wall Street to keep you fully invested at all times. All this does is diminish your returns. The fact is that it is possible to time your stock market investments so that at least you are in the market when it's overall trend is going up and you get out when the market is going down.
The key behind this strategy is reviewing the price and volume action of the major market indexes each day. The indexes you need to follow are the S&P 500, the Dow Jones Industrial Average, the NASDAQ and the New York Stock Exchange Composite index. What you are looking for is whether or not the index increased in price or decreased in price from the prior session.
In the end it all comes down to experience, and you get better at stock market timing as the time goes on.
