When people talk about “buying low” and “selling high,” they’re really talking about timing.
Being able to anticipate how an investment will perform is only as useful as your ability to predict precisely when it will do so. Of course, market forces can move quickly and seem unpredictable.
Fortunately, you do not have to out-time the market. You only have to out-time other traders.
Everyone who loses money on a trade does so because someone else made money.
The logical conclusion? While you cannot always predict the best moment to buy or sell, if you can out-predict enough of the other traders, you will show a profit. Questions of timing then really become questions of precision.
It seems like a rhetorical question, or perhaps a paradox. If there is a better way to time the market, why wouldn’t everyone use it? If they did, would it then become useless, because it removes competition? The fact is, there is no perfect method, but certain trends are still a constant. The key is to account for timing in the risk model.
Timing has to bear a close relationship to outcomes and be accounted for by risk management.
For example, if you need to profit on a given investment within three months and haven’t made a profit within that time then you have to expand your time frame on expecting a return on that investment.
How long do you have before you have to pull those funds out?
When your risk model is accurate you should have a budget for timing that reflects a much larger range of time.
You can always re-invest the additional budget for reduced profit later in the cycle, once the danger has passed. Consider any funds invested without this compensation to be in a higher risk category, and compensate elsewhere accordingly.
Now, you don’t want to have to have this huge reserve of cash set aside for a timing budget, so what do you do? How can you get the sharpest positive outcomes, to minimize the impact?
That’s where IQ Option comes into play. They can let you set your trades to fill almost automatically under emergency conditions, which cuts your risk on outlying possibilities sharply.
By reducing the maximum impact via your trade setup, and being able to rely on a rock-solid platform to deliver that outcome, you don’t have to set aside nearly as much capital to insure against a longer term gain. You just wait out the hiccups and minimize losses on every trade that doesn’t perform.
We all want to make fewer mistakes, but insulating yourself against the impact of your errors lets you stay in the game longer, and overall that is how you win. You have to be present and involved when the opportunities do come, and that means being able to safely hedge your risk without impacting your buying power. Keep your timing strategy tight and well correlated to risk, and you’ll find you have more time to spot and move on the real opportunities that allow you to pull ahead.