Timing Signals – Your Choices

The essence of with everything concerning investing, especially safe investing, revolves around “when” – when should you sell, when should you buy.

There are many types of Timing Signals. Here is a brief run down on a few key types:

Market Exit Signal – this timing signal is designed to tell you when to move either to a ‘safe’ position or out of the markets with a particular strategy or even totally. This signal can be based upon either the benchmark of your group (S&P 500 for example) or the strategy itself.

While an ME signal may not come into play frequently its value cannot be understated because it can protect you portfolio from major losses when the market crashes – as it does every so often. If most retirees had an ME in place when our 2007-2008 recession hit then instead of losing 40 – 60% of their retirement value they would have had minimal losses and been able to build upon a strong portfolio when the market started climbing again in 2009.

Signal Charts – these charts contain bullets – for example – green for buy and red for sell. Almost any chart can incorporate signals but I have found that a moving average chart and a full stochastic chart are excellent for providing solid timing signals.

These charts can be considered one of the most elementary type of timing signals as they can pinpoint with relative reliability when to buy or sell a stock or when a strategy is no longer producing gains.

The charts can be found:

  • Symbol Charts
  • Portfolio Signal Charts for each selected Strategy
  • Portfolio Signal Charts for individual symbols

Technical Strategies – the parameters in an investment analysis software program can allow you to define when to receive a sell signal and corresponding buy of a new symbol. Some rule examples could use any or all of these:

  • Cutoff for ranking drop
  • Stops from either purchase price or trialing high point
  • Market Exit Signal

The advantage of using a variety of buy-sell rules with an investment management software program is simple: instead of relying upon just one signal for when to buy or sell you can have a number of rules that can be back tested to give the best results based upon the exact group of symbols you are working with, thus maximizing your returns which maintain a safe investing procedure.

Portfolio>Self Tracking – report with signals based on drawdown and trailing high stop.

Equity Curve – as discussed by relative strength author Michael Carr, an equity curve can provide a buy-sell signal for individual symbols and strategies.

This curve is similar to a moving average chart but by focusing on the trends of a symbol can tell you if it is a good buy, hold or if it is time to sell. The same goes for a strategy based upon a universe of symbols.

The critical aspect, as any investor knows, is buying and selling at the “right” time defines whether or not you are going to make money or lose money. By employing timing signals instead of feelings or tips you are more likely to reach or surpass your goals and desires – yes, make more money.

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