The old adage states that "The trend is your friend." But not everyone plays that game. Some seek to maximize profitability by playing the inevitable reversals. And those who succeed perform exceptionally well. But it takes a certain mindset to do so. Read this short piece to see if you have what it takes.
Many investors focus almost entirely on the nitty-gritty of when to buy and sell and fail to recognize that in the long run, it is the relative smoothness of their equity curve or lack thereof that will ultimately determine their success.
Sundial Capital Research is an independent investment research firm dedicated to the application of mass psychology to the financial markets. Sundial publishes the SentimenTrader.com website.
Our focus is not market timing per se, but rather risk management. That may be a distinction without a difference, but it's how we approach the markets. We study signs that suggest it is time to raise or lower market exposure as a function of risk relative to probable reward. It is all about risk-adjusted expectations given existing evidence.