Definition of Market Timing

What is the definition of the term "market timing"? What does the term "market timing" mean?

"Market timing" is when somebody tries to guess the near-term direction of the market (Dow Jones, NASDAQ, TSX, whatever) in order to profit.

Definition of Market Timing - Financial Dictionary - Stock Market - Illustration of Stop Watch and Dollar SignFor instance - let's say that the Federal Reserve announces another round of quantitative easing, and let's say that you anticipate a large, multi-week market rally as a result.

You load up on SPY (SPDR S&P 500) and QQQ (PowerShares QQQ) in anticipation of a big run-up in both the S&P 500 and the NASDAQ.

You are a "market timer", as you are trying to make money based on where you think the market is going to move over the near-term.

"Market timing" is a tough way to make a living, and many people have gone broke trying.

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