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Trading Foreign Stocks

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Trading Foreign Stocks

What is the value in trading foreign stocks when both the NYSE and NASDAQ offer lots and lots of US stocks? The point is that by trading foreign stocks an investor can take advantage of growth in various parts of the world at times when the markets are flat in the USA. During periods of Asian growth or volatile debt driven European markets trading foreign stocks can put the investor into stocks on the ground floor. Fundamental analysis of individual stocks and broader market trends works the same when trading foreign stocks as with stocks in US markets. Because foreign markets are commonly not as transparent as the NYSE or NASDAQ, many investors choose ADR’s. These are American Depository Receipts. Many foreign stocks trade in the USA as American Depository Receipts. Level II and III ADR’s require supervision by the SEC and, thus, have similar reporting requirement to US companies. Thus, an investor will have true numbers on which to base his estimate of the stock’s margin of safety and intrinsic stock value. Trading on the NYSE or NASDAQ these stocks can be profitably followed with technical analysis tools such as Candlestick stock charts.

Foreign Markets

Even though the Chinese economy has slowed it is still growing at more than twice the rate of the USA or EU when the two largest world economies are having a good year. This fact alone makes trading foreign stocks in China an attractive alternative to US stock investing. When an investor uses American Depository Receipts of Levels II and III he is assured of the transparency he is used to when evaluating US stocks. As with all investing and trading one needs to develop a strategy consistent with the market and individual stocks. For example, a viable strategy in China may be to look for growth stocks. In Europe an investor may decide to assess stock volatility as the Euro raises and falls as the Eurozone deals with a slow economic recovery and suddenly cooler relations with the Russian Federation over issues in Ukraine. If companies in Europe, such as Siemens, have substantial sales outside of the Euro Zone they may continue to have a strong balance sheet even if the Euro falls. Thus a trader could look for a stock in the Euro Zone with a high price to earnings ratio. He could follow via Candlestick patterns as well as quarterly reports and news about the Euro. In the periods of market inefficiency that follow changes in fundamentals, such as a debt default in Greece or Italy, he could profitably buy stock, sell stock, sell short, or profit from buying options as Candlestick signals indicate.

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Trading Foreign Stocks

  1. 1. www.CandlestickForums.comwww.CandlestickForums.com Trading ForeignTrading Foreign StocksStocks
  2. 2. www.CandlestickForums.comwww.CandlestickForums.com What is the point of trading foreign stocksWhat is the point of trading foreign stocks when there are plenty of US stocks towhen there are plenty of US stocks to trade on the NYSE or NASDAQ?trade on the NYSE or NASDAQ?
  3. 3. www.CandlestickForums.comwww.CandlestickForums.com Trading foreign stocks in Asia can putTrading foreign stocks in Asia can put traders where the growth is.traders where the growth is.
  4. 4. Before We Continue…Before We Continue… Click the links below to get yourClick the links below to get your FREE training materials.FREE training materials. Free Weekly Investing WebinarsFree Weekly Investing Webinars Don’t miss these free training events!Don’t miss these free training events! http://www.profitableinvestingtips.com/free-webinarhttp://www.profitableinvestingtips.com/free-webinar Forex Conspiracy ReportForex Conspiracy Report Read every word of this report!Read every word of this report! http://www.forexconspiracyreport.comhttp://www.forexconspiracyreport.com
  5. 5. www.CandlestickForums.comwww.CandlestickForums.com Trading foreign stocks in Europe can putTrading foreign stocks in Europe can put traders in situations of high markettraders in situations of high market volatility and potential profits as thevolatility and potential profits as the European debt crisis threatens a wave ofEuropean debt crisis threatens a wave of sovereign debt defaults and a plummetingsovereign debt defaults and a plummeting Euro.Euro.
  6. 6. www.CandlestickForums.comwww.CandlestickForums.com Sorting out who the winners will be and whoSorting out who the winners will be and who will be the losers in trading foreign stocks,will be the losers in trading foreign stocks, as usual, will take both fundamental andas usual, will take both fundamental and technical analysis of individual stocks andtechnical analysis of individual stocks and broader market trends.broader market trends.
  7. 7. www.CandlestickForums.comwww.CandlestickForums.com Trading foreign stocks does not requireTrading foreign stocks does not require trading on a foreign stock exchange.trading on a foreign stock exchange.
  8. 8. www.CandlestickForums.comwww.CandlestickForums.com Many foreign stocks trade in the USA asMany foreign stocks trade in the USA as American Depository Receipts.American Depository Receipts.
  9. 9. www.CandlestickForums.comwww.CandlestickForums.com Level II and III ADR’s require supervision byLevel II and III ADR’s require supervision by the SEC and, thus, have similar reportingthe SEC and, thus, have similar reporting requirement to US companies.requirement to US companies.
  10. 10. www.CandlestickForums.comwww.CandlestickForums.com Thus, a trader will have solid numbers onThus, a trader will have solid numbers on which to base his estimate of the stock’swhich to base his estimate of the stock’s margin of safety and intrinsic stock value.margin of safety and intrinsic stock value.
  11. 11. www.CandlestickForums.comwww.CandlestickForums.com Trading on the NYSE or NASDAQ theseTrading on the NYSE or NASDAQ these stocks can be profitably followed withstocks can be profitably followed with technical analysis tools such astechnical analysis tools such as Candlestick stock charts.Candlestick stock charts.
  12. 12. www.CandlestickForums.comwww.CandlestickForums.com Trading foreign stocks, like all stock trading,Trading foreign stocks, like all stock trading, profits those who learn a stock’sprofits those who learn a stock’s fundamentals and closely follow stockfundamentals and closely follow stock price patterns with Candlestick analysis.price patterns with Candlestick analysis.
  13. 13. www.CandlestickForums.comwww.CandlestickForums.com The Eurozone’s economy is equal to orThe Eurozone’s economy is equal to or slightly larger than that of the USA.slightly larger than that of the USA.
  14. 14. www.CandlestickForums.comwww.CandlestickForums.com China’s is still substantially smaller than thatChina’s is still substantially smaller than that of the USA or the EU but is growing atof the USA or the EU but is growing at nearly ten percent a year.nearly ten percent a year.
  15. 15. www.CandlestickForums.comwww.CandlestickForums.com Both economies have many large companyBoth economies have many large company stocks that trade in the USA as ADR’s.stocks that trade in the USA as ADR’s.
  16. 16. www.CandlestickForums.comwww.CandlestickForums.com To trade these stocks a trader willTo trade these stocks a trader will commonly develop a trading strategy.commonly develop a trading strategy.
  17. 17. www.CandlestickForums.comwww.CandlestickForums.com For example, a potentially viable strategy inFor example, a potentially viable strategy in China might be to simply look for growthChina might be to simply look for growth stocks.stocks.
  18. 18. www.CandlestickForums.comwww.CandlestickForums.com In Europe, on the other hand, a trader mayIn Europe, on the other hand, a trader may choose to look for stock volatility or stockschoose to look for stock volatility or stocks that gradually become cheaper as thethat gradually become cheaper as the Euro falls.Euro falls.
  19. 19. www.CandlestickForums.comwww.CandlestickForums.com If companies in Europe, such as Siemens,If companies in Europe, such as Siemens, have substantial sales outside of the Eurohave substantial sales outside of the Euro Zone they may continue to have a strongZone they may continue to have a strong balance sheet even if the Euro falls.balance sheet even if the Euro falls.
  20. 20. www.CandlestickForums.comwww.CandlestickForums.com Thus a trader could look for a stock in theThus a trader could look for a stock in the Euro Zone with a high price to earningsEuro Zone with a high price to earnings ratio.ratio.
  21. 21. www.CandlestickForums.comwww.CandlestickForums.com He could follow via Candlestick patterns asHe could follow via Candlestick patterns as well as quarterly reports and news aboutwell as quarterly reports and news about the Euro.the Euro.
  22. 22. www.CandlestickForums.comwww.CandlestickForums.com In the periods of market inefficiency thatIn the periods of market inefficiency that follow changes in fundamentals, such as afollow changes in fundamentals, such as a debt default in Greece or Italy, he coulddebt default in Greece or Italy, he could profitably buy stock, sell stock, sell short,profitably buy stock, sell stock, sell short, or profit from buying options asor profit from buying options as Candlestick signals indicate.Candlestick signals indicate.
  23. 23. www.CandlestickForums.comwww.CandlestickForums.com Getting accurate and up to date stockGetting accurate and up to date stock information is often a problem wheninformation is often a problem when trading foreign stocks on a foreign stocktrading foreign stocks on a foreign stock exchange.exchange.
  24. 24. www.CandlestickForums.comwww.CandlestickForums.com Here is where American DepositoryHere is where American Depository Receipts are useful.Receipts are useful.
  25. 25. www.CandlestickForums.comwww.CandlestickForums.com The level II and III ADR’s are regulated byThe level II and III ADR’s are regulated by the Securities and Exchange Commissionthe Securities and Exchange Commission and must provide periodic and accurateand must provide periodic and accurate reports of their financial condition andreports of their financial condition and plans.plans.
  26. 26. www.CandlestickForums.comwww.CandlestickForums.com Because these foreign stocks trade as USBecause these foreign stocks trade as US stocks do on the NYSE or NASDAQ theystocks do on the NYSE or NASDAQ they readily tradable during US business hours.readily tradable during US business hours.
  27. 27. www.CandlestickForums.comwww.CandlestickForums.com Using Candlestick pattern formations andUsing Candlestick pattern formations and Candlestick trading tactics a US trader canCandlestick trading tactics a US trader can trade European or Asian stocks and taketrade European or Asian stocks and take advantage of the growth and volatility thatadvantage of the growth and volatility that often leads to trading profits.often leads to trading profits.

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