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Market Trend Prediction Versus Market Timing
In the What is Trading or Investing section, it was said that when we want to make profitable trades, the buying or selling price alone is irrelevant. What is relevant is to know: (1) when the price is low so that we can buy or cover and (2) when the price is high so that we can sell and take profits.
The notion of "timing" puts the concept of making a profit in an entirely different context. Here, the timing of prices is essential for making profitable trades, not the prices proper. This is the reason why we need to know When precisely to buy and When precisely to sell financial assets. Successful trading requires accurate determination of the time to buy and the time to sell. It is necessary, and it is sufficient.
Your ability to determine precisely those times will ultimately make of you a successful or less successful trader and investor. As a corollary, you can buy and sell financial instruments only within a very narrow and specific time-window, not randomly. If you miss those windows of opportunity, then you would have to wait for another opportunity.
The Money Printing Strategy (MPS) rejects the random theory of buying or selling financial assets at any time. This is because there are times when the Reward-Risk Ratio (RRR) is too low and too risky for initiation of trades. A too low value of RRR is one of the main reasons why people lose money by investing in the financial markets. We all know that opening Long positions at the market tops or Short positions at the markets bottoms is a catastrophic strategy. This is because at those times, the value of reward is too low and the value of risk too high, hence leading to a too low value of the RRR.
The purpose of this book is to enable you determine the timing for buying and selling of various financial markets, be it real estate, equities, commodities, forex, or bonds, independently. This knowledge should enable you sitting in the driver's seat of your financial investments.
How do investors determine the market timing? Well, there are two methods. They apply a combination of indicators and trend lines to the past prices of financial assets to get a signal for potential future prices. Currently, a few good indicators are available to achieve it. Although some are quite precise, they usually tend to lag the market trends substantially. As a result, they pinpoint potential deals with only marginal Reward-Risk Ratio, henceforth, less profitable. Such method uses the past prices only to predict the market future prices, but gives no hint as to the associated buying or selling dates and times. Money printing Strategy calls this method the Trend-Prediction Strategy (TPS).
The second method to determine the market timing is to forecast the dates and times of the future market’s tops and bottoms based only on the dates and times of the past market’s Tops and Bottoms. This strategy of market timing is completely different and independent from the one based on prices. It uses only dates at which the previous price tops and bottoms have occurred, not the associated prices. This method of prediction would use only a calendar and clock to open and close positions, but gives no hint concerning the prices on those dates. The MPS calls this method “Market Timing.”
You see, the Trend-Prediction Strategy enables us to predict the future prices of financial instruments, but not the associated dates, and the Market Timing, the dates of financial instruments tops and bottoms, but not the associated prices. In other words, the application of both methods simultaneously would enable us to predict not only the asset’s future prices, but also the dates those tops and bottoms should occur. The two methods are independent and complementary.
Would you like to predict the market future trends with the same high level of accuracy based on prices than on dates? Of course, yes! Currently, the Trend-Prediction Strategy method of the MPS is close to a probabilistic science. However, its Market Timing method is immature and unable to predict the dates of future market’s tops and bottoms with enough accuracy for profitable trades. You will find a detailed description of Market Timing in chapter 14. With TPS, you will be able to determine the price of future market tops and bottoms with enough accuracy, but not necessarily their timing. However, this is already sufficient to achieve highly profitable trades.
When the art of predicting the market future trends based on Market Timing alone also becomes as mature as the Trend Prediction Strategy, a new and never seen era for market trend prediction and trading will begin. This knowledge would then bring the art of trading one giant step closer toward the science of trading.
Become your own financial adviser and trade based on your own independent trend predictions and trading strategy -
not on untrustworthy, unreliable, and costly external advice.
In Money Printing Strategy, we highly value and respect our customers' trust that we shall not betray in any way, and take pride in our honesty and integrity. We believe that these values form not only the foundation of trustworthy relationships but are also essential prerequisites for long term successful business, especially in the sensitive fields of wealth management, trend prediction, finances, investing, and trading.
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