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There can be a lot more to stock trading than trading homegrown stocks. One useful approach is to find companies that work offshore. Another viable option is directly trading offshore stocks. The ...
There can be a lot more to stock trading than trading homegrown stocks. One useful approach is to find companies that work offshore. Another viable option is directly trading offshore stocks. The easiest way to do this is with American Depository Receipts, ADR’s. You can profit from trading offshore stocks that are listed on the New York Stock Exchange as ADR’s. An ADR is a negotiable security of a non-US based company which trades in United States markets. Such stocks are denominated in US dollars and, when they pay dividends, pay in US dollars. When trading offshore stocks via the ADR route an investor avoids the risk of dealing with a foreign stock exchange and dealing in a foreign currency. An ADR is issued by a US bank after shares of the original stock are deposited in a custodial bank in the nation of origin. This is typically done by a broker in the home country of the stock. The price of an ADR follows the value of the stock in the nation of origin as translated into US dollars. American Depository Receipts are an excellent vehicle for trading foreign stocks and not needing to speak the language of the country in which the original stock is issued. Because these stocks trade live on US exchanges they are amenable to sound technical analysis.
Picking a Foreign Stock to Trade
There are two general routes when trading offshore stocks. One is to look for a market that is likely to grow. If you believe that you can make money trading the growth and volatility in Latin America you may look for stocks issued in Brazil or Mexico. A viable choice might be oil stocks, especially in Brazil as recent oil finds bring its reserves to the level of Saudi Arabia. Alternatively, look for individual companies that are powerhouses in their homeland and exporter goods and services to the world. In this case, issues such as a fall in currency value in a nation may be helpful both in making a stock cheaper to buy and in making the underlying company more competitive in world markets. To the extent that the local currency is volatile trading offshore stocks can substitute for trading currencies.