Tuesday, October 2, 2007

Forex Day Trading Tips You Need to Know

The popularity of forex currency trading system continues to grow as more and more people have realized the potential income that they can earn from forex trading.

With a massive daily profit of $1.5 trillion, forex trading has definitely surpassed the combined profits of bond market and global stock market. This is probably the main reason why many people were enticed to try forex trading.

Along with the massive growth of forex trading comes the forex day trading. As its name implies, forex day trading mainly refers to the actual selling and buying of various foreign exchange currencies all throughout the day. Its main purpose is to come up with no net variation in place at the last part of the day. In other words, for every forex currency bought, there should be one currency sold.

In order to see the profit or the deficit, one must look into the discrepancy between the current values of the currency being sold to the purchase amount. The main incentive of this method of trading is to lessen the burden of maintaining a position during the night.

Normally, the open price may have considerably altered from the earlier days final currency value. Hence, forex trading that involves traders who are dependent on the currencys performance during the day is known as forex day trading.

In essence, forex day trading is not as dangerous as the other types of forex trading activities. But then again, the usual employment of margin purchases such as utilizing funds on loan increases the deficits and profits. So to speak, the potential shortfall and returns may happen in very little time.

For this reason, experts say that it is normal to expect that nearly 90% of forex day traders will lose profit. Hence, it would be more enjoyable on the part of forex day traders to gamble their money that is not important to them.

The main point here is that even if forex day trading aims to provide you with the right amount of money that you need to gain, it should still be separated from the psychosomatic point of examination and trading activities.

To know more about forex day trading, here are some tips that you need to know, or you can read about forex futures trading.

1. You should know that forex day trading is course oriented

This means that forex day trading is focused more on the development. Forex day traders are expected to identify what comprises the winning trade. By the time you have already identified the outline, you will have more confidence in taking the trade.

This means that you will easily make good decisions without feeling regretful. In addition, at the end of each transaction, you will be able to feel good about your decision.

2. You are bound to lose before you can gain something

Forex experts say that every successful forex traders has definitely lost some hefty amount of money before they were able to achieve something. In fact, they say that this is the primary factor needed in order to gain success in forex day trading.

However, it does not necessarily mean that because you are bound to lose money at one point or another, you should expect loses all throughout. It is still important to remember that as a forex day trader, you must do everything just to win the game.

This can be done by speculating positively at all cost, taking risks without uncertainties. Of course, losing is part of the game. But remember that losing is not a major issue in ones success.

Fail if you must; that is, if you will think that losing is inevitable. Yet, one should also keep in mind that these loses are relatively small and will only take few minutes of your time to make those errors.

And lastly, it is important that you know what you are doing. Do your homework and find out more about forex day trading. In this way, you will learn the basic safety measures of forex day trading. You will also learn the important steps you have to make if ever the unforeseen circumstances take place.

So the next time you want to start a career in forex day trading, it is important that you start on the insides first. Know what the client wants. From there you can already make a fresh start in trading.

For more information and tips about forex trading. Visit us at http://www.ForexTradingSpot.net.

Are These Simple Trading Mistakes Costing You Money In The Forex Market?

The 2% rule is a powerful tool in Forex trading. By adopting this rule youre using a strategy that decreases the size of your losses during losing streaks, an important consideration. There is, however one small caveat that you need to be aware of when using the 2% rule to calculate how many Forex shares you are going to buy. As you know, the number of shares you can purchase is determined by your maximum loss and the size of your stop. This means that by increasing your risk, you can also increase the dollar value of the position you open. By simply shrinking your stop size, that is by setting a tighter stop loss, you can increase the dollar value of the position you open.

To avoid a situation where you could end up with excessively large positions that may put your Forex trading float at risk, you can choose to introduce an extra rule. This rule would limit the dollar value of a position to be no more than a set percentage of your entire Forex trading float.

For example, you might decide that youll never open a position that has a dollar value of more than 25% of your entire Forex trading float. This rule would only be executed if, after calculating the formula that determines how many shares you buy, you find the dollar value of that position would greater than 25% of your float. If this happened, you would scale down the position to make sure it did not exceed that 25%.

The percentage that you decide upon will depend on the type of system youre trading, the size of your float, and your personal tolerance for risk. Generally, smaller Forex trading floats might use 25%, and larger Forex trading floats might use as little as 10% or even 5%. There are no definitive numbers, and the percentage that you choose will depend on your personal circumstances.

Once this tendency is corrected for you will have all your money management rules in place, ready to control your risk in the Forex market. Now you need to take the next step. Test your system to find out which of the variables best suit you, remembering always that position sizing is the most significant part of any system design. It is the lynchpin of money management. Once youve tested your system, and fine-tuned your rules, you will be well on your way to becoming a successful Forex trader.

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comes to designing profitable stock trading systems.

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Singin' the Market Research Blues

Good data is hard to find. It's so easy to get the other kind! If you feel like singin' the blues whenever you try to find reliable business information, you're not alone. A lot of other marketers are singing the same tune.

Solid information is critical, the basis for making any marketing plan or decision. Yet, finding that information is easier said than done. The Internet seemed like it would be a quick fix to the problem. While the Internet does serve as a bountiful source of business statistics and information, it has thus far proved both a blessing and a curse for business research. The information on the Net can be inaccurate and difficult to locate without spending a lot of time with fruitless searching.

Clifford Stoll says in his book, Silicon Snake Oil, "There is no easy, complete access to information. Never was. Never will be." Although there may be no quick and easy source for accurate business information, we offer in this article a few places to look for helpful data.

The Personal Touch
Unlike much Internet information, libraries are not only catalogued and organized, they offer the most user-friendly sources of business information available: librarians. These wizards of information provide the personal touch by expertly guiding us through the ever-increasing maze of available knowledge. Infinitely patient people, librarians spend most of their time gently guiding those of us who search for business information but don't know where to find it. Whether your questions concern finding dates of trade shows or defining prospect lists in a special database, the staff of a good business library is trained to help.

The Internet
You don't need to end up disappointed when you try to collect business facts on the Internet. To help lower your frustration level, we recommend the following addresses for free on-line research. Groups such as universities, governments or professional associations generally maintain these sites.

Completely devoted to patent information, including search engines for a variety of categories.


www.lib.umich.edullibhomeIDocuments center/frames/statsfr.html
Well organized and maintained site with a variety of hyperlinks to useful information including Census Bureau data, Securities Exchange Commission (EDGAR) filings and U.S. Industrial Outlook statistics.

Another excellent site with hyperlinks to the Wall Street Journal Interactive edition and Hoovers On Line Research, among others.

www.census.gov/econ/wWW/ econ_cen.html
Economic census data including industrial products overview, annual survey of manufacturers and other good industry information.

Stock market information, excellent research hyperlinks including one providing connections to local newspapers and periodicals throughout the country.


Articles about demographics and trends throughout the country including a search engine.


Great site for industry news/information including press releases and hyperlinks to companies.

Hyperlinks to a wide variety of federal departments including WorldTech-Foreign Technology Alerts.

Just be careful, information alone can only take you so far. As Clifford Stoll says, No amount of data, bandwidth or processing power can substitute for inspired thought. We hope you use the research tools presented here with confidence, but always remember, it is up to you to process this data and convert it into good, profitable business decisions.

Deborah Henken served as VP of Marketing at several Silicon Valley start-ups, and in senior marketing and channel positions at Hewlett Packard, Informix and BEA Systems. She earned her MBA from the Kellogg Graduate School of Management at Northwestern University. Deborah is Founder of the Highland Team.

Susan Henken has directed marketing at consumer and health care companies for more than 15 years. She provided marketing consulting to manufacturing companies at Minnesota Project Innovation through a grant from the SBA and Department of Commerce and ran her own consulting business. She is currently Director of Marketing for Consumer Products at Compex Technologies. She earned her MBA from the Kellogg Graduate School of Management at Northwestern University

Forex Trading 'Must Do': Instant Guide For Forex Beginners

It is believe that more than 50% of Forex traders are losing money long term in the foreign currency exchange market. Yet, there are still a lot of Forex traders jump in to the market, trade blindly and lost their money. Trade after trade, its surprising to see that 'normally-losing' traders keep betting (not investing!) their money into Forex market without reviewing their trading strategy. No matter you are the experienced or the beginners, there are certain 'must-do' when trading Forex to manage the risk wisely and to increase your possibilities in making profits.

Forex traders must-do 1: Invest in your brain first
If you are serious about investing in Forex market, building up your trading skills and knowledge is the very first step that you must take. Seminars, workshops, video tutorials, online learning, or even books are handful to help us learn from the professional. Learn to implement technical charting into your trades; learn using indicators to determine the right time to enter/exit the market; brush up your experience by trading with a demo account all these are effective to ensure your smooth starts and it will definitely reduce your chances of losing money.

Forex traders must-do 2: Getting the right trading system
It is wise to research very well and consider all the various brokers' system available to you before making your choice. By applying certain level of computer automations (such like charting and doing auto trades), trading; a well-designed trading system will reduce your work dramatically. This in turns give you more time to focus on studying the market and plotting your strategy. Also, using auto-trading system will avoid you from doing emotional-trades.

Forex traders must-do 3: Have a trading plan
As the old says: Fail to plan is plan to fail. Trading is like sailing boat middle in the sea; you will not be going anywhere without compass and navigator. What is the detail objective of the trades? How much profit to expect from the trade? When to get into the market? How much to invest? What price to exit the market? If things do not work out, when do execute the stop loss order? How high is the affordable risk? A good trading plan should at least answers the above questions. Further more, if your trading plan fails, review and modify your trading plan. Find out your mistakes and learn from them.

Forex traders must-do 4: Money management
Money management is controlling your risk through the use of protective stops, while balancing your potential for profit against your potential for loss. For example, good money management means you know your profit objective and the odds of being right or wrong, and controlling your risk with protective stops. You are better off with a trade where you might lose $1000 if you are wrong and make $500 if you are right, that would work eight times out of ten, than to take a trade where you would make $1000 if you are right and lose only $500 if you are wrong, but works only one time out of three. If you are investing using your savings, it's even more important that you manage your money in your trading and in your personal expenses. Chances are high that you miss a good investing chance because of you are lack of capital.

Forex traders must-do 5: Discipline trading
Trading Forex with discipline is important. Success in Forex trading could not be achieved by plotting out the best trading plan. It is also depends on implementing the trading plan. Be discipline, trade according to your plan and never trade with your emotion no matter you are losing money or winning. Greed will stop you from taking profit at predetermined level; while fear will stop you from making the nice kill in the market.

Without a doubt, Forex is gaining its popularity fast against other kind of trading. No limited market access, no liquidity issues-after market hours, zero commission fees, low capital requirements with high leverage rates, and no restrictions on short selling -- Forex can be very beneficial. Always remember to plan your investment wisely by investing first on yourself; you shall get your reward at the end of the road.

Teddy, writter and webmaster in financial investment. Learn Forex trading from scratch in his website at http://www.golearnforex.net.

Forex Charts - Using The ADX Indicator For Bigger Profits

If you're using charts, then you want to trade the strong trends - and the Average Directional Movement Index Indicator, or ADX, enables you to do this.

Wells Wilder developed the ADX, and outlined it in his classic book New Concepts in Technical Trading Systems.

Lets look at this essential indicator in more detail - and see how to apply it on your forex charts, to give you greater accuracy when generating your trading signals.

Determining the Strength of the Trend

The ADX is a momentum indicator, which aims to measure the strength of the trend - and attempts to determine if the market is trending, or is trading sideways.

The Advantages of the ADX

A core belief of technical analysis is that a strong trend in motion is more likely to continue, than reverse. Therefore, you always want to be trading strong trends - as your odds of success are higher. The Average Directional Movement is a good indictor and you should consider using it as part of your currency trading system.

The Technical Bit

For the boffins out there, heres the technical bit dont worry if you dont understand the calculation, its easy to use when visually plotted. The ADX is based on the comparison of two other directional indicators, both of which were also developed by Wilder, and they are:

Positive Directional Indicator (+DI) and the Negative Directional Indicator (-DI) to produce ADX as showed in the following formula:

ADX = SUM[(+DI-(-DI))/(+DI+(-DI)), N]/N


N: Refers to the period of calculation. The formula above produces the ADX line, which oscillates between 0 to 100 values. The +DI and -DI are both present and can be seen to make up the indicator.

You dont need to understand the above calculation to use the indicator you only need to accept that the indicator works.

The indicator is easy to use when its visually plotted - and youll find it included, with most of the good forex chart services.

How to Trade using the ADX Indicator

The ADX its not a bullish, bearish trading signal generator - and should never be used as such.

The ADX indicator simply indicates the strength of the trend - and other indicators should be used to enter, and exit trades.

Although the ADX fluctuates from 0 to 100, it rarely moves above 60.

Use the ADX in the following way:

Readings above 40 indicate the strength of the trend.

Readings below 20 indicate range trading and flat periods of consolidation.

You can use the crossing of +DI and -DI to determine the trend direction; when +DI crosses -DI upward, its a bullish signal, on the other hand, when +DI crosses -DI downward its a bearish signal.

The ADX line is a great momentum indicator and like the RSI (also developed by Wells Wilder), the ADX it will help you trade the strongest trends - and give you advance warning of changes in momentum.

The Bottom Line

If you want currency trading success, you cant just trade support and resistance levels, and hope they hold or break. You need confirmation of momentum to get the odds on your side - and the ADX indicator will assist you.

Final Words

New Concepts in Technical Trading Systems was published in 1978, and was one of the first trading books I ever bought. Every trader should make this book a part of his or her forex education. If you want to learn forex trading the right way, get the book, and use the ADX indicator to increase your chances of making big FX Profits.

Grab 5 FREE Trader PDF's and get the support you need to trade like a pro with our user-friendly multi-lingual learn forex trading. Get up to date financial news, real-time market prices, tight pip spreads, built-in risk management system, and 24-hour professional support. Grab your FREE PDF's NOW:

7 Profit Multiplying Trading Strategies of Successful Traders

Would you like to see your trading profits multiply? Are you struggling to squeeze out small profits and reduce losing trades? Here are some tips to help you make better decisions each and every time you trade.

One of the first and foremost strategies of the successful trader is actually having a strategy in the first place! Many new investors mistakenly make decisions based on one day of trading or the release of just one economic indicator report. The more successful traders develop a long-term strategy for their investments and trade only when certain criteria are met. Traders who go back and forth from one strategy to another are sabotaging their chances for success. These erratic changes make it much more difficult to analyze which strategy works and when.

To boost profits, you must employ careful research and long-term planning. Just because the strategy is long-term does not mean you cannot participate in day trading or swing trading. The long-term strategy means developing investment goals and making sure that each trade adheres to these goals. You will also want to develop specific criteria for your trades. Use historical prices as a starting point in developing when you will buy and sell. Write down your entry and exit strategies. Then stick to them at all times and track your results. Lastly, modify the plan as needed to produce the greatest percentage of winning trades as possible.

Successful traders analyze the level of risk that they are willing to assume and their trading strategies are built around this risk level. Evaluate your individual financial needs. A 25-year-old male is much more likely to be willing to assume a higher level of risk than a 40-year-old female with two children to support. Determining the level of risk you are willing to undertake will keep you focused when developing your trading plan.

Research is another power tool in the successful stock traders arsenal. These traders utilize stock charts, press releases, news articles, and other sources to detect trends in various industries as well as to make individual stock predictions. They also do not make their trading decisions based on biases. Make sure that you are relying on solid financials, from a reputable source.

Successful investors stay smart by being aware of the trading scams that abound on the net. From bogus stock purchase programs to promises of doubling or triple digit returns, there are always dishonest people willing to use the allure of huge profits against you. Dont get scammed out of your hard-earned money. Make sure to avoid any site selling or relating to high yield investment plans, or HYIP for short. If it seems too good to be true, it most likely is.

Finally, understand and being able to utilize current technologies that will help your bottom line in the trading game. New online software and systems can give your trading strategy a boost. If you refuse to learn how to use this technology and availability of information, you are undercutting the profits you stand to make. You could buy many trading courses and still be ahead if you found just one that enables you to multiply your profits and become a successful trader. Keep in mind that the ones that dont work for you will most likely have a money back guarantee.

Lastly, making investment decisions based on emotions is one of the poorest decisions a trader can make. Dont let the emotions surrounding a loss keep you out of the game. If you are truly interested in investing to make a profit, suspending your emotions and making fact-based trading decisions that follow along with your set trading plan. If you dont stick to your plan, then how can you determine whether it was faulty and a new plan should be formed?

About The Author:
Jeff Fairchild is the publisher of http://www.best-stock-trading-systems.com which provides reviews of trading systems and software. You can view a review of favorite stock trading software here: http://www.best-stock-trading-systems.com/marketclub_review.html or a review of the ebook trading for beginners here: http://www.best-stock-trading-systems.com/trading_for_beginners_review.html

***** Publishing guidelines (Publisher, delete before using this article): Make sure when using this article that the about the author resource information is included and the related links are working (clickable). *****

Take Back Your Life: Prioritize Your Personal Life

For some reason, Americans think they have something to prove by doing it all themselves. People say to me all of the time, that someone else just cant do for them, the things that are on the to do list. Well, that is not only a ridiculous statement, but one that can be proven wrong over and over again. We all strive to appear in control. However, you cannot be in control if you are constantly struggling to juggle events and lists. So give up some of the control. I know that is a scary thought, but do it. By having professionals handle the items on your list, you will amaze your friends and family by having more time to enjoy life and you will seem more in control than ever. Dont worry. We dont expect you to do this cold turkey. We are going to give you tips on accomplishing this daunting task after we shock you into reality.

Don't Be A Statistic!
Here are the facts......I think the expression is "read 'em and weep." I know I wanted to when I saw these numbers.

According to the Economic Policy Institute, the average U.S. family works between 105-115 hours per week. So let's run the numbers.

168 hours in a 7 day week x2 (if 2 people are working those hours) = 336
Less 110 hours for work
Less 112 hours for sleeping
Less 28 hours for eating
Less 15 hours for commuting

So what's left........71 HOURS!!! That is 71 hours for both workers total. Look like a big number of hours? Keep running the math. (If you are single that leaves you with 35.5 hrs - cut everything in half)
Now what do you have to do in that 71 hours? Remember, if you are doing something as a family (both workers), you have to double the hours used when you subtract from the 71.

  • Spend time with your family
  • Run/attend children's activities (i.e. soccer, music lessons)
  • Run errands
  • Visit friends/relatives for special occasions
  • Make purchases - clothing, gifts, daily needs

Anyone feeling exhausted yet? I am ready for a nap...oh that's right...no time for that. Well here is some advice from the BusyB herself on taking back your life.

Remedying the Problem:

  1. First evaluate the numbers that we provided above and adjust for your particular family. Some of you may work more than 110hrs, commute more, sleep less, etc. Also, stay at home moms count as working members of the family in our book so dont forget that their hours count too!
  2. Make a list of all of the things you do that take up the 71 remaining hours (or whatever number you now have).
  3. Sort the tasks by type of activity. Feel free to make up your own categories.
    • Family
    • Home Repairs/Maintenance
    • Errands/Shopping
    • Social Activities
    • School Activities
    • Other
  4. Star the ones you would rather not do (and sorry your job is one of those adult requirements in life so don't star it you dont have a choice).
  5. Estimate how much time it takes you to do each task (per week).
  6. Now make a list of all of the things that are on the perpetual to do list that never seem to get finished. Sort this list as well. Having things that are constantly waiting to be completed, does nothing but add stress to your life.
  7. Now here comes the difficult part. Giving up control to get control. You are really going to have to put on your positive change attitude to make this work. Ready? Circle the items that can be hired out. The possibilities are endless. If you are serious about change, then you will not be making excuses at this point as to why someone else cannot do the job. Do NOT, use money as an excuse at this point. You cant afford to do that. This is your life you are talking about. Here are some suggestions:
    • Lawn Care
    • Home Repair Specialists (painters, handyman etc)
    • Errand Service
    • Personal Shopper/Concierge
    • Nanny/Babysitter
    • Car Specialists
    • Financial Specialists
  8. Make another list of things you would like to do but never have time to do.
  9. If you successfully completed Step 7, you should now be able to make a new list of things to do each week that include your wants. Can you replace the have to items with the want to items? If you answered yes, you did a great job and are well on your way to taking back control of your life. If you answered no, then we still have some work to do.
Now some of you are probably saying, this is easy for her to say. Well, no it isnt. I have been where you are and it took a major life-altering situation for me to realize what is really important. Do not put yourself in the same situation.

Stop now and take stock of your life and priorities. You may find that when you reprioritize you only need some reorganization and a little help from a life management consultant or you may have bigger problems and you need to schedule time each month for professionals to help you sift through the chores.

Get your life back but appear more in control. You can do it!

Additional Information:

In this article we mentioned concierge & errand services as well as personal shoppers. While this concept is taking hold all over the world, here is a little more information about what each is and can do for you.

Errand Service It is exactly what it says. It is a company that will do your errands for you such as groceries, prescription pickup, dry cleaning drop off/pick up etc. There are also many drugstores, groceries and dry cleaners that will deliver directly to your door. Check with your local service providers.

Concierge Service Think about what you use the hotel concierge for when you do an overnight stay. Well, personal concierges do the same thing but usually on a larger scale. They plan entertainment, organize activities, make inquiries, plan travel, etc. Many provide business and secretarial services. Just ask and your wish is their command. They are master organizers. Because they are well connected with local events and businesses, they can pound out a task in minutes where it might take you hours or days.

Personal Shoppers Most people know the term Personal Shopper as it relates to high-end department stores that offer the service in-store. However, personal shoppers are now everywhere and offer the flexibility of not being tied to one particular name store.

Record Online published an article entitled "Personal Shoppers Aren't Just for the Rich Anymore" in October of 2002.

And how true this statement is! There are three types of personal shoppers and it is not by any means geared only toward women:

  • one who does all of your shopping for you
  • one who serves as your conscience, giving you advice while you shop
  • one who organizes recreational shopping trips for those who just can't get enough

A personal shopper is aware of the trends, knows about fashion do's/dont's, and is savvy about where to find those special items that aren't available at the mall.

A personal shopper is able to provide you with items without asking you if you want them, because he/she understand your lifestyle and your needs.

And no it is not just about your wardrobe - it is anything in your life that is purchased. We have even known personal shoppers who buy cars for clients.

So all in all, you, the client, custom designs the type of service you require from your personal shopper.

In the case of ON THE GO 4 U, we offer a combination of these services, as do several other firms around the country. We provide you with the ultimate life management experience. We can organize as much or as little of your life as you require.

Indra A Books, author of this and many other lifestyle articles is the owner and founder of ON THE GO 4 U, Personal Shoppers & Concierge Service in the Washington DC metropolitan area. The companys creed is to provide its clients with the ultimate life management experience. In addition to its shopping and concierge services, ON THE GO 4 U also publishes a monthly e-zine and conducts workshops on wardrobe, entertaining and decorating. Ms. Books also gives seminars on the topic of this article. For more information about the author and ON THE Go 4 U, please visit http://www.onthego4u.net

2004 Indra A Books, ON THE GO 4 U.

Why Are Coalbed Methane Stocks Red Hot

Eric Nuttall:

Coal bed methane (CBM) is perhaps one of the last significant natural gas resources available in Canada. With the maturing of the Western Canadian Sedimentary Basin, the potential for elephant sized discoveries has been greatly reduced. Higher natural gas prices have also greatly improved the economics for CBM exploitation. We at Sprott Asset Management are quite excited about the prospects for companies with coal bed methane assets so long as natural gas prices remain above $6 per Mcf (thousand cubic feet). The economics would be very skinny under $6.

StockInterview: But there may be elephant sized discoveries in CBM?

Eric Nuttall:

Well in Canada, CBM is called the oil sands of natural gas. The analogy is that its a very large resource. The Alberta Energy and Utilities Board has assigned 71 trillion cubic feet of gas in place for Horseshoe Canyon and 239 Tcf of gas in place for the Mannville coals. Those are very large potential resources. They fit the definition of an unconventional resource: definable in aerial extent, predictable in nature and repeatable. In contrast to the oil sands, which are only found in Alberta, emerging CBM plays exists in many areas of the country, such as in Nova Scotia (Stealth Ventures), Southern British Columbia (Storm Cat Exploration), and even in Northern Ontario (Admiral Bay).

StockInterview: Can you explain why everyone refers to CBM as an unconventional resource, when methane is the key constituent of conventional natural gas?

Eric Nuttall:

Coal bed methane is referred to as an unconventional resource, because it requires different techniques and approaches than the exploitation of natural gas from a conventional reservoir. One such difference is the need to fracture the reservoir, often using air or nitrogen, due to the lower permeability of coal versus a conventional reservoir. This fracing can often be equal to the cost to drill a coalbed methane well, depending on the number of coal seams. Also, CBM wells typically come on at lower rates than conventional wells, yet have many of the same fixed costs, in addition to the added costs of fracing and compression. So it makes sense that in order for the economics to be equal, the CBM well would require a higher natural gas price.

StockInterview: Where is the strongest area for CBM exploration in Canada?

Eric Nuttall:

For the past four years, Horseshoe Canyon (province of Alberta) has been the primary industry focus. Horseshoe Canyon coals are almost always dry, are relatively shallow, produce sweet gas, and can be drilled with basic drilling rigs. The Horseshoe Canyon Trend is generally known, and exploration risk is fairly minimal. The primary risk is not whether the coals will contain gas, but rather whether there is enough natural cleating to allow for an economic rate of gas production.

StockInterview: But there appears to be more excitement in Albertas Mannville area?

Eric Nuttall:

The Mannville coals are a deeper and more complex target. The allure of the Mannville coals is they are thicker and contain much more gas than the Horseshoe Canyon coals. However, they contain large amounts of water. A joint venture between Nexen (Toronto: NXY) and Trident in mid-2002 began a 40 vertical well pilot project. They found that the coals were taking over two years to dewater and reach commercial gas rates. Such a long dewatering time greatly reduced the economic viability of the play. In August 2004, rumors of a successful horizontal Mannville well began to circulate, with gas rates of over 1MMcf/d mentioned. These rumors eventually turned out to be true, and marked a shift in Mannville CBM exploitation towards the use of horizontal wells. Operators have found that it takes months, not years to dewater the coals. The average stabilized rate is approximately 200 to 300mcf/d, an economic rate in a robust natural gas environment. Another pivotal event that served to increase interest in Mannville CBM was a recent Mannville acreage Crown land sale on December 14, 2005. EnCana (NYSE, Toronto: ECA) spent $159 million dollars to purchase rights to approximately 270,000 acres. This was their most costly land acquisition since spending $930 per acre in Cutbank Ridge. EnCana is a pioneer in the exploitation of Horseshoe Canyon CBM. I think this recent purchase demonstrates EnCanas belief that Mannville CBM is both technically viable and economic. I expect data from many wells that have been on tight hole status to become publicly available this year, and will further increase enthusiasm towards the play.

StockInterview: How does the Sprott Asset Management team feel about investing in CBM?

Eric Nuttall:

We have significant investments in several coalbed methane companies, in addition to companies with exposure to other unconventional resources, such as tight gas. I have many that I continue to monitor. We get quite excited over companies that have large resource potential and its very difficult to find that in Alberta and British Columbia now, because the basin is so mature. We look for multi-baggers at Sprott, so we look for opportunities that have well in excess of 100 percent potential upside on our investment.

StockInterview: Sprott Asset Management appears to be betting on an ongoing energy crisis, does it not?

Eric Nuttall:

Absolutely. Its a very strong macro view of Sprott Asset Management, that due to the world having peaked in its ability to produce meaningfully more oil, we are in an environment of sustainably high energy prices, whether they are natural gas, oil, coal, or uranium.

StockInterview: Which are some of your favorite CBM investments?

Eric Nuttall:

The most interesting one to us currently is Canadian Spirit Resources (TSX: SPI). We own about 15% of the company. It is a significant player in an emerging CBM play in Farrell Creek, which is north of Hudson Hope in northeastern British Columbia.

Whats unique about Canadian Spirit is the companys president Phil Geiger worked at Chevron between 2002 and 2003 at a time, when Chevron was deciding whether to pursue CBM development. Natural gas prices were low and Chevron decided not to pursue CBM. Phil Geiger was then able to leave with all of the data that he had accumulated over that time in which he evaluated potential CBM plays across the country. Farrell Creek was the one project he decided to pursue. Last year, Sproule Associates, the premier CBM reserve engineering company, assigned a contingent resource of 9 to 14 Bcf of gas in place per section, based on 46 sections. The company now sits on almost 60 net sections. Sproule is set to release a new report evaluating the entire Gething Formation. I think the assigned gas in place number could easily double. With gas content confirmed, the next risk was economic productivity. On March 15th of this year the company, after refining their frac job, released a stabilized rate of 250 300mcf/d from only part of the formation in one well. This is in my opinion clearly an economic rate.

Should Canadian Spirit Resources be able to replicate this rate on future wells, the company could be sitting on over 1 Trillion cubic feet of net recoverable gas, with a Duke gas pipeline running right through their property with 100MMcf/d of spare capacity. Though it would take many years to develop, if one were to value Canadian Spirit on a take-out basis I do not think it unreasonable to place a value of $1 per Mcf of recoverable gas, suggesting a market capitalization of $1 billion, roughly 7X larger than todays. It is important to note that the play is still in its infancy. Significant risk still remains. But this story possesses the type of upside that we look for, hence our significant ownership in the company.

StockInterview: Is there a favorite CBM company in Albertas Mannville area?

Eric Nuttall:

Ember Resources (Toronto: EBR) is the only pure play Mannville CBM company in Canada, and has approximately 219,000 acres of potential Mannville exposure. Half of their Mannville acreage offsets the Nexen/Trident Manville Project that was declared commercial in July of 2005, and whose partners plan on investing $400 million over the next year and a half to prove up the productivity of the acreage. Expectations of companies pursuing Mannville are that each section will recover approximately 3.6Bcf. Ember has over 340 net sections that are prospective. So their potential could be quite large, though it will take many years to prove up their resource potential. An investor should apply an appropriate risk factor to their acreage. I wouldnt be surprised if Ember were to be acquired at some point in the future, since it is extremely difficult to accumulate such a large contiguous area of prospective acreage.

StockInterview: Can you share another favorite with us?

Eric Nuttall:

Another company would be Rockyview Energy (Toronto: RVE), which was a spin-out out of APF Energy Trust. They were one of the first energy trusts to pursue coalbed methane. The management team is solid. Steve Cloutier, the President, was one of the cofounders of APF Energy Trust and was able to bring along his CBM technical team from the Trust to Rockyview. Rockyview has both existing conventional and CBM production, and is trading at roughly industry multiples on a cash flow basis. However, the company sits on significant Horseshoe Canyon and Mannville acreage, with 132 net sections of HSC and 55 net sections of Mannville exposure. On a risked basis, the company could have 160Bcf of unbooked resource potential. At a NPV of $1.50 per Mcf in the ground, would suggest the possibility of appreciation of over 100%. I think Rockyview would be a great take-out candidate for a Trust seeking low decline assets. I wouldnt be surprised if the company is not around in a year from now.

StockInterview: Are there many pure plays?

Eric Nuttall:

Its difficult to find pure CBM plays. There is Ember, Canadian Spirit, Rockyview, many others I wouldnt necessarily recommend. Maholo Energy (Toronto: CBM) is an exciting story I believe has significant upside potential. But their primary growth asset is not in Canada, its in Oklahoma, targeting a CBM horizon, but also an emerging shale play in the Caney/Woodford Shale.

StockInterview: Do you ever look outside North America to invest in CBM?

Eric Nuttall:

There really arent many coalbed methane plays that Im aware of outside of North America other than in China. A few companies have chased CBM in Australia, but they have not to my knowledge had a tremendous degree of success. I think anyone who has invested in an Australian coalbed methane story has not had a very pleasurable experience. Were invested in a few Chinese CBM companies. Were invested in Pacific Asia China Energy (TSX: PCE). Were also in a private company called Terrawest, which will be going public later this year. Weve found in general investments in Chinese CBM companies to have been somewhat challenging. It can take an extraordinarily long amount of time to sign a production sharing agreement with either CUCBM or with one of the state oil and gas companies. The wheels of bureaucracy move slightly slower in China than in North America.

Thankfully, future investors in Terrawest wont have to endure the wait that we had to go through. I expect over the next year that China will become a hotbed for natural gas exploration, and would encourage investors to seek companies that have already signed production sharing agreements. Both Pacific Asia China Energy and Terrawest have such agreements.

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James Finch contributes to StockInterview.com and other publications. StockInterviews Investing in the Great Uranium Bull Market has become the most popular book ever published for uranium mining stock investors. Visit http://www.stockinterview.com