Saturday, September 29, 2007

You Cannot Build a Free-Market Economy Going Half-Way - China

China has posted year over year growth of about 10% and many economists say that is where the money is. Indeed there is a lot of capital flow there, but we have just witnessed a near disastrous stock market correction. What is going on in China? Is China really interested in free-markets? Well let's look at some of the issues?

The Chinese Government subsidized airlines selling tickets 50% cheaper than South Korean Airlines. That is dumping. China continually practices Mass Media control and censorship, for instance their censorship of TV, Radio and Internet. China practices Currency Manipulation or currency gaming along with protectionism in their domestic markets.

What about Patent Piracy of your preferred trading partners technologies? You see, you cannot build a Free-Market Economy going half-way and therefore obviously China is not interested in building a free-market, they are interested in what is best for China and not in what's in the best interest for all concerned nor should anyone expect that from China.

Recently when asked about their pollution by the coalition for Global Warming, China responded that they would in the future consider the affect as they build new infrastructure, but would never let the Global Warming issue to slow their growth? Interesting because China's pollution is completely outrageous.

So, what is China going to do with this mess on their hands as 25% has disappeared in their market in just over a weeks period? What would you do? Will there be more manipulation or will there be a huge shifting of wealth, as more money pours in after rock bottom is hit?

L. Winslow is an Economic Advisor to the Online Think Tank, a Futurist and retired entreprenuer

Currently he is planning a bicycle ride across the US to raise money for charity and is sponsored by and all the proceeds will go to various charities who sign up.

Online Trading: Where Should I Start?

New to the trading scene? Overwhelmed by all the trading jargon out there and dont know where to start? Dont worry, you are not alone! Virtually all traders go through this experience! Allow me to share my opinion with you.

Where you should start depends firstly on your preference to risk. The tradable financial markets basically get split up into two main categories. The first category is Stocks or Shares and everything else I would classify as Derivatives, which include CFDs (Contracts for Difference), Options, Warrants and Futures (Indexes, Forex, Commodities, Currencies etc).

For those of you who have never traded before, I suggest you start off with trading plain and basic shares or the underlying stock. An example of this would be buying and selling shares in Microsoft. When you buy shares in Microsoft, you own a part of Microsoft. When Microsoft shares go up by $1, then you make $1 for every share that you have purchased in Microsoft. This flip side is also true. When Microsoft shares drop by $1, you lose $1 for every share you hold in Microsoft. Very Simple.

When you get into trading derivatives, the underlying method of trading is essentially the same. You will pick trades in the same way, exit trades in a very similar way, however, there is one major point that you must understand, and that is of leverage. Essentially, with a derivative product, you can control a much larger position size with the same amount of money. That being said, when a position goes in your favor, you make more money, however, when a position goes against you, you also lose more money. This is where money management rules become paramount. I will post an article giving examples of leverage at a later date.

Now that you understand a little about the types of products out there, how do you choose which one to trade. I cant offer you specific advice on that, but I can give you a little guidance.

I started off trading stocks in my home country, Australia. I feel that when you trade local stocks, you have a better connection with them. So if you are from the United States, go with the local markets. Likewise with anybody from any other country.

Initially, I believe you just have to get a feel for how the stock markets work. With a little experience in placing trades, you will get a feel for how volatile your local markets are, what the potential returns are, how frequent do trading opportunities come along and so on. Over time, you will better understand your preference for risk and your style of trading.

I would describe my style of trading as momentum trading. I dont try to pick highs and pick lows, as I believe that that is a very difficult thing to do. My trades range from a few days to a few months long. Trading is my full time job and I trade from home.

I have met many people who get started in trading but have unrealistic expectations to begin with, and lack the discipline to execute their particular trading plan.

My honest belief is that ALL trading systems work, provided they have been proven and tested. The only thing in the way is the human element. More on this topic in future articles.

Still confused? Still dont know where to start? Well, post a comment and I will do my best to steer you in the right direction!

By Peter Yin,

12 Basic Stock Investing Rules Every Successful Investor Should Follow

There are many important things you need to know to trade and invest successfully in the stock market or any other market. 12 of the most important things that I can share with you based on many years of trading experience are enumerated below.

1. Buy low-sell high. As simple as this concept appears to be, the vast majority of investors do the exact opposite. Your ability to consistently buy low and sell high, will determine the success, or failure, of your investments. Your rate of return is determined 100% by when you enter the stock market.

2. The stock market is always right and price is the only reality in trading. If you want to make money in any market, you need to mirror what the market is doing. If the market is going down and you are long, the market is right and you are wrong. If the stock market is going up and you are short, the market is right and you are wrong.

Other things being equal, the longer you stay right with the stock market, the more money you will make. The longer you stay wrong with the stock market, the more money you will lose.

3. Every market or stock that goes up will go down and most markets or stocks that have gone down, will go up. The more extreme the move up or down, the more extreme the movement in the opposite direction once the trend changes. This is also known as "the trend always changes rule."

4. If you are looking for "reasons" that stocks or markets make large directional moves, you will probably never know for certain. Since we are dealing with perception of markets-not necessarily reality, you are wasting your time looking for the many reasons markets move.

A huge mistake most investors make is assuming that stock markets are rational or that they are capable of ascertaining why markets do anything. To make a profit trading, it is only necessary to know that markets are moving - not why they are moving. Stock market winners only care about direction and duration, while market losers are obsessed with the whys.

5. Stock markets generally move in advance of news or supportive fundamentals - sometimes months in advance. If you wait to invest until it is totally clear to you why a stock or a market is moving, you have to assume that others have done the same thing and you may be too late.

You need to get positioned before the largest directional trend move takes place. The market reaction to good or bad news in a bull market will be positive more often than not. The market reaction to good or bad news in a bear market will be negative more often than not.

6. The trend is your friend. Since the trend is the basis of all profit, we need long term trends to make sizeable money. The key is to know when to get aboard a trend and stick with it for a long period of time to maximize profits. Contrary to the short term perspective of most investors today, all the big money is made by catching large market moves - not by day trading or short term stock investing.

7. You must let your profits run and cut your losses quickly if you are to have any chance of being successful. Trading discipline is not a sufficient condition to make money in the markets, but it is a necessary condition. If you do not practice highly disciplined trading, you will not make money over the long term. This is a stock trading system in itself.

8. The Efficient Market Hypothesis is fallacious and is actually a derivative of the perfect competition model of capitalism. The Efficient Market Hypothesis at root shares many of the same false premises as the perfect competition paradigm as described by a well known economist.

The perfect competition model is not based on anything that exists on this earth. Consistently profitable professional traders simply have better information - and they act on it. Most non-professionals trade strictly on emotion, and lose much more money than they earn.

The combination of superior information for some investors and the usual panic as losses mount caused by buying high and selling low for others, creates inefficient markets.

9. Traditional technical and fundamental analysis alone may not enable you to consistently make money in the markets. Successful market timing is possible but not with the tools of analysis that most people employ.

If you eliminate optimization, data mining, subjectivism, and other such statistical tricks and data manipulation, most trading ideas are losers.

10. Never trust the advice and/or ideas of trading software vendors, stock trading system sellers, market commentators, financial analysts, brokers, newsletter publishers, trading authors, etc., unless they trade their own money and have traded successfully for years.

Note those that have traded successfully over very long periods of time are very few in number. Keep in mind that Wall Street and other financial firms make money by selling you something - not instilling wisdom in you. You should make your own trading decisions based on a rational analysis of all the facts.

11. The worst thing an investor can do is take a large loss on their position or portfolio. Market timing can help avert this much too common experience.

You can avoid making that huge mistake by avoiding buying things when they are high. It should be obvious that you should only buy when stocks are low and only sell when stocks are high.

Since your starting point is critical in determining your total return, if you buy low, your long term investment results are irrefutably better than someone that bought high.

12. The most successful investing methods should take most individuals no more than four or five hours per week and, for the majority of us, only one or two hours per week with little to no stress involved.

C.C. Collins is a Financial Planning Advisor and Author of Scientific Wealth Strategies at Find more information at

The Secret to Stock Market Trading

Think stock market trading and you see images of pin-stripe suits, leather brief cases and the sweet smell of money. Of course there is also the vision of Gordon Gekko, the fictional version of a cut-throat Wall Street manipulator. Is the secret to stock market trading known only to these insiders? No, this secret is available to any investor if you practice the essential elements.

Element of Reality. Applying the secret to online stock trading starts with planting feet firmly on the ground. Profits can be made fast and fortunes lost just as fast. Online trading may have the same stomach turning impact of piloting a supersonic jet, but even jet pilots have to know how to land safely back on earth. Online stock traders have to accept that winning and losing depends on factors outside of your control. And when you lose, traders need to bounce back quickly and get back into the market.

Element of Learning. Traders can be so busy reading reports and newsletters that they fail to learn from the best teacher of all, experience. Every investment whether a winner or a loser presents a valuable lesson. In learning from experience, the secret is to examine the emotional as well as technical aspects of the trading decisions. When traders acquire a strong sense of self checked by motivations, they discover influences on trading that hidden beneath the surface. Dont be surprised if you learn more from your losses than from winners.

Element of Suspense. Online stock traders must be ok with uncertainty. The best research and an ideal stock choice can be turned upside down with the impact of external events, government policy changes, oil prices or just about any world crisis. Successful traders enjoy the game. They thrive on responding to the unexpected and savor profits rescued from crisis all the more. Traders who cant take suspense need to go for long term buy and hold strategy or just drop their cash into a mutual fund and let the pros manage it for them.

Element of Flexibility. The stock market is a fluid environment. Online stock traders, who are ready to go with the flow, even if it means tweaking their trading strategy, respond most effectively to market swings. Projections are merely the hoped for scenario. For day traders its particularly important to be flexible, accept any losses and get back on track after adjusting the market changes.

Element of Confidence. Online trading fluctuations can cause traders to doubt their strategies. Losing money in the market does not make you a loser. Keep a clear separation between what you do and who you are. Online traders who maintain strong belief in their system, research and instinct get back in the winners circle faster than traders who are driven by emotion.

Traders who combine these elements are on the way to mastering the Secret to stock market trading success over the long haul.

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