But

Its not necessarily that easy if you want to buy foreign stocks which you shouldnt really underestimate nor neglect. Theres a whole batch of foreign stocks out there that make great investments but that are not available in your country, or only with difficulty.

And thats the reason for this article. Several of my subscribers emailed me saying that they were interested in a stock but couldnt purchase it in their country. Now why is that?

If you want to buy Microsoft or Wall Mart stocks for instance, you will not experience any problems at most stock exchanges let alone the USA. These two stocks alone already have a trading volume of over 10 million + every day on Wall Street. Even the regional stock exchanges like Chicago or San Francisco etc. have a high trading volume with Microsoft and Wall Mart. Buying and selling takes place within seconds.

But although most foreign stocks are also found on the trading floors of New York and other international exchanges, there are exceptions. Like the Canadian company Loblaw for example. You wont see Loblaw stocks anywhere in Frankfurt, which is the largest stock exchange in Germany. Theres only a bit of volume at the regional stock exchange in Berlin. On average about 17 stocks per day. And thats nothing!

The same is true for other big exchanges too! You will not find every single stock in New York, London, Frankfurt, Sydney or Hong Kong. It simply has to do with supply and demand. If theres hardly any demand for a stock in XYZ country for whatever reason you wont have the necessary supply. So either the stock is not available in your country at all, or only at very low volumes.

The difficulty with very low trading volumes is, that if you dont only want to buy say 10 or 20 stocks, but maybe 500 or even 1000, this volume will be difficult to get and may take several hours or even days.

What can also happen then is, that your order will automatically be split up into several orders until the entire volume ordered is purchased. This is what happened to one of my orders a few years ago. And every order is charged with a commission. Considering the extra charges for each order at your local stock exchange, it might even be cheaper if you buy the stocks at a foreign stock exchange where volume is much higher.

And thats exactly what you also do if you find a good stock that you are eager to get hold of, but cant buy it in your country at all! You buy your stocks at a foreign exchange which in most cases will be the country of the stocks origin. This will also involve higher charges because you gonna have to do this via 2 brokers.

So lets take the Canadian Loblaw again. If I would like to buy this stock, Im gonna have to see my broker here in Germany who will then buy the stocks at the stock exchange in Toronto which will involve several extra commissions and charges. Because not only my broker will charge a commission but the broker in Canada too. So Ill end up paying 2 brokers who are involved in my transaction.

So thats simply how it works. My broker will contact a broker in Canada who will then make the purchase for me. And apart from extra charges involved it will also take longer before the transaction goes through.

But these extra commissions shouldnt be overrated. If you find a great and solid stock that you really want, then go for it and because if youre an investor and not a trader, you are probably contemplating a long-term investment anyway. And in the long run, commissions and other charges are negligible anyway.

At the end of the day its only important which stocks you buy and not the place where you buy them!

Yours in Successful Trading

Ricky Schmidt

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Historically, investing in stocks has generated a return, over time, of between 11 and 15 percent annually depending how aggressive you are. Stocks outperform other investments since they incur more risk. Stock investors are at the bottom of the corporate “food chain.” First, companies have to pay their employees and suppliers. Then they pay their bondholders. After this come the preferred shareholders. Companies have an obligation to pay all these stakeholders first, and if there is money leftover it is paid to the stockholders through dividends or retained earnings. Sometimes there is a lot of money left over for stockholders, and in other cases there isn’t. Thus, investing in stocks is risky because investors never know exactly what they are going to receive for their investment.

What are the attractions of blue chip stocks? 1. Great long-term rates of return.

2. Unlike mutual funds, another relatively safe, long term investment category, there are no ongoing fees.

3. You become a owner of a company.

So much for the benefits – what about the risks? 1. Some investors can’t tolerate both the risk associated with investing in the stock market and the risk associated with investing in one company. Not all blue chips are created equal.

2. If you don’t have the time and skill to identify a good quality company at a fair price don’t invest directly. Rather, you should consider a good mutual fund.

Selecting a blue chip company is only part of the battle – determining the appropriate price is the other. Theoretically, the value of a stock is the present value of all future cash flows discounted at the appropriate discount rate. However, like most theoretical answers, this doesn’t fully explain reality. In reality supply and demand for a stock sets the stock’s daily price, and demand for a stock will increase or decrease depending of the outlook for a company. Thus, stock prices are driven by investor expectations for a company, the more favorable the expectations the better the stock price. In short, the stock market is a voting machine and much of the time it is voting based on investors’ fear or greed, not on their rational assessments of value. Stock prices can swing widely in the short-term but they eventually converge to their intrinsic value over the long-term.

Investors should look at good companies with great expectations that are not yet imbedded in the price of a stock.

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More and more investors are looking to alternative investment options, and the largest single investment category is without a doubt property. Think about it for a second, there is a finite amount of land, and populations continue to grow. The simple equation of supply and demand means the property (in prime locations) will continue to be an excellent long term investment as demand outstrips supply.

As wealth increases per capita people have more disposable income to invest. Historically the equity markets have in general provided excellent returns when compared with inflation, but equity is less tangible, companies can go bust in effect vaporising your money. On the other hand property, if brought in the right location as a freehold, will be there forever, an asset for retirement income and inheritance for your children and generations to come.

So, buy to let looks an attractive investment, but there are also things to be aware of. Firstly you need to consider the ratio of rental returns to the actual cost of having the property. These costs need to be properly considered and will include; mortgage interest payments; property insurance; property maintenance; and property management. Considering these costs means allowing an appropriate budget to cover at todays interest rates and any projected increases as interest rates for most will be the largest cost for buy to let investment.

On the rental income side you also need to allow for periods where the property is vacant, e.g. in between tenancies. As a general rule assume one month per year, but this will vary according to the type of property and the local rental market.

An increasing number of private landlords are also starting to manage properties themselves, if done correctly they can save 10% to 15% of the rental revenues. But how easy is this achieve? Depending on your situation it can be fairly straight forward, the key is having the right contacts, these include property maintenance companies (ones that you can trust) and services to locate and check tenants.

Within the UK there are services to find tenants through websites such as Simple2rent which are totally free to use, also there are some very effective services to check tenant risk through analysing their credit history, and County Court Judgements, etc. An example of this is Credit-Check-Services. But there are other websites also, do some internet research and you will find them.

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There are two kinds of FOREX investing strategies:

TECHNICAL ANALYSIS
FUNDAMENTAL ANALYSIS

TECHNICAL ANALYSIS:

Technical analysis is mostly undertaken by small and medium size investors.
A technical analysis considers factors that are actually affecting the market rather than factors that can affect it. Thus the price quoted reflects all the factors that have influenced it. Only market generated facts and figures are taken into account and factors like fear, hope, expectations or other changes are not considered. Thus the analysis is generally based on these suppositions:

Price reflects all actual market movements. That means price includes everything known to the market like supply and demand of foreign exchange, political factors, trade agreements etc. It is not concerned with what resulted in change rather deals with actual changes. It works on the assumption that price can take only one of the three directions:

 Upward
 downward
 sideward

It rest on those market patterns that have been identified as significant. That means those factors which are repetitive in nature or will produce desired results.

History always repeats itself as human psychology changes very slowly with time. That is market movements are predictable.

VARIOUS TECHNICAL INDICATORS ARE:

1. RELATIVE STRENGTH INDEX:

It takes into account the ratio of upward and downward movements in index and expresses it in the range of zero to hundred.

2.CHARTS:

Charts include various hills, slopes, curves that develop on a chart over a time and reflect some major and minor changes in pattern. Some of the chart formations include:

TRIANGLE
RECTANGLE
HEAD AND SHOULDERS
DOUBLE TOP AND BOTTOM
SAUCERS
V

3.GAPS:

A gap represents area on a bar chart where no trading took place.

UPGAP: it is formed when the lowest price on a particular day is more than the highest price of previous day.

DOWNGAP: it is formed when highest price of a certain day is less than the lowest price on previous day.

NUMBERS:

Various number theories are used in technical analysis like:

Fibonacci theory
GANN

STOCHASTIC OSCILLATOR:

This indicates the overbought or/and undersold condition. It uses a scale of zero to hundred percent.

FUNDAMENTAL ANALYSIS:

It is the one where current economic, political, financial situation of the country of currency is studied. A countrys economical and political condition depends upon many factors like the interest rate, unemployment level, exports and imports, per capita income, percentage of population living above and below the poverty line, inflation, trade relations with other countries, tax policies etc.

A fundamental analyst studies and evaluates all these factors before coming to any decision. Thus it helps in long tem decision making and making profits in short term by extra ordinary developments.

Some of the indicators that help in fundamental analysis include:

1. GROSS DOMESTIC PRODUCT:

It reflects total market value of all the goods and services produced in a country during a given year.

2. RETAIL SALES:

This reflects total receipts by all the retail stores in a country.

3. CONSUMER PRICE INDEX:

It reflects change in prices of consumer goods.

4. BUSINESS CYCLE:

It reflects various phases through which a business passes. These phases include:

EXPANSION
PEAK
RECESSION
DEPRESSION

5. MONETRY POLICY:

It controls the supply of money in an economy.

Trading successfully needs knowledge, time and understanding of a market. You cannot earn continuously in a Forex market due to its volatile nature. Thus as a trader you should try to consider both technical and fundamental strategies of forex trading and make decision based on market expectations and trends. Try trading with money that you can afford to loose without any regrets. Trade with logic and if you are not sure quit and take rest for some time.

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