Market Timing Strategies | (Setups, Regime Filters & Backtest)

What are Market Timing Strategies? Plenty of investors try to time the market. Most are unsuccessful due to a number of reasons. Thus, most investors should not time the market. However, most of the failures can be attributed to a few reasons. In this article, we look at some elements that we believe are required for successful market timing.

At the end of the article, we give you several market timing systems and strategies we have backtested that can be used for aspiring market timers. (and work well).

What is a timing model?

Market timing involves attempting to predict the future movement of an asset. However, predicting the future can be challenging to do accurately and is subject to many subjective factors.

To avoid this problem, we prefer timing models that are built using quantitative methods to make trading more mechanical and less discretionary. The rules for buying and selling are based on previously specified criteria, and personal opinions and predictions are not included in the model (obviously). We have written about this before:

• Mechanical Trading Strategies Vs. Discretionary Trading Strategies
• Mechanical Trading Strategies – Advantages with Mechanical Rules and Edges

The key to successfully trading a timing model is to closely follow the system and your strategy, assuming you have e a proper backtested market timing system. Even if you have an outstanding timing model, it will be useless unless you commit your money and follow ALL the signals. You don’t know beforeh