May "Not" Be Greener On The Other Side
As market timers who trade trends, we are always on the
lookout for a new indicator or strategy that might give
us a better edge and improve results. Education and
study never end.
Many hours are spent testing every conceivable timing
method. We study suggestions submitted by subscribers
(always appreciated), ideas garnered from analysts seen
on TV, books offering trading strategies and sometimes
spend hours just trying to improve current strategies.
You name it and we have read it, studied it and spent
many hours researching it.
Changing Methodologies To Meet Current Market
A good friend emailed me the following a few days ago,
"A trader puts himself a great risk of failure trying to
guess what the markets are going to do and changing
methodologies to meet current market conditions."
How true. Yet so many investors do just that. They
search for someone who will promise huge gains. Who will
say they have achieved unrealistic profits over previous
years. Who will promise them the world (just send your
hard earned dollars).
They are out there. We have seen so many websites
offering guaranteed profits of 100% (or more) a year we
have stopped looking at them.
Some actual statements copied from market timing
websites, "up over 1000% since 1999," "gains averaging
from 61% to 263% annually," "Up 1500% in 4 Years,"
"annual returns above 100% with only few trades a
month," "up over 900% since January 2000."
Please do not fall for such scams.
At FibTimer we do not mislead. We tell all our
subscribers that losses are inevitable in trading. The
trick is to keep them small.
If achieving profits in the stock market were no more
difficult than going shopping at your local supermarket,
everyone would be a billionaire.
FibTimer offers solid results by trading "all" trends,
for subscribers who "stay" with our strategies and do
not exit at the first small loss or inconvenient news
The Grass Is "Usually" Greener During Drawdowns
Typically, market timers experiencing a drawdown are
most tempted to change methodologies. If the grass is
always greener, it makes sense it is vivid green when
your strategy is experiencing a loss.
But changing methodologies midtrade is almost always
a losing proposition.
Traders who change strategies during a drawdown are
attempting to "forecast" what the market will do next.
There is no way to do this consistently, so the odds are
the change is a mistake. ALL strategies have periods
when the markets move against them. If a traders thinks
otherwise, they are headed for losses.
You can always find an indicator that worked perfectly
over the prior weeks or months. It is easy to find an
accurate forecaster "after" the fact. It is an entirely
different matter being accurate in real time and doing
Emotions are the primary reason for changing a good
strategy midtrade. We have written so many commentaries
about emotions, this may be repetitive to the majority
of our subscribers, but it is extremely important.
Emotional decisions are almost always losing decisions.
During the early and mid summer months we had many
subscribers who exited because of the market's
volatility and sideways trading. At that time we had
several small losses as the stock market just refused to
break out into a trend. One subscriber even wrote he was
leaving because, "...what if the markets NEVER trend
again?" We have no idea how he solved that concern.
That sentence was a sure sign a new profitable trend was
about to begin! Pure emotion bulldozing over common
sense. When the majority give up, the next trend starts.
And, that is just what happened.
Our guess is, very few of those who left during this
year's difficult sideways market are happy with their
trading results since leaving. But those who stayed are
now in the middle of solid gains, and they can see why
it is important to stick with a good timing strategy
through thick and thin.
Anyone who believes there will never be any "thin" is
doomed to following all the hype and promises many
timing services offer. They will never realize the
profits that are attained by staying the course with a
solidly performing timing strategy.
Don't Be Misled By False Promises
Following trends can and will result in occasional small
losses. Because no one can accurately forecast the
future, some trends will fail. But at FibTimer we exit
those failed trends quickly, keeping losses small.
As long as "every" trade is taken, trend followers will
"always" be fully invested in every real trend. They
will "never" miss a trend!
Those who stayed the course during this very difficult
year have now realizing solid gains. Having a few small
losses mean little if you catch every trend and make
solid profits in them.
Trend trading is the sure path to consistent long term
profits. Strategies based on any of the many, many
indicators are subject to long periods of time when
those indicators fail. Do not be misled by anyone who
promises he or she has found the perfect indicator. It
does not exist.
Use common sense and stay with the trends to ensure you
are "never" left behind in any rally, and are always
protected during a bear market or prolonged decline (or
profiting in a bearish position).
Copyright (c) 2002-2005, StarTrade, Inc., All Rights
FibTimer reports may not be redistributed without
Disclaimer: The financial markets are risky. Investing
is risky. Past performance does not guarantee future
performance. The foregoing has been prepared solely
for informational purposes and is not a solicitation,
or an offer to buy or sell any security. Opinions are
based on historical research and data believed
reliable, but there is no guarantee that future
results will be profitable.