Timing: the most undervalued indicator by day traders
“The stock market is a device for transferring money from the impatient to the patient”
If you don't know who is the author of that quote, then you must do a bit of research as it is one of the most well-known quotes of all time.
Yeah, it is a Warren Buffet’s quote. Now, it is not about who said it, but rather WHY he said it. The reason why many veterans highlight the “TIME” factor is actually the reason why I have decided to write this article.
A successful trader knows that perfect entries are all about rational decisions. That's why sniper entries and timing go hand in hand. In this industry, timing is a matter of rational judgment and the ones that do not take timing with the respect it deserves, then they won't last long in the game.
Trading is far away more than the common phrase we heard from the mass “buy low, sell high”. In fact, trying to spot the lowest low or highest high is a whole science itself. For an investor, timing is not an essential factor, but for traders, time is actually another indicator.
Let me break this through so you can understand my previous statement. Investors are looking for a long/medium-term profit based on high-timeframe supply and demand zones rather than timing. Even DCA (dollar-cost averaging strategy) is not directly attached to the time of the entrance. Inversely, a trader needs to give full priority to the time of a trade as it will directly affect your Risk-To-Reward ratio.
Timing (and a dash of intuition) is developed alongside logical thinking, observation, and mental discipline. In fact, “timing” needs to be practised as much as fundamental or technical analysis. Most traders veteran believe that time is also a buy and sell indicator, that's why it should be part of your entry checklist.
Market timing will determine if your trade is going to work out or not. The “timing factor” not only includes the perfect shift in momentum but rather WHEN this shift happens. Market cycles are directly correlated with market timing. The overlap between forex sessions can mess with the direction of your daily trade, thus, “timing” is also about determining in which hours of the day will you set your positions.
Some of the questions that will enhance your “timing” are the following:
* Am I considering timing inside my trading strategy?
* Did I calculate the cost of an incorrect market timing?
* Am I trading during the best times of the day? (high liquidity hours)
* Am I taking into account trading sessions’ overlaps in my trades?
* Am I adding market timing into my exit and entry strategies?
* Which is the strategy I am using to time my trades?
* Are my trigger points in sync with the fundamental events happening during the week?
All in all, use TIME as your new best friend, use TIME as your best indicator, and use TIME as your path for success....