American Depository Receipts

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American Depository Receipts

American Depository Receipts

America depository receipts (ADR fs) represent ownership of shares of a non-United States company that trades in United States financial markets. Many foreign stocks trade on US stock exchanges as level II or III ADR fs. Through the purchase of American Depository Receipts US investors can buy shares of promising foreign companies without needing to change to foreign currencies, collect dividends in foreign currencies, and deal with a stock broker in a foreign language. Owners of American Depository Receipts receive dividends in US dollars, buy and sell just like buying stock and selling stock of American companies. In addition traders can follow these foreign stocks with technical analysis tools such as Candlestick analysis just like they do with US stocks.

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American Depository Receipts

  1. 1. American DepositoryReceiptsBywww.candlestickforums.com
  2. 2. America depository receipts (ADR fs)represent ownership of shares of a non- United States company that trades in United States financial markets. Many foreign stocks trade on US stock exchanges as level II or III ADR fs.
  3. 3. Through the purchase of American Depository Receipts US investors can buy shares of promising foreign companies without needing to changeto foreign currencies, collect dividends inforeign currencies, and deal with a stock broker in a foreign language.
  4. 4. Owners of American Depository Receipts receive dividends in USdollars, buy and sell just like buying stock and selling stock of American companies. In additiontraders can follow these foreign stocks with technical analysis tools suchas Candlestick analysis just like they do with US stocks.
  5. 5. American Depository Receipts are issued by one of four US depositorybanks, the Bank of New York Mellon, Citibank, Deutsche Bank orJPMorgan. ADR fs represent a share,multiple shares, or a part of a share of the foreign stock in question.
  6. 6. The owner of an AmericanDepository Receipt can, in fact,request and receive the foreign stock that the ADR represents but that really defeats thepurpose and ease of trading an ADR.
  7. 7. The American Depository Receipt tracks the price of the foreign stock in its home market, adjusting for currency rate variation. As an ADR represents a foreign stock both fundamental analysis of the foreign company and technical analysis of market pricing in the USA are valuable in trading these replacements for foreign stocks.
  8. 8. It is level II American depositoryreceipts that are typically traded on US stock exchanges. Unsponsoredshares and level I ADR fs are traded over the counter. This is a convenient way for many foreign companies to have their stocks traded in the USA.
  9. 9. However, foreign stocks belowthe level II cutoff have minimalreporting requirements and the trader or investor dealing in these has many of the sameproblems as with penny stocks investing on the OTC market.
  10. 10. Level II ADR fs must meet SEC filing requirements and aredelisted from stock exchanges if they fail to do so. Level III ADR•fs are typically from companies that are raising capital in the USA by selling stock.
  11. 11. They are subject to much more strict reporting requirements, similar to American companies. Thus thoseinterested in trading ADR fs or interested in long term investingin foreign companies will be able to trade level II and III American Depository Receipts on a US stock exchange.
  12. 12. Trading stocks through the use of American Depository Receipts allows US citizens access to promising means ofpicking offshore investments. Level II and III ADR fs provide sufficient information for investors and traders to do adequate fundamental and technical analysis of these stocks.
  13. 13. It will be possible to not only determine a foreign stock fs margin of safety and intrinsic stock value but to be able tofollow profitably with Candlestick patterns as well.
  14. 14. Application ofCandlestick tradingtactics is possible with ADR fs as well as other US based stocks trading on US exchanges.

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