Trading in London hasn’t even started but I’m expecting a big fall. The Dow closed down 200 points and the Fed made some interesting comments: http://biz.yahoo.com/ap/060605/wall_street_close.html?.v=5

This is exciting - a chance to make some money - i’m expecting a mini-crash and then a rally in the next few days. But don’t take my word for it: nobody knows anything.

A day for waiting - definitely not buying. Watch your portfolio plummet today.

What did you expect on 6-6-06?

All this just demonstrates the importance and effect of the macro environment. Price may vary up and down, sometimes quite significantly, yet this is nothing to do with the underlying fundamentals of the company; good and bad firms move with the tide.

Take Yahoo during the tech boom: it would double every few months; was that the company performing twice as well in that short space, no, it was just confidence in the market that pushed it to the stratosphere.

What’s going to happen to Microsoft? Google brings out a version Excel Spreadsheets..that’s a definite move to an online and easily accessible alternative version of MS Office. They haven’t been innovating: they need to speak to this guy: creativity-management.com/

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One Saturday morning, while he was sitting at his computer studying the market, David’s 7 year old daughter came up, tugged at his shirt sleeve, and said, "Daddy, why aren’t we rich?"

He looked his child in the eye, and thought to himself, what a great question - why aren’t we rich?

As she stood there expectantly waiting for an answer, he struggled to come to grips with the realization that, although he had focused his undivided attention on nothing but creating wealth for more than 15 years, he was still broke.

He had bought and sold hundreds of Stocks and several properties over those years, but had never made any real money to speak of.

He looked at his daughter, and asked, “What makes you think we aren’t rich, sweetheart?”

She looked at him sternly and said, “Because you said that if we were rich, you and mom wouldn’t have to go to work any more, and you both still work all the time.

You said we could live near the beach and play in the sand every day. I want to know what you are doing about that. When can we go and live at the beach?”

There’s nothing like a child to cut straight to the heart of the problem - and what was he doing about it?

“We’re not rich because daddy made some mistakes,” he finally answered.

“What kind of mistakes, daddy?” she asked.

“Well, I bought some shares that were going down and then didn’t sell them soon enough. Then I bought some houses but sold them again just before they went up in price.”

“Why did you do that?” she asked.

He had to think long and hard about that. He had no reason to buy shares that were going down in the first place. He had no reason to hold on to them when they kept going down. He had no reason to sell the properties either, come to think of it.

Her logic was flawless – why wasn’t he doing better financially than he was?

He knew in that moment that he had to change his strategy.

He owed it to himself and his family to finally get his act together and make some changes - that was the day the pain of not living up to his potential made him sit down and write out his stock market trading plan…his trading strategy and rules – he had to have a life raft.

He started by writing out his vision - what he wanted his life to look like when he became a successful trader and investor, then worked backwards from there - through the details of how he was going to achieve his dream.

He saw in his mind the 4 bedroom penthouse on the beach, the red Ferrari 360 Modena, the 80 inch plasma screen computer monitor in an office overlooking the surf beach 17 floors below, the family holidays, the million dollar donations to worthwhile causes and children’s charities.

He visualized all the tremendous benefits of becoming a successful trader, investor and philanthropist.

He realized that his main problem all this time had been that he was afraid of losing, and that fear was just too expensive to let it control his life any longer! He had been playing not to lose, instead of playing to win.

He decided he would never again sell a property unless there was a compelling reason to do so.

He decided that he would no longer accept anything less than perfect execution of his stock trading plan.

He decided that he would take every trade entry signal his system gave him and follow his trading plan as if his life depended on it.

As if, after each trade was closed out, he had to stand in front of a panel of super traders, and explain his actions to them - why he entered where he did, where he placed his stop losses, why he exited when he did.

And if they weren’t convinced he followed the rules of successful trading, he would be taken out and shot!

This certainly focused his attention on only trading strong trends - trends where the price bars were trading above their respective moving averages for long trades, or below for the moving averages for short trades, and the Stock price was moving strongly in one direction.

He pretended that if he couldn’t justify his trading decisions to his trading Mentors, he was dead…

That was the day he resolved to study his selected group of Stocks, the ones that had a track record of trending strongly, every day.

He would then take every trade his system produced, put his stop loss orders in the market as he entered each trade it a place where the trend had to change to take him out of the market, and he would hold every position until the trend changed.

He would act ‘as if’ he was a great trader, even though his record up to that point had been less than inspiring…

That innocent question from a child turned out to be the start of David’s successful trading career.

He started to trade profitably and consistently for the first time in his life. He thought he was doing well, and indeed he was making money.

He knew from his wealthy mentors that rich people are different; they make rational decisions based on facts, not emotions.

They understand the value of money - they respect it as a tool for building a better world. They buy well for logical reasons and hold until there is a valid reason to sell.

Then one day, he closed out a trade, and excitedly told his daughter, “Daddy made a big profit in the market today darling, come and look and see what I did.”

His daughter came over to the computer and looked at the screen as he excitedly showed her where he had bought a Stock and then sold for a $13000 profit. She looked at him and said, “But daddy, it’s still going up, why did you sell now?”

His smile faded as the power of that question sunk in…why had he sold it?

What was he doing getting out of such a strong trend just to take a profit? What would his trading Mentors say?

She was right…the market was still open, so he bought back in again. He had never been able to bring himself to do that before - he was becoming a great trader!

The rally continued and he kept buying more as it rallied. The trend finally changed, but his profit on that trade, when he eventually got a valid sell signal, was $34500!

His daughter’s simple, logical question 5 weeks earlier had been worth over $20000!

That was the last time he ever got out of a trade based on his emotions. His fear of the market was gone - thanks to some simple questions from a 7 year old…

So now, it’s your turn.

Whenever you are preparing to place a trade, find a small child, even if you have to borrow one, and ask them what the trend is. Then don’t trade the other way!

If your trading isn’t as great as you know it could be, decide to create a trading plan now that will become your life raft.

Remember, fear is just too expensive folks.

If you are afraid of losing money, reduce your position size until your fear goes away.

Once you have made a series of small profits, you will be trading with the markets money and you can increase you position size according to your growing confidence and account balance.

If you have a series of losses, reduce your position size again until you get back on the right track. Stick to your trading plan once you have something that works consistently.

Then, just go out and do it!

Rocky Tapscott is an active trader and investor. You can read more of his articles at http://www.hobbyandlifestyle.com

An informed investor knows where his money is going. For an investor in mutual funds, it is essential to understand the expenses of mutual funds. These expenses directly influence the returns and cannot be neglected.

The expenses of mutual funds are met from the capital invested in them. The ratio of the expenses associated with the operation of the mutual fund to the total assets of the fund is known as the “expense ratio.” It can vary from as low as 0.25% to 1.5%. In some actively managed funds it may be even 2%. The expense ratio is dependant on one more ratio – “the turnover ratio”.

“The turnover rate” or the turnover ratio of a fund is the percentage of the fund’s portfolio that changes annually. A fund that buys and sells stocks more frequently obviously has higher expenses and thus a higher expense ratio.

The mutual fund expenses have three components:

The Investment Advisory Fee or The Management Fee: This is the money that goes to pay the salaries of the fund managers and other employees of the mutual funds.

Administrative Costs: Administrative costs are the costs associated with the daily activities of the fund. These include stationery costs, costs of maintaining customer help lines and so on.

12b-1 Distribution Fee: The 12b-1 fee is the cost associated with the advertising, marketing and distribution of the mutual fund. This fee is just an additional cost which brings no actual benefit to the investor. It is advisable that an investor avoids funds with high 12b-1 fees.

The law in US puts a limit of 1% of assets as the limit for 12b-1 fees. Also not more than 0.25% of the assets can be paid to brokers as 12b-1 fees.

It is important for the investor to watch the expense ratio of the funds that he has invested in. The expense ratio indicates the amount of money that the fund withdraws from the funds assets every year to meet its expenses. More the expenses of the fund, lower will be the returns to the investor.

However it is also essential to keep the performance of the funds in mind too. A fund may have higher expense ratio, but a better performance can more than compensate higher expenses. For example, a fund having expense ratio 2% and giving 15% returns is better than a fund having 0.5% expense ratio and giving 5% return.

Investors should note: It is not sensible to compare returns of funds in different risk classes. Returns of different classes of funds are dependant on the risks that the fund takes to achieve those returns. An equity fund always carries a greater risk than a debt fund. Similarly an index fund that invests only in relatively stable and thus less risky index stocks, cannot be compared with a fund that invests in small companies whose stocks are volatile and carry greater risk.

Avoiding funds with high expense ratio is a good idea for the new investor. The past performance of a fund may or may not be repeated, but expenses usually do not vary much and will certainly reduce returns in future too.

Know more about mutual funds at http://www.completeonlinetrading.com.

Fundamental analysis is the practice of evaluating a company’s stock price by comparing base elements in the company’s balance sheets as well as general market factors. It does not include chart analysis, which is the domain of technical analysis.

The main principle of fundamental analysis is to find profitable companies to invest in by comparing revenues, sales, management, etc. There are two types of drivers to look at in fundamental analysis: internal drivers and external drivers.

Internal drivers are company factors that are directly related to the actual business in question. For example, liabilities, assets, revenue, income, products, management, etc. It is these characteristics in a company that you will be comparing to other companies in the same industry. This allows the trader to get a general understanding of where this company “sits” in relation to other companies with similar businesses. A trader can also use these internal numbers to calculate many different ratios that will help determine if the company is currently undervalued or overvalued.

Who is the management? What have they done in the past? What is the quality and diversity of the management team? All these questions can lead to a lengthy discussion about the particulars of each individual in management. Traders should use reports, news, internet, and other sources to help make an informed decision about the management team.

What are the company products and/or services? How does it compare to other competitive products? What’s unique? Why is it better? If you would not be willing to buy the company’s product why would you invest in that company? Companies with inferior products, weak development/product cycles, poor quality companies tend not to last very long. (I’m sure there are some exceptions to that rule, but it can be considered bad policy to invest in companies with bad products).

Production is very important when it comes to companies that produce oil/gas, wood, power, metals etc. Their value depends highly on their production output as well as the current value of the product. The more a company produces, the more it can earn. As well, these specific commodities vary in cost, the higher the value of the product, the higher the potential for profit. Oil is a perfect example of this relationship. As global oil prices rise so does the value of oil companies.

Profit margins are important, or for that matter, profit in general is important. Profit can be considered the keystone to fundamental analysis - the more profitable the company, the higher the potential for dividends as well as price growth. Most valuation techniques compare profit in some form or another to that of similar companies.

Companies that have not yet attained net profit are still in the early stages of development. While these companies generally have a larger growth potential, they also have more risk. Companies that are producing net income can generally be considered established in the market place. There is less risk, and typically, the price of the stock will reflect that. The axiom here is that the more the company makes, the more the company is worth.

Is there an institutional presence? The level of institutional presence is determined by the amount of shares outstanding that are owned by institutional investors (mutual funds, pension funds, investment houses, etc). As small companies mature, there is a point where they will be recognized by institutional investors. When these institutions begin investing in a company, the stock price will reflect that recognition (also when they sell out, it will be noticed in the stock price as well). Larger and more established companies typically have larger percentile institutional presence than smaller companies (micro-caps tend to have little to none).

While the study of volume patterns is in the realm of technical analysis, volume can also be used as a fundamental indicator. Does the company you are looking at have enough share volume to sell your shares at a later date?

External drivers are factors which are outside the company’s influence that can affect profitability. For example, the economy, inflation, interest rates, politics, bond market, etc. External drivers can be interpreted differently by different individuals. Remember, there is no magic formula.

Alex Martin is an senior analyst with MHP Systems Inc. http://www.chartfilter.com

Why does the average investor is making far less money than the sophisticated investor? Well, they are lots o reasons why these happens.

One of the most important reasons is the lack of financial education, and the lack of information, which in our era is more important than the usual education, the kind of education that we receive at school.

The average investor, invests accordingly with the advices that they are receiving from their financial advisors…

"Invest on long term. Diversify. Buy cheap stocks."

And they continue to buy and lose. But what happens when the market is starting to fall? What are the financial advisors telling them?…

"Don’t worry. Continue investing on the long term."

But how long is the period included in the expression "long term"? In the operations known as "commodity futures", the expression "long term" could mean 30 seconds. In business or real estate, the same expression could mean centuries.

The majority of the people who invests at the stock market, are people over 50 years and in a few years will retire. What will this people do if the market will crush tomorrow, or next month, or next year, or over 5 years from now? Are they protected? Are they prepared for that?

An article from USA Today, says that the main fear of Americanness is not having money.

Do you realize? Americanness don’t fear of a nuclear war, or the end of the world, or a new terrorist attack, they fear of not having money.

Then, why do so many people is investing without insurance? Why so many people is risking all the savings, all the money they worked for they’re entire life?

The investment process doesn’t have to be risky. Although the risk exists, the investments doesn’t have to be risky. And you don’t have to lose when the market decrease.

Tell me, please…

Would you buy a car without insurance? — That would be a total madness.

Would you buy a house without insurance? — That would be even a bigger madness.

Do you agree with me?

If yes, tell me please…

WHY DO YOU INVEST IN PAPER ASSETS WITHOUT INSURANCE? (sorry for shouting)

The average investor is interested by average things, that’s why is average. Average things are for the average people. Average investors like lukewarm things. But, if you want to be rich you must move away from the medium.

The average investor wins when the market grows and lose when the market decline.

The sophisticated investor makes money in both situations, especially when the market declines.

You can become rich when the market grows, but you can become very rich when the market falls.

So, while the average investor invest without any kind of insurance, the sophisticated investor invests with insurance.

And guess who is making more money, in less time and with little or no risks.

So, if you want to be a rich man, think like an rich man.

Tudor Ciurescu — investor an business man — learn-business.blogspot.com. You are free to reproduce this article as long as no changes are made and the author’s name is retained.

As I predicted, a rally. They’re climbing a little today. But I was wrong about the depth. I thought they’d decrease a couple of clicks more before recouping losses. So, they didn’t hit the depths of a few weeks ago.

I did think about buying yeterday but I waited. That’s the way it is. It could have gone either way today.

But no problem. This is a volatile period. And we’ll be back here again.

As usual, mining is leading the way. Which means there is more money to be made and more money to be lost trading them. The risk premium.

The ECB rate rise didn’t seem to have an effect. But it means there are worries about inflation / overheating etc.

Now also….look what’s happening in Tokyo…an early rally and then a drop…so I wouldn’t be surprised if that is mirrored here today.

Today I’m looking at luxury goods and services…something that tends to hold during a bear and a bull….investigating a firm that seems to be doing will - share price risen dramatically - but also has plans for expansion in the right places…

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Learning to penetrate the smoke screen that the Dow-Jones Industrial Average has become is, in my opinion, vital to the success of any investor or trader.

If you don’t know what is going on inside the "Dow", you don’t know anything worth knowing.

The complex formula used to compute this monstrosity, called price-weighting, goes far beyond simply adding up the individual prices and dividing the whole thing by thirty. It also employs a divisor designed to compensate for stock splits.

The effect of all this not only gives the higher priced issues more weight in the average but accounts for the incredibly high valuation of the average itself.

Confused? Good! You’re supposed to be. You see, dividing a number by a value less than one actually turns it into a multiplier!

The current divisor, as of this writing, is approximately .2 which is the same thing as multiplying by 5!

That means a one point move in a stock is good for a five point move in the average.

It also allows a few higher priced issues to give the illusion that the average stock is moving up when, in fact, the other issues are moving down.

Imagine thirty men carrying a heavy load up a mountain.

In the beginning all is well; each member is bearing their fair share of the load.

As the climb continues, visualize one member at a time becoming exhausted and, unable to continue, dropping out.

This means the heavy load, shouldered by a constantly shrinking number of remaining members of the climb, eventually collapses under its own weight.

If you were keeping track of the climbs’ progress and noted that what started out as a 30 man team was now down to fewer than 15, what would be your prognosis?

What would be your prognosis if all you saw was the average moving higher and higher and were completely unaware of what was going on inside?

What’s going on inside the Dow? Those that know should have a better chance of profiting than those that do not.

Because No One Cares More About Your Money Than You

http://www.dynamic-stock-market-strategies.com

Good trading,
Don Heggen

Know the Rules

Employee stock options can provide you with a substantial source of deferred income and permit you to control the recognition of taxable income. You generally pay no tax when an option is granted because you are not receiving any shares of stock, only the option to purchase shares at a later date.

In general, holding an option to acquire stock may be better than holding the stock itself. The option provides protection against loss should the value of the stock decline below the exercise price. In addition, the option gives the holder equivalent ownership rights in the corporation, without requiring any immediate investment. Employee stock options offer the potential to have post-exercise stock growth taxed as capital gains rather than ordinary income. This provides an advantage for those who are in the top tax brackets

Know the Difference

Nonqualified Stock Options (NSOs) give an employee the option to buy corporate stock at a specified, fixed price (usually at fair market value at the time the option is granted). In general, you must exercise your option to buy within a specified time period–typically 10 years or less.

Upon exercising your rights, any gain realized from the spread (the difference between the exercise price and the fair market value) is taxed as ordinary income. However, any gain realized from the date the option exercised until the date the stock is sold is taxed as capital gain.

Incentive Stock Options (ISOs) also offer the option to purchase corporate stock at a set price, but ISOs cannot be issued with an exercise price below the current fair market value of the stock.

Generally, the spread on ISOs is not subject to ordinary income tax at the time you exercise the option. However, spreads may be subject to the alternative minimum tax (consult your GROCO financial adviser for more information). Gain realized upon the sale of the ISO stock may be taxed as capital gain. Provided you have held the ISO stock for at least one year from the date of exercise and at least two years from the date the option was granted, the entire gain recognized upon sale of the stock is taxed as a long-term capital gain.

When to Exercise Your Options

The decision of when to exercise your options depends on several factors as well as your particular situation:

Your Company’s Plan

Generally, options become exercisable over a period of years. For example, options granted in the company plan vest 20 percent a year over five years. It’s important to know the details of your firm’s plan before you make a decision.

Your Company’s Growth

Understanding how your company is poised for growth is another important factor in your decision making process. Issues to review and understand are:

• How your company makes money – understand the industry that their earnings are tied to.

Your Current Financial Needs

The decision to exercise should consider the need for cash, the proximity to the option’s expiration and/or the current stock value as compared to its expected future value. With regard to ISOs, because of taxes, the required holding periods should be considered when determining when to exercise the options and/or sell the underlying stock.

Balancing Your Portfolio

You may also choose to exercise an option if your company’s stock represents a large portion of your investment portfolio and you wish to diversify your holdings. Some professionals say to reduce investment risk, company stock should not represent more than 40 percent of your portfolio.

Market Conditions

Obviously, market conditions will play a large role in your decision to exercise your option. If the stock underlying the option appreciates, you may wish to hold on to options as long as possible in order to take advantage of future gains.

Tax Ramifications

In the case of NSOs, you may want to consider exercising your option over a few years to avoid being forced into a higher tax bracket. Remember, the spread on NSOs is subject to regular income tax at the time of exercise. Because appreciation occurring before exercise is taxed as ordinary income, it may be advantageous to exercise over time.

Your company’s nonqualified stock options may be transferable to family members. If so, you may be able to trim your estate tax by giving options to your heirs. The transfer may be gift tax free if the value transferred is $11,000 or less ($22,000 if married). notwithstanding the transfer, upon exercise the executive will be responsible for any income taxes generated.

Alan L. Olsen is the Managing Partner at Greenstein, Rogoff, Olsen & Co., LLP, a top Bay Area CPA firm. A specialist in income tax planning, he frequently lectures and writes articles on tax issues for professional organizations and community groups. Alan has over 21 years experience in advanced tax planning including international tax, company reorganizations, multi-state taxation, financial statement preparation, stock options, estates and trusts, and representation before tax authorities. Alan received a BS in Accounting from Brigham Young University and an MBA in Taxation from California State University at Hayward. His website is ranked among the top accounting sites in the nation, featuring tax tools and wealth management articles: http://www.groco.com

Here is why you absolutely should consider the almost certain weakening of the dollar in the future regarding your stock investments. It’s the reason Warren Buffet just consummated the largest foreign investment deal in Israels’ history a U.S. $4,000,000,000 purchase of 80% of Iscar. The real tension right now between the U.S. and Iran, I believe, has little to do with Iran’s nuclear enrichment program. I believe that Iran is probably is still years away from the development of tactical nuclear weapons and this whole “nuclear crisis” is a smoke screen for tense economic negotiations happening behind the scenes.

If there is one thing I learned from attending one of the best public policy graduate programs in the U.S., where I had the chance to hear former Secretaries of Defense and former Presidents speak, is that politics and economics are forever intertwined, and that the politics of war is never what it appears to be as presented to the public masses. So that’s why I think the nuclear tensions between the U.S. and Iraq are for the most part largely fabricated beyond reality and any military tension that exists is more likely due to the IOB and not to Iran’s alleged uranium enrichment program. Don’t get me wrong, it’s not that I believe Iran doesn’t have an uranium enrichment program. I just believe that the stage they are at in their program is a far different reality than what is being presented to us through the media. The real military tensions that exists, those between Israel and Iran, are hardly even discussed. And just a couple of days ago, on June 4th, Iranian leader Ayatollah Ali Khamenei said that the U.S. could “seriously endanger energy flow in the region,'’ supplier of about a quarter of the world’s oil, by acting against Iran.

Ah yes, oil. This is what I believe is the true cause of tension between Iran and the U.S.- the I.O.B. or the international Iranian Oil Bourse. It is the first oil bourse in the world that plans to trade in a currency other than U.S. dollars, electing to trade in Euros.

The IOB already has the support of China, as well as prominent Latin American trading partners that are anti-American such as Venezuela. The IOB in fact would like to trade exclusively in Euros, not U.S. dollars. If this situation materializes, this could potentially spell disaster for the U.S. dollar and send it into free fall. I think a dollar crash is unlikely, but it is still possible over the next couple of years. What is more likely is a gradual steady decline in the dollar. Why? Right now, one reason every central foreign bank holds U.S. dollars is because they must buy oil in dollars. Every country in the world has to pay for oil in U.S. dollars, no ifs ands or buts. The IOB will change all this. This is a real threat as already foreign central banks all over the world are taking note.

The Financial Times reported this month that for THE FIRST TIME IN SIX MONTHS, central banks all over the world were net sellers of U.S. treasuries instead of net buyers. In March, Japan, the world largest holder of U.S. dollars, sold $18.2 billion worth of Treasuries. Sweden’s central bank cut its dollar holdings in half, also in March. South Korea has also moved away from the dollar, diversifying its assets in foreign currencies.

Some people say Iran is not that big of a player in oil, so even if this situation materializes, it will not weaken the U.S. dollar that much. Iran accounted for 15% of all oil exports from the Middle East in 2003. But that’s the small picture. And 15% is still a significant chunk of Middle East exports. The big picture is what kind of domino effect the IOB might trigger. If Iran takes this bold stance, who will follow? Hugo Chavez in Venezuela, Evo Morales in Bolivia, China’s Hu Jintao? And if all these events happen, then what happens to the value of the dollar? That’s the big picture that I believe the U.S. is considering in their negotatios with Iran over the IOB, I mean, nuclear enrichment program.

The IOB was supposed to open in March but its opening has been delayed. Then it was supposed to open last month, and it was delayed again. Most likely due to behind the scenes negotiations between the U.S. and Iranian governments about the effect the IOB will have on the U.S. dollar. Ironically, the Federal Reserve in the U.S. reported that it will no longer report M3 figures anymore. M3 measures U.S. dollar supply and this figure is necessary to know how much foreign government holdings of U.S. dollars are decreasing or increasing. The Fed has reported the M3 supply for a long, long time. The IOB was supposed to also open in March though it didn’t. You can interepret this how you want.

Already following Iran’s lead is Russia, or vice versa (I’m not positive which country introduced the concept of an oil bourse trading in foreign currency other than U.S. dollars). Russia is one of the world’s largest players in oil and gas. Why do you think last year that the most of the new billionaires on Forbe’s wealthiest people in the world list came from Russia. While most of the world ignored Russian oil stocks, many Russian oil stocks returned 300%, 500%, 1000% over the past several years. Gazprom is the largest natural gas company in the world. Russia’s Gazprom is warning Europe that it will divert natural gas exports elsewhere if European governments don’t allow the company to establish significant outposts inside their respective countries. And guess what? Russian President Putin has announced that his country will create an oil and gas bourse that will trade solely in roubles. This development is even more significant the the IOB.

If you need further proof that the dollar has a high probability of moving further downward, and perhaps significantly, besides all the world’s central banks moving out of the dollar, look to the actions of two of the greatest individual investors of all time, Warren Buffet, George Soros, and one businessman, Bill Gates. All have been tremendously short against the dollar (billions of dollar worth) this year and continue to be. Although Soros and Buffet have been spectacularly wrong at times in their bets, in this case you’d not only be betting against them, but you’d be betting against the smartest bankers in the world, those responsible for the decisions at the world’s central banks, and you’d be betting that the huge trillion dollar U.S. trade deficit would suddenly disappear, and you’d be betting that world political stability would suddenly happen.

The IOB and the Russian oil bourse would mean that the world’s central banks would no longer have to hold as many U.S. dollars as they currently are. If they chose to sell off U.S. dollars in larger quantities than they already have, the dollar could weaken sharply. Then finally take into account the U.S. federal reserve’s position. First of all there’s so much speculation right now about whether the feds will raise interest rates or not. They will. At least I believe that they almost have to. Rising interest rates protect a weakening U.S. dollar. Only problem is that for the massive U.S. trade deficit to close at all, the dollar will have to weaken not just a little bit more, but considerably.

So if the dollar weakens considerably, the U.S. feds will continue to rise interest rates, inflation will increase sharply, the rest of the world will continues to lose what little confidence they still have in the U.S. dollar, and one of the wisest investors on this earth,Warren Buffet, will start investing heavily outside of the United States into foreign markets. Oh, sorry, this last event has already occured.

So what does all of this all mean? Number one, if you hold lots of dollars, buy euros and an asian currency basket sometime in the near future. It will serve as nice hedge and should provide some decent gains over the next year.

This article may be freely reprinted on another website as long as it is not modified, changed, or altered in any way and as long as the below author byline is included along with the active hyperlink exactly as is.

J.S. Kim is the Managing Director of SmartKnowledgeU™. He has over thirteen years of experience in finance and financial services, and has earned a BA in Neurobiology from the University of Pennsylvania, a Master in Public Affairs from the University of Texas at Austin, and an MBA with a concentration in finance from the McCombs Business School, University of Texas at Austin. He is the inventor of the revolutionary MoneyPing™ investment strategies, a novel approach to learn how to build wealth, not just dreams.

To learn more about how to achieve financial freedom, and investment ideas to dramatically decrease risk and intelligently increase the probabilities of 25% or higher annual returns, click the following link Advanced Wealth Planning Techniques and Achieve Financial Freedom Ideas

When stock prices start to move within a certain range, falling to established lows and then rebounding up to established highs, meet with resistance, and fall back again, the stocks are said to be in a consolidation or congested phase.

Most of the time, typical consolidation patterns can be seen, with the most common one being the rectangle pattern or sometimes called a price "corridor" or channel.

When prices start to drop, traders get nervous and weak holders will sell their stocks so that they will fall to a support level which other traders will consider a good price to buy. From that level, stock prices will then rebound, often with volume as support comes into the stock.

As the price of the stock improves and increases, it will reach a peak where traders who have purchased the stock at lower prices will sell. At the same time, weak holders who have purchased the stock at higher prices may wish to bail out as their losses are narrowed with the improved prices. At that point in time, resistance is encountered and the stock price then tops over to form a peak.

When you connect the support prices and the peak prices where the price tops over, you will find the pattern of a channel or a rectangle.

During consolidation phases, prices trade within a range formed by the bottom of the channel or rectangle and the top of the rectangle or channel.

Technically, the use of oscillators will be suitable for trading within congestion phases. The key is to identify the bottom of the channel and to buy closer to the bottom of the channel and to sell as prices reaches the top of the channel or rectangle.

A common mistake newer traders commit is to continue to use their trend following trading system during a congested phase and encounter a lot of whipsaws as prices oscillate between a small range.

When you transit from a bullish market and moves into a bearish market, be contented with smaller gains which come from trading the congested and consolidation phases. Identifying where the price is within the channel is a good way to help you trade during these consolidation and congested phases.

Peter Lim is a Certified Financial Planner and author of the ebook "Swing Trading for Gigantic Profits" which you can check out on the website http://signaldot.poolofwisdom.com/swingbook.phtml You can also access free resources on swing trading at his website http://www.online-guides.info