Definition of Market Timing
By Dave Manuel
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.
For 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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