Between 30-50% of market volume is caused by market makers. This is an alarming increase over the past. Individual investors trying a market timing strategy are at a disadvantage.
Market Timing
Anyone who thinks they can time the market has the deck stacked against them.
In the past, it was a common strategy to try to buy and sell at optimal prices given any day’s market movements.
They likely are buying and selling at a different price from what the market makers are getting.
Market Makers
With the advent of computerized systems and methods, especially in the last decade, markets are getting more efficient .
But, during times of volatility, they more inefficient.
Why is this important?
Because any individual investor who tries to time the market needs to understand what they are up against.
Professionals who time the market for a living, but also computerized systems and algorithms that trade not in a second, but a millisecond.
This is the way markets are structured now.
This is partially why we are seeing more volatility than in the past.
Next Step
Ready to take the next step and work with a fee-only CFP? Reach out to schedule a Discovery Meeting to learn more.