Market timing

Market timing trading strategy is the act of moving in and out of a financial market or switching between asset classes based on some predictive methods. Usually, market timing strategies include two assets, a risky asset (for example, ETF based on the market index) and a reserve asset (most often cash). The catch is to know when to switch between the two in order to realize only the positive market movements. These decisions are based on some predictive factor that tells the investor in which periods to go long the risky assets and when to switch to the reserve asset. These predictive tools can include some well-known price-based technical indicators (moving averages, momentum-based indicators, oscillators like RSI, etc.) or sentiment or economic indicators. Market timing strategy is an investment strategy based on the outlook for an aggregate market, rather than for a particular slice of the market. These strategies can be used in any asset class; however, they are the most popular in the stock market.

Financial literature offers a growing number of market timing strategies for international investors.

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The Encyclopedia of Quantitative Trading Strategies

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