Chance of Failure Is High When You Time the Market

October 25, 2018

If you do market timing then it is a flawed strategy and you need not look beyond probability to prove that. Firstly let us consider the fact that market timing embraces two decisions. First decision is regarding when to get into the market and on the other hand, next decision is regarding getting out of the market.

If you ignore the important details and simply calculate probability then there is only 50 percent chance of getting one decision right. Hence, there is only 25 percent chance of getting both the decisions correct. It would be not wrong to conclude that one out of four bets will make money whereas three will lose money.

Traders who believe in market timing have no idea that the odds are heavily stacked against them. Actually, there is very few probability of making a profit.




About nehanchal

I am Nehanchal. 3 years ago, I started my career as content writer at Money classic Research. I am fascinated with this job and I feel habit of reading and writing enhances your skills. I love to write technical and health blogs. However, I am engineer turned writer and pursued graduation at Rajiv Gandhi Prodyogiki Vishwavidhyalaya.
By: nehanchal

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