Market timing

Market timing is the prediction of future market movements to shift funds in and out of investments. The intent is to buy securities before prices increase and sell them before prices decline. Technical indicators and forecasts of future economic conditions are typically used as the basis for these investment changes. It is quite difficult to anticipate market changes with any degree of accuracy, so investors who engage in market timing over the long term tend to underperform those who simply keep their funds in the market. The market timing strategy also incurs higher transaction costs to buy and sell securities than a more passive investment approach.