Using Our Signals

This section explains various ways that MarketTiming’s signals can be used to manage the timing risk associated with entering or exiting the Australian share market. The investment vehicles used for switching between exposure to shares and cash should be decided in consultation with your investment adviser.

How to begin with MarketTiming’s signals

If you decide on the Active Strategy (around 5 signals a year), we would suggest that it be phased in gradually over one month, say 20% initially and then 20% each week thereafter so that you don’t get caught buying at the top or selling at the bottom of a short wave cycle in the market.

If you decide on the Conservative Strategy (around 3 signals a year), we would suggest that it be phased in slowly over two months, say 20% initially and then 20% each two weeks thereafter so that you don’t find yourself buying at the top or selling at the bottom of an intermediate wave cycle in the market.

If you decide on the Ultra-Conservative Strategy (around 1 signal a year), we would suggest that it be phased in slowly over four months, say 20% initially and then 20% each month thereafter so that you don’t find yourself buying at the top or selling at the bottom of a long wave cycle in the market.

How to respond to subsequent signal changes

Our latest Australian share market timing signals are shown as either ‘Buy’ (meaning it’s opportune to enter or remain in the share market using an exchange traded fund with ASX share codes STW, VAS, SFY and RDV) or ‘Sell’ (meaning it’s prudent to exit or stay out of the share market and keep your funds instead in a government-guaranteed cash management account). 

It is always best to enter the share market on a ‘Buy’ signal. For all of our strategies, this should be done the day after a ‘Buy’ signal is issued by MarketTiming (or, if that is not possible for the Ultra-Conservative Strategy only, within three days of that date).

It is always best to exit the share market on a ‘Sell’ signal. For all of our strategies, this should be done the day after a ‘Sell’ signal is issued by MarketTiming (or, if that is not possible for the Ultra-Conservative Strategy only, within three days of that date).

MarketTiming monitors whether a change in signal has been triggered on a daily basis. Signal changes can therefore occur on any day of the trading week.  Should there be a change to any of our timing signals, subscribers are sent an Alert Email within three hours of the ASX closing for the day. The signal also changes on the subscriber-only "Signals" and relevant strategy pages of this website 

It is best to strictly adhere to the current signal of whatever strategy you adopt, whether you agree with that signal or not, otherwise you are unlikely to succeed. Second guessing the market’s future direction is the road to ruin. Keep your own opinion, emotion and ego out of it and instead become a mechanical investor who has faith in a demonstrated model for timing the market.

Expect small losses on some signals as the price for big gains on others. Reserve your judgment on each strategy until you have used it for two or more years. Then compare your results (both return and volatility) with the All Ordinaries Index over the same period.

Market timing is not a ‘dash for profit’, but a disciplined ‘long march’ that rewards the patient. If market timing a particular share fund is too slow for your temperament then you might do better joining the fast lane and becoming a daily or swing trader of individual stocks. However, be warned, most traders lose money unless they are highly skilled, experienced and disciplined or use a completely automated professional trading system.

MarketTiming’s approach

The best way to completely remove emotions and subjectivity from the investing process is to use a fully mechanical signaling service like MarketTiming’s.

Fastidiously applying the signals and strategies of our computerised timing system should enable you to avoid much of the downside of a market contraction while gaining much of the upside of a market expansion. But you will need self-discipline to succeed and be prepared to accept occasional losses (because no market timing system is perfect) so as to win over the medium to longer-term.

Back-testing of our Conservative Strategy since 1984/85 shows it produced two winning sell signals for each losing one and that the average win was +12% compared to an average loss of -3%. The maximum win while 'In' the market over this period was +48% whereas the maximum loss was -6%. By contrast the maximum loss avoided while 'Out' of the market over the same period was -40% and the maximum win missed was +10%.