Market timing

market timing

The purchase and sale of securities based on short-term price patterns as well as on asset values. Some analysts use fundamental analysis to select the securities to purchase or sell; then they rely on market timing to decide when to trade those securities. Also called timing.

Is market timing best left to the experts, or can I use it when determining when to buy or sell securities?

To put it bluntly, the most important investment advice for the serious investor is that it is "time in the market," not "timing the market," that is the key to long-term successful investing.

George Riles, First Vice President and Resident Manager, Merrill Lynch, Albany, GA

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Market timing. Market timing means trying to anticipate the point at which a market has hit, or is about to hit, a high or low turning point, based on historical patterns, technical analysis, or other factors.

Market timers try to buy as the market turns up and sell before the market turns down. It's the anticipated change in direction rather than the amount of time that passes between those changes that's significant for these investors.

The term is sometimes used in a negative sense to refer to a trading strategy that aims for quick profits by taking advantage of short-term changes in securities' prices.

Market timers, sometimes known as day traders, trade electronically. They try to buy low and sell high by taking advantage of second-to-second or minute-to-minute changes in the financial marketplace. They base decisions on information such as a forecast on interest rates or a sell-off in a particular market sector.