Market Timing and Mechanical Trading Systems For the Stock Market
Read a nice article regarding market timing regarding the stock market & mechanical trading systems. One of the simplest and most effective tools I use for market timing and trend following are moving averages. Only being long when the stock market is above the 200 Exponential moving averages is one of the most effective market timing tools. It kept you out of the huge down draft in 2008 and virtually every other bear market.
There are no predictions when we trend follow. Predictions are opinions, while established trends are facts. If you use a trend-following timing system, you are likely to be in cash 30% to 40% of the time. Every day your money is in cash, it is not exposed to the risk of the market. A buy-and-hold investor, by contrast, is exposed every single day to risk and volatility.
Past performance is not indicative of future performance