Entering the Market: Timing

The market is a murky place, and sharks—also known as people who trade for a living—swim in the infested waters. Do not be the crustacean. Unless you pay someone to do it (and maybe not even then), no one can really tell you the exact time to enter the market, and you will likely get different opinions. This is particularly true if you have a hazy goal in your head.

If your goal is timing certainty and walking off with reasonable profits, the best thing anybody can recommend is to educate yourself about the stock market. Forewarned is forearmed. Here are some general tips that can help beginner traders get their feet wet and mimimise risk to a degree:

• Start by learning fundamental investing concepts and building your stock vocabulary. Read up on what the market has been doing in the past to understand how stock market trends are grouped and identified. Learn from history.
• Resources and books on market indicators are helpful. They reveal techniques used by analysts to predict stock market ups and downs, and you can get a picture of the slew of factors that influence market fluctuations and share prices.
• Make it a daily habit to read business and market news. Subscribe to publications like The Australian, The Sydney Morning Herald and The Wall Street Journal.
• Follow the Standard and Poor 500 index and use ASX index fund reports to take note of stocks that reach record highs and lows. Stock price data can give you hints about disproportionate buy/sell activity.
• A trial stock portfolio is a great way to test the waters. If you work at it, pretty soon you’ll begin to understand what makes the market tick and you can formulate your investment strategy (short, medium or long term).
• Start small; you can always step up the amount of money later. Do not sink your life savings (or a ridiculous amount of leveraged capital) into the market all in one go, unless you can afford it.