Sunday, September 30, 2007

Fibonacci Trading Videos Of Stocks Futures Forex

Predict Market Turning Points with Fibonacci Support Resistance Levels

Use Fibonacci for For Accurate Support and Resistance Levels and Better Profits from Each Trade. Learn how to use Fibonacci Retracement, Extension and Projection Analysis to maximize trading profits and tightly control losses. Fibonacci numbers and ratios point to specific turning points in the markets' movements.

Fibonacci Numbers

Leonardo Fibonacci, a mathematician in the 1200's created a numerical sequence of numbers. From left to right after the first two numbers, the values increase successively. Each number, in turn, is determined by the sum of the previous two numbers.

1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377,...

The other interesting relationship of this number sequence is that if we take the ratio of two successive numbers in the Fibonacci series (that is, we divide each number by the number after it in the sequence) we will move towards a particular constant value. That value is 0.6180345 which has been referred to as "the golden ratio". If you also calculate the ratios using alternate numbers in the Fibonacci series (that is, do the same calculation but skip over a number) the resulting ratios approaches 0.38196.

From here on, skipping the numbers by going in both directions we get infinitive number of Fibonacci ratios, but only handful of them have found application in modern markets:

0.236, 0.382, 0.618, 1.000, 1.618, 2.618, 4.236, 6.854, 11.090, 17.944

Many technicians use Fibonacci numbers in their Technical Analysis when trying to determine support and resistance, and commonly use 38.2%, 50%, 61.8% retracements. Commonly thought, a .382 retracement from a trend move will tend to imply a continuation of the trend. A .618 retracement implies that a trend change may be in the making. Many such rules have been adopted by technicians.

It cannot be stressed strongly enough that Fibonacci principles is not just a numbers game; it is the most important mathematical representation of natural phenomena ever discovered. To appreciate the great relevance of the Fibonacci ratio as a natural constant, one need only visit The Fibonacci Numbers and Golden section in Nature and discover a particular natural law.

Fibonacci Trading will show you that this nature phenomena has its presence in the modern market and how to understand and capitalize on it.

Fibonacci Trading Videos
Fibonacci Trading Videos

Tuesday, September 25, 2007

Stocks That Double In Price

We all love the idea of buying a stock that doubles in price. Here's ten key points on how to find stocks with a good chance of doubling.

1. Out of Favor Stocks. This is potentially a value investor’s most financially rewarding situation. A stock that’s been out of favor and disliked by the street. Many of the most profitable stock investments have risen from the depths of fear and despair.

2. Invisible Progress.

Often a companies business progress will take time to show itself through it annual and quarterly financial statements.

3. New Technology.

In some industries companies can create significant expense savings by introducing new technology into their business models.

4. Investing in Research & Development.

The benefits of research and development and many. The best stocks to buy are those who are big investors in research and development to create profitable returns in the future.

5. Industry Tailwinds.

Look for stocks in current favorable industries and sectors. These stocks can benefit from the whole industry and sector growth.

6. Changes in Industry Structure.

Changes to an industry’s structure or the number of competitors can provide stock investing opportunities.

7. Owner-Managers.

Owner-managers are the most likely companies which can double do so because the company has exceptional management.

8. Insider Buying.

Look for CEO's, CFO's, and the rest of the companies board of directors buying their own stock for their own stock portfolios, especially in large amounts. The board of directors knows more about their company than anyone, and if they are willing to make big bets on their own companies stock, then this warrants us to take a closer look.

9. Financial Balance Sheet Strength.

Weak balance sheets are a fundamental indicator of financial weakness. Look for stocks that have no more than 50% debt to their total liquid equity.

10. Not Loved by the Market.

Lastly, look for quality stocks that the market is not watching or interested in. With so many listed stocks around the world, there will always be opportunities for investors and traders find opportunity. As the saying goes, "there's always another taxi coming along, if you missed the last one."

Profit Opportunity

There is it, simple analysis to find stocks that have good potential to double in price. Start with knowing more about the industries, sectors, and companies, then setting your own investment goals, then creating and having an investment plan, then take action on your plan, and profitable success can be yours in the stock market.

Stocks That Double

Monday, September 24, 2007

Forex "Heads-Up"

Last week, I alerted you to the charter release of the step-by-step Forex Profit Accelerator course that totally took the Forex community by storm.

Well, if you've checked the website lately, then you know that only 71 copies of the course remain and the offer will be closed for good on Tuesday, September 25th, at noon eastern time.

See the latest inventory count here:

WHY IT MAKES COMPLETE SENSE

If you're still struggling with the Forex markets, or are just sick and tired of staring at your computer like a zombie for 2, 3, 4 hours a day or more, then I really encourage you to take 30+ year market veteran Bill Poulos's Forex Profit Accelerator for a test drive.

Why? Well, I was thinking about what specifically it is that I like the best about this course and what sets it above most of the other methods and courses I've seen. Here's what I came up with:

COMPLETE

This is one of the most complete Forex trading courses I've ever seen. Period. There's material to get beginners going quickly, and it's structured in such a way that more experienced traders can jump right into the "meat" of the methods.

Further, it's a multimedia powerhouse -- from the screen capture CD-ROM videos to the full color reference manual to the detailed "trading blueprints". It's designed to make sure you really understand all the concepts quickly and effectively.

CLEAR

Bill's teaching style is among the best I've ever seen. He speaks in a clear, nurturing way that steps you through all the material. It's very apparent why so many traders keep coming back to Bill's courses.

CONSTANT

I think of this as the "surprise" of the course. Bill constantly follows-up with his students after they get his course. He mentions this on his open letter, but I really believe this is the true value of his course. His students receive regular new bonus video lessons, and Bill is fanatical about offering concise, thoughtful answers to his students' questions.

So that's what stands out for me about the Forex Profit Accelerator. And frankly, I'll even go out on a limb and say that if you can't succeed in the Forex markets with Bill's course, then you probably never will. That's how powerful his
methods are.

FAIR WARNING

I cannot promise that copies of the Forex Profit Accelerator will be available when you visit the web page - it may already be completely sold out.

If that's the case, please put your name on the waiting list. Bill has no immediate plans to release any more copies of this course, but after he gets through mentoring his initial group of 950 students, he may introduce a few more (but it could be
months before that happens - I can't say when).

If any copies are left, you can claim one here:

Good day, and good forex trading!

P.S. I just checked Bill's real-time inventory counter before sending this email to you and it now reads 61 copies available. Time is running out. You can check it here:

Less Than 24 Hours Left!

Thursday, September 20, 2007

Market Volatility

With this latest historic rise in volatility, I wanted to put some thoughts together about the current situation, to try and make some sense of it. One thing is for certain; market risk has risen for equity bulls AND bears alike. How long will it last, and what damage has already occurred? Is this recent rise in volatility just a flash in the pan or perhaps a prelude of things to come?

Risk levels have been high for quite some time...but they haven't really been 'considered' for a long time. When uncertainty in markets arises then risk assessment levels are adjusted upward to compensate for the uncertain outcome. In the bond market, Chairman Greenspan would constantly talk of a 'conundrum', the disconnect between yield spreads, inflation expectations and economic growth. Why were longer term yields so low for a very long time relative to short term rates? Option volatility rises as the cost for protecting the downside increases. No longer is insurance considered 'cheap'. Stock prices have been hitting new highs for months (Dow Industrials), while the SPX 500 has been rising right along with it. In close to a year, stock prices are up more than 15%, and that's including the recent drop. When markets drop, they drop fast...REALLY FAST. Who has time to think what to do when your investment account is falling like a rock. What's the natural reaction? Sell, get me out...I'm done with it. Sometimes it's a full out P A N I C, can't stand the pain anymore.

What may explain the recent volatility, and further...the divergence in advancers and decliners? A little history is in order. Way back in the 1930's, the SEC instituted the uptick rule after a major bear raid nearly destroyed the markets in the 1929 crash...basically, you could only go short a stock after an buy, or uptick. This rule had been in place for more than seventy years, and most had deemed it old and useless. But, the removal of the rule simply let the bear genie out of the bottle. Can you imagine a boxer who gets knocked down to the canvass, and the other boxer continues to beat on him mercilessly without letting him get up off the ground? This is what the bears or short sellers got as a gift from the SEC, who incidentally...picked the exact WRONG time to remove the rule (with markets at or near all time highs, and ripe from the picking by shorts). Is it any coinicidence that the rise in volatility just after the removal of this arcane rule?

How to manage your own volatility is quite unique. We all are blinded by emotional responses when trading...it's natural. Even the best and most solid traders succomb to the evils of fear and greed at some point. It's the management of these emotions that separate the winners from the losers. Above you'll find a spectrum of volatility. The closer you are to the middle, the better you have your emotions in check. I trade with some emotion, but try to keep it contained. I find myself more toward the cautious level when i'm fearful, and confident when I'm feeling invincible. Check your emotions when you are trading or investing, and see where you might be on the spectrum.

The VIX may be flashing panic levels...or is it? 30% volatility is high from an historical perspective, but is not unprecedented. We saw markets rise in 2004 as the volatility index increased late in the year, and back in the mid 1990's the same thing occurred...prior to massive price explosion. But in 2002, volatility rose from the 20's to the 40's as the bear market swiped through with reckless abandoned. More often than not, however...a sharp increase in volatility is short-lived, so this one may follow that theme.

Tuesday, September 18, 2007

Forex Profit Accelerator

How Select Groups Of Forex Traders Are Riding On The "Coat Tails" Of The Big Banks

When you treat the Forex markets as end-of-day markets, I’ve found they can offer far more profit potential than the minor swings many day traders kill themselves to capture. And when you learn the right way to trade Forex as an end-of-day market, you can quickly jump from one big swing to another as they’re driven by the Forex market giants – the big banks and other financial institutions, including governments.

While these behemoths react slowly to market changes due to their sheer size, as soon as you learn to spot a big swing, you can get on and “ride their coat tails”. And by the time they’ve turned to look over their shoulder, you’ll have already gone on to the next big swing.

For example, suppose several major financial institutions think that the Japanese Yen is undervalued versus the dollar and that the Japanese government will soon act to stop artificially suppressing the value of the Yen. Collectively they might begin slowly building what will become very large positions in the market by selling short the USD/JPY pair. I am talking about hundreds of thousands of standard lots.

Whether the Japanese government acts or not, the market might drop as expected, in part, due to the ever increasing short positions of these financial institutions. If they are right, we small traders can apply trading methods that will spot these moves and jump on board at a moment’s notice. We can protect our positions with initial stops and ride the wave to good profits if the market follows through on the downside. And we can jump out just as quickly as we jumped in. The big institutions simply can’t move that fast without damaging their positions.

The bottom line here is that we are prepared to ride the trend on the coat tails of the mega traders, but with a level of agility they don’t have. And by doing this, we minimize risk and maximize profit while they’re still trying to “unwind” their positions.

This is a BIG DEAL! If those last few paragraphs didn’t make sense, please go back and read them again. What this means is that there's a way to exactly, step-by-step, identify when a Forex pair is likely to make a move UP or DOWN. And no matter which way it goes, there is specific trading rules that let you take advantage of those moves and ride them for a huge potential profit. And here’s the kicker – there's more than one way.

There's four complete methods, all based on time-tested principles, that allow anyone to identify as many profitable trading opportunities as possible.

And that’s why the course the Forex Profit Accelerator created – because they show you how to truly accelerate your Forex profits with these four methods. And you can use them individually or together - synergistically - to maximize your profit-taking.

Let's take a look at some sample trades you could have made using the Forex Profit Accelerator. Keep in mind that trades like this are setting up ALL THE TIME, even potentially right this second.

Just click here to watch this short video.

So the bottom line is this – no matter what happens in the Forex markets, with the Forex Profit Accelerator, you will always know exactly what to do every time you place a trade. No exceptions. No matter the outcome. It’s that simple.

Monday, September 17, 2007

Elliott Wave Should Lighten Up

By Tony Beckwith, MTPredictor Ltd

A remarkable number of traders the world over use Elliott Wave (EW) theory as at least a part of their trading plans. But, how many of them are able to trade in a way that controls risk and is, therefore, profitable over the long-term? All professional traders know that, without strict risk control, a trader’s longevity will be limited…

One of the (many) criticisms leveled at EW theory is that its basis is subjective. You have to judge where a market is in an EW sequence (typically, a 5-wave trend or a 3-wave correction to a trend). You may be “right,” you may be “wrong” or you may start off looking “right,” only to find price moving away from the assumed market pattern -- that feels distinctly “wrong”!

If this is the case, how can a trader have any control over his trade risk or know in advance the profit levels to be used in any formal risk-reward calculation? For a risk-reward assessment to be made, the two sides of the equation need to be both simple and known. To achieve that with standard EW analysis is at best difficult, at worst impossible…

One way for a trader to address these inherent difficulties is to strip down EW principles to form a lean, tradable approach to the markets. This may deter the purists, but the survivors in the trading world know perfectly well that trading is about understanding risk, not about forecasting or “getting it right.”

Probability risk can be reduced… The practical meaning of risk in trading involves two elements: probability risk (the risk that a trade may not turn out as anticipated) and money risk (the amount lost if a trade does not turn out as anticipated). Probability risk is usually the more difficult of the two to pin down. If we accept trading with the trend as a basic premise, in EW terms, this means trading off the end of a correction-to-a-trend, back into the trend itself.

Ideally, this can be in only 3 places: Off a corrective Wave 2 into a trend Wave 3, off a corrective Wave 4 into an end-of-trend Wave 5 and off a corrective Wave B into a trend Wave C. Again, the ideal is to see the Wave 2, Wave 4 or Wave B unfold as a simple 3-wave correction-to-trend -- an ABC correction, the easiest-to-identify correction in the EW world.

The probability of this trade set-up actually working is enhanced if there is no confusion over its identification (it is a clean zig-zag pattern), if it clearly follows an unambiguous trend (so could be correcting it) and if it is at a critical price level. We may disagree over what is “critical,” but the use of Fibonacci numbers and ratios to guage when the correction is ideally over provides a constant framework.

For instance, if the length of Wave C of the ABC correction equals 0.618x or 1.00x the length of Wave A, this may indicate that, say, selling power is now becoming exhausted in a correction down against an uptrend. To further improve the probability risk, it is wise to wait for the market to show signs of price reversal itself, rather than jump the gun. So, the many variants of reversal bars, indecisive price movement (inside bar, etc.), traditional Japanese candlestick patterns, channel / moving average breaks or oscillator reversals can be used to narrow the odds of a market returning to trend.

Money risk can be controlled…

This leads us to a discussion of money risk. To know this type of risk, you must know the entry price and initial stop loss price in advance of any trade. It follows that, the closer the entry trigger to the initial stop, the smaller the initial (money) risk.

If you are trading off one of the 3 best market junctures in EW terms (as previously described), the initial stop can always be the extreme price reached in the ABC correction. Logically, this makes sense in that, if this price is reached, the trader’s initial analysis is incorrect, and there is no business in this trade for now. If you are trading any other part of an EW sequence, appropriate stop loss placement is much less clear.

Risk-reward can be assessed…

For the other side of the risk-reward equation, reward levels have to be clear and constant. If a trader is specializing in entering trades off these “isolated” ABC corrections, the obvious profit targets are the EW price levels that would be reached if the market does indeed return to its previous trend direction.

For instance, if you are trading off an ABC correction that forms a Wave B, the trend wave to follow would be the Wave C -- here, the minimum, typical and maximum Wave C price targets using the widely accepted Fibonacci ratios would form the profit targets. They can be calculated in advance of entering the trade, so you can also know and evaluate the risk-reward outlook before you commit any capital.

Trades should be treated in isolation...

Furthermore, the standard pitfalls of conventional EW analysis must be prevented from interfering with this risk-reward trading framework. If you treat these trade set-ups in complete isolation, you can avoid having to fit the corrective pattern into a larger EW pattern or squeeze a smaller-degree pattern inside it. Similarly, you can also avoid having to link the corrective pattern and its prior trend to previous market movement.

This Isolation Approach also means that any trades resulting from these set-ups can be managed on the same timeframe as that on which the set-ups occurred. No interference with the trader’s mindset from conflicting timeframes (there are 9 in traditional EW analysis…) is allowed. Elliott wave labeling or “counts” do not change mid-trade and the profit targets are unmovable. This all makes for highly decisive and consistent trading.

Overcoming R. N. Elliott’s own problems...

As Frost and Prechter state in Elliott Wave Principle “for all his (Elliott’s) meticulous study and profound discovery, he displayed a typical investor’s weakness in (at least once) allowing a prior opinion adversely to affect his objectivity in analyzing the market.” To be able to use some of his basic principles for consistent and objective risk-reward trading really is something for traders to celebrate.

MTPredictor is a sophisticated Elliott Wave Software Program. For a review of the software program click here.

Sunday, September 16, 2007

Best Conversations With Top Traders

It's always enlightening to read a book a second time, as you seem to find things that weren't there the first time. Possibly this happens because the first time you read, you read for content, and the second time for context. Here are some of the things I learned as I reread "The Best Conversations With Top Traders", by Kevin Marder and Marc Dupee.

In the interviews there were some common elements that kept arising.

Above all else, maintain discipline. This usually was the summation of a risk management question. Nearly all of these traders agreed that the number one mistake they saw (especially in new traders) was an unwillingness to let go of a bad trade. The secret to their success was discipline, or as one of the interviewees said, "I would rather have a mediocre strategy and a good money management system than a good strategy and a mediocre money management system."

Focus on good trading rather than making money. If you can do the former, the latter will occur naturally. If on the other hand you focus on making money, you'll lose your focus on the good trading that leads to profitability. Ironic, isn't it? In fact, many of the traders regarded trading as a game of sorts.

You must have a passion for the market. These top traders would have chosen the same profession even without all of the financial rewards. Their passion drove them to persevere, even when most others would have quit. Their love of markets kept them in the game for a long time, and with time comes wisdom and experience. That experience was their edge.

You must have humility. Trading is one of the only professions where failure can be expected about half of the time. All of these traders can deal with a bad trade; humility allows them to exit before that bad trade gets worse. Since your ego is a trading pitfall, you must park your ego at the door, and you must have the uncanny ability to not dwell on bad trades.

Marder's and Dupee's "The Best Conversations With Top Traders" is a good read for the trader who is ready to take their activity to the next level. And, there are plenty more of these helpful ideas like the ones above. You may even want to read it twice, to make sure you get them all.

Good monday, good 2007, good investing and trading!

Thursday, September 13, 2007

Forex Profit Accelerator Giveaway

Want to get a chance at a Free Copy of Forex Profit Accelerator?

The big release date of Forex Profit Accelerator is Tuesday, September 18th. So to celebrate the release, the authors of the Forex Profit Accelerator are going to give away a free copy to one lucky trader. Includes shipping and handling to anywhere in the world.

Everyone is eligible! Here’s how to win.

CLICK HERE and post a comment at the bottom of the page and answer these two questions:

1. WHY do you want to trade the markets (besides the money)? They're looking for the ultimate reason you got interested in trading in the first place. What does all that money get you?

2. HOW will trading with the Forex Profit Accelerator help you?

That’s it! Be sure to add your full name and email so they can contact you in case you win!

DEADLINE: Saturday, September 15th, at NOON eastern time.

Click here to sign up to win the Forex Profit Accelerator!

There's also a Free Forex Report that comes with this give away. Its a instant access 55-page digital Power Forex Profit Principles report.

Click here for their Free Forex Report!

Here's the details of the free forex report.

HEADLINE: Don't place another forex trade until you read this FREE report...

"You're About To Learn How Select Groups Of Forex Traders Are Riding On The Coat Tails Of The Big Banks..."

HINT: They spend 20 minutes a night, and they're NOT day trading. Inside you'll learn:

How to "shake out" the good Forex brokers from the unscrupulous ones. Many brokers won't be prepared when you ask them these 5 questions (page 12).

How to maximize your "pip potential" by only trading the best 6 Forex pairs based on liquidity and price movement (page 13).

My "insiders formula" on how to determine the best mix of technical indicators to use when trading Forex pairs (page 23).

Step-by-step tactics for applying my "Optimal Profit Exit Strategy". This is one of my favorite ways to enjoy profit-taking as quickly as possible (page 32).

How I was able to drastically reduce my "time in the trenches" trading Forex by spending only 20 minutes a day. These 2 discoveries made it all possible (page 42).

...and a whole lot more, as I give my detailed answers to the top questions collected from my recent Forex survey that went out to over 50,000 traders.

Good luck and good forex trading!

Wednesday, September 12, 2007

Why the Fed is Such a Lousy Wizard of Oz

By Susan C. Walker, Elliott Wave International

Central bankers who "follow the yellow brick road" end up in Jackson Hole, Wyoming, every Labor Day weekend for their annual symposium sponsored by – who else? – the Kansas City Fed. (Who can forget Judy Garland saying to her little dog, "Toto, I've got a feeling we're not in Kansas anymore," in the 1939 movie, The Wizard of Oz?)

The Jackson Hole Resort serves as the Federal Reserve's equivalent of the Emerald City, as Fed governors and presidents meet with central bankers and economists from around the world to discuss economic issues. This year, the symposium focused on housing and monetary policy. Usually, the Fed chairman kicks off the symposium and, this year, the new chairman, Ben S. Bernanke, did the honors. He closed his speech with these words:

"The interaction of housing, housing finance, and economic activity has for years been of central importance for understanding the behavior of the economy, and it will continue to be central to our thinking as we try to anticipate economic and financial developments."

Then came the other speeches. And it seems that some of the guests in Emerald City were waiting for their chance to pull back the curtain and prove that the Wonderful Wizard of Oz isn't such a wizard after all. Bloomberg reported that "Federal Reserve officials, wrestling with a housing recession that jeopardizes U.S. growth, got an earful from critics at a weekend retreat, arguing they should use regulation and interest rates to prevent asset-price bubbles." Apparently, one academic paper presented at Jackson Hole graded the Fed an 'F' for the way it has handled the repercussions from the rise and fall of the housing market.

Truth be told, these folks are a little late to the table as critics of the Fed. We're glad they're joining us, but here's what they still haven't learned: It isn't because the Federal Reserve messes up by allowing credit, asset and stock bubbles to form that it's not a wizard. The Federal Reserve isn't a wizard for one particular reason that it doesn't want anybody to know – and that is that the Fed doesn't lead the financial markets, it follows them.

People everywhere want to believe in the Fed's wizardry. But all this talk about how the Fed will be able to help the U.S. economy and hold up the markets by cutting rates now is as much hooey as the Wizard of Oz promising Dorothy, the Scarecrow, the Tin Man and the Cowardly Lion that he could give them what they wanted: a return to Kansas, a brain, a heart, and courage. Because when the Fed does do something, it always comes after the markets have already made their moves.

If you don't believe it, you should look at one chart from the most recent Elliott Wave Financial Forecast. It compares the movements in the Fed Funds rate with the movements of the 3-month U.S. Treasury Bill Yield. What does it reveal? That the Fed has followed the T-Bill yield up and down every step of the way since 2000. And the interesting question becomes this: Since the T-bill yield has dropped nearly two points since February, how soon will the Fed cut its rate to follow the market's lead this time?

[Editor's note: You can see this chart and read the Special Section it appears in by accessing the free report, The Unwonderful Wizardry of the Fed.]

We've got our own brains, heart and courage here at Elliott Wave International, and we've used them to explain over and over again that putting faith in the Fed to turn around the markets and the economy is blind faith indeed.

"This blind faith in the Fed's power to hold up the economy and stocks epitomizes the following definition of magic offered by Teller of the illusionist and comedy team of Penn and Teller: a 'theatrical linking of a cause with an effect that has no basis in physical reality, but that – in our hearts – ought to be.'" [September 2007, The Elliott Wave Financial Forecast]

Because, you see, what makes the markets move has less to do with what the unwizardly Fed does and more with changes in the mass psychology of all the people investing in those markets. The Elliott Wave Principle describes how bullish and bearish trends in the financial markets reflect changes in social mood, from positive to negative and back again. To extend the metaphor: The Fed can't affect social mood anymore than the Wonderful Wizard of Oz could change the direction of the wind that brought his hot air balloon to the Land of Oz in the first place.

As our EWI analysts write, "With respect to the timing of the Federal Reserve Board rate cuts, we need to reiterate one key point. The market, not the Fed, sets rates." Being able to understand this information puts you one step closer to clicking your ruby red shoes together and whispering those magic words: "There's no place like home." Once you land back in Kansas, your eyes will open, and you will see that an unwarranted faith in the Fed was just a bad dream.

Susan C. Walker writes for Elliott Wave International, a market forecasting and technical analysis company. She has been an associate editor with Inc. magazine, a newspaper writer and editor, an investor relations executive and a speechwriter for the Federal Reserve Bank of Atlanta. Her columns also appear regularly on FoxNews.com.

Click here to get a Free Independent Investors eBook from Elliott Wave International.

Monday, September 10, 2007

Opportunities in the Subprime Meltdown?

The growing number of homeowners who are falling behind on their mortgage payments could spell opportunity for real estate investors.

Most of the problems are among homeowners with "subprime" mortgages -- loans extended to borrowers with poor credit, low incomes or both -- and particularly among subprime borrowers with adjustable rate loans, which total roughly 7% of the $10 trillion mortgage market. They are being pummeled by spikes in their mortgage interest rates as the low introductory rates expire.

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Some 700,000 of such loans are likely to go into foreclosure between now and the end of next year because the homeowners won't have enough cash to cover higher payments. That would suggest that the time is right to invest in a foreclosure. But buying a foreclosed home to flip or rent out isn't an easy, quick, cheap or surefire route to wealth. The typical deal comes with more problems than the average do-it-yourselfer can handle.

Even so, investing in a foreclosure can be rewarding if you're willing to do your homework.

Compared with a year ago, foreclosures are up more than 25% nationally, according to RealtyTrac, an online marketplace for foreclosed properties. A total of 130,500 new foreclosures were filed during January, the most in the two years since RealtyTrac began tracking the numbers. Nevada, Michigan, Georgia, Colorado and Arizona lead the states with the highest rates of new foreclosures compared with total households.

Investors Andy Heller and Scott Frank say they're "licking their chops" in anticipation of diminished competition for foreclosures as fair-weather investors flee the market and would-be owner-occupants look for easier pickings. "This is the time when you should be diving in," says Heller, who co-wrote, with Frank, Buy Even Lower: The Regular People's Guide to Real Estate Riches.

Realty Trac Foreclosures
Realty Trac Foreclosures


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Range of discounts

At the market's peak, in the first half of 2005, the nationwide median discount off market value of foreclosures was 14.6%, according to Christopher Cagan, director of research for First American Real Estate Solutions, in Santa Ana, Cal.

The slower the local real estate market, the greater the chance that you'll find a bargain, as foreclosing lenders are forced to offer bigger discounts to lure a smaller pool of buyers. The discount ranged from a tenth of a percentage point in California to 40% in New York. Cagan thinks that the current median is about the same, but he expects that it may deepen in 2007 if the number of foreclosures continues to increase and the housing market stays in a slump.

How much of a bargain you need to make a deal work depends on your post-purchase plans. The shorter the time you intend to hold a property, Heller and Frank say, the greater the "minimum investor discount" you require. They recommend trying to buy homes for 20% to 30% off market value if you plan to flip the property; 10% to 20% off if you'll rent it out with the option to buy; and 5% to 10% if you intend to rent it out indefinitely. Keep in mind that the days when you could flip for a quick profit are over -- at least for now.

Savings per square foot.

Bruce Reeks has been adding to his retirement savings by buying foreclosures. Reeks, who owns 15 such properties, identifies a bank-owned foreclosure on a multiple listing service, then compares its price per square foot with those of homes recently sold in the same subdivision. The difference signals opportunity, he says.

Last year, Reeks purchased a five-bedroom, two-bath home in Austell, Ga., northwest of Atlanta, for $102,900. After he spent $7,800 on repairs, the property appraised at $142,000. If Reeks had flipped the house, he would have made about $24,000 after commissions and other costs. Instead, he collects rent of $1,190 and pays $850 per month toward the mortgage, reaping a gross profit of $340 a month. Meanwhile, Reeks builds equity as he pays the mortgage with the renter's money, he enjoys tax write-offs, and he expects to benefit from price appreciation. He anticipates cashing out his portfolio in the next five years and retiring to Asheville, N.C.

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Foreclosure laws vary by state (for an overview, go to www.realtytrac.com, then verify the information with your county's clerk of court). You can buy foreclosures three ways: negotiate with a homeowner before the bank forecloses, bid at a county foreclosure auction, or, as Reeks does, buy a real estate owned property, or REO (see below).

Plenty of pitfalls. At a foreclosure auction, you'll buy a home "as is," and you might not be able to do more than peek through the windows beforehand. Cleveland agent Mike Phillips says you could be bidding on a home that has been vandalized -- sometimes by a distraught owner who has stripped it of everything valuable. Long-vacant homes may have water or mold damage. And the property may have legal warts: liens, difficult-to-evict tenants or, in some states, a mandatory "redemption period" that gives the former owner time to try to get the home back.

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REOs, properties that lenders have bought back at auction, generally offer the easiest route for novices. With an REO, you won't become entangled with a harried homeowner facing foreclosure. You'll probably find nicer properties than the dregs left on the courthouse steps by lenders. And although an REO is likely to be sold "as is," you will have the right to an inspection, a title search and contingencies. Another advantage: You can finance the purchase with a conventional loan. However, the buyer of an REO is generally not likely to get as deep a discount as an investor in other kinds of foreclosures.

In Stone Mountain, Ga., Kelly Wiley shopped REOs but took a slightly different tack on buying-and-holding. Wiley, a real estate agent with Metro Brokers/GMAC, decided to look for a foreclosure large enough for herself and her sons, Javon, 13, and Juwan, 11, and to rent out her former home. To start, she focused on a few desirable neighborhoods, setting strict standards for price and condition. Over two and a half years, other buyers outbid her on several homes, mainly because she took anticipated repairs into account when calculating her offers.

Last summer, Wiley finally found her dream home: a four-bedroom, two-and-a-half bath house in Stone Mountain. It was in move-in condition and listed for $214,000. Wiley bought the property for $199,900 with a no-money-down, fixed-rate mortgage, for which the rental income on her former home helped her qualify. Her new home appraised for $221,900. "I had instant equity," she says.
Buying it back from the lender

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Learn to Anticipate Real Estate Trends
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More than three months in the making, Learn to Anticipate Real Estate Trends. For Buyers, Builders, Bankers and Brokers is a truly one-of-a-kind, on-demand, online course that goes well beyond any of EWI's previous research on the real estate trends.


For novice foreclosure investors, the best bet is often a real estate owned home, or REO, a property that a lender bought back at auction to resell for close to market value. You can find REOs on local multiple listing services, which may be available online. Other sources include the Web sites of federal agencies and government-chartered corporations or their affiliates, such as HUD, FannieMae and FreddieMac national online listing services, such as Realtytrac and Foreclosure.

The above article came from Kiplinger.com. Click the "Opportunities in the Subprime Meltdown?" title link to go to their website.

Friday, September 07, 2007

Options Pricing Models

Talking about options pricing models, the biggest unknown factor is the anticipated volatility of the stock over the estimated holding period of the option. The historical volatility of a equity over the most recent period of time is considered to be the first test to forecaast future volatility. For a equity that is not making big swings, the option most times will be priced cheaper than for a equity making more volatile swings up and down.

But this can change should a quiet stock be expected to make a big move following an upcoming event like earnings or other important news item for a stock or its sector. The key is the expectation of volatility to come. This is called implied volatility, in which the current option price can grow rich or cheap relative to historical volatility, based on the market's perceptions of what movement is to come. Read on for more on the difference between a stock's volatility and its trend.

Most options analysts will tell you to focus on the volatility assumption within the options pricing model, as that is the only factor the standard options model assumes to be unknown. Stock price is assumed to be basically unchanged, except for a carrying cost equivalent to the short-term interest rate. This assumption is due to the Efficient Market Theory notion that stock prices incorporate all available information and cannot be predicted into the future. We believe trends occur and can be predicted, and thus this options pricing model assumption creates an opportunity for option traders. Our approach is to focus first on the expected movement in the underlying stock's price, as we find the average off-the-floor option trader gets a much bigger impact from a given percentage gain in the stock than from the same percentage change in the volatility assumption. Let?s look at the example of XYZ December 60 call options with approximately 10 weeks until expiration:

Impact of 25% Rise in Volatility vs. 25% Rise in Stock Price

As you can see, the 25% gain in the stock price amounts to a 402% gain in the option price, while the 25% jump in volatility leads to a 30% gain in the option price. If these events are equally probable, you have about a 13-to-1 edge in focusing on the stock price change relative to the volatility change. Looked at another way, the 25% change in volatility would have to occur 13 times for every one time the stock price changed by 25%, if there were to be no edge in focusing on expected stock price over volatility. Individual option traders will find much more value in focusing on expected stock price. Clearly the bigger the expected trend, the bigger your edge versus the standard option pricing assumptions.

Note that there are adjustments you can make for your comfort level as well. Many times traders will be too optimistic in the scenarios they input, and a way to moderate this is by employing one of the following two tactics. Traders wanting to employ more conservative tactics can either buy one strike further in-the-money, or buy the next expiration month further than you think you'll need. Option traders, or any traders or investors, will always be faced with being wrong no matter what they do: if the position is a winner, you should have bought twice as much, or if the position loses, you should have never bought it. The point is that we can always second-guess ourselves, but we will better positioned over many trades taking a more conservative approach to mitigate those situations which could knock us out of the game entirely, as opposed to worrying that we left some profits on the table by choosing a less leveraged option.

Options Trading Software can help in determining if the option your buying is cheap or expensive. Click here to review Volcone Analyzer PRO from Options University.

Good day and good options trading!

Thursday, September 06, 2007

Real Estate Trends Video

Want to learn to anticipate real estate trends? This FREE Video is for buyers, builders, bankers and brokers.

By Elliottwave.com

Click here to watch the YouTube Video!

“The biggest myths in real estate investing are the notion that real estate prices always trend up and that the three keys are ‘location, location, location.’ This course debunks those myths, and more importantly, explains what you should really consider when managing your real estate investments.”
— Wayne Gorman, EWI Senior Tutorial Instructor

Flaws of Economics 101

Contrary to popular belief, the supply and demand curves for real estate trends – even for one of life’s basic necessities, the family home – are vastly different than those for shoes, televisions or cell phones.

“Well, everybody knows that, right?” you might ask. But the fact is, current models for forecasting real estate trends have a major flaw: they rely largely on the supply and demand curves taught in Economics 101, the same ones that apply to your favorite pair of sneakers.

Real Estate Ain’t Shoes

You see, the key difference between real estate trends and price trends for common items like sneakers is that – with real estate trends – buyers, builders, bankers and brokers all want the same thing: for their respective real estate markets to increase in value. With sneakers, each party has a different set of goals, and they don’t all include rising prices.

EWI Senior Tutorial Instructor Wayne Gorman’s new on-demand, online investment course, Learn to Anticipate Real Estate Trends – For Buyers, Builders, Bankers and Brokers will teach you what really governs real estate trends, including residential real estate, farmland and commercial property.

Be an Independent Investor

With this course, you will go beyond the typical noise from Wall Street and dig deeper than the mainstream media’s misguided op-eds. You will not only learn why Economics 101 does not govern the real estate markets, but also how the Elliott Wave Principle – combined with other proven technical studies – can help you follow and anticipate real estate trends. With this groundbreaking course, you will learn …

How to use the Elliott Wave Principle to anticipate turning points in real estate price trends and sales trends.

How to differentiate between real estate trends occurring in various sectors, such as farmland, residential housing, REITS (real estate investment trusts), homebuilders stocks, stocks of major real estate lenders and geography.

How to use Fibonacci mathematics to spot turning points in real estate trends.

What, if any, long-term relationship exists between trends in the stock market and real estate trends.

How real estate trends are a function of collective social mood, which makes them predictable.

How sentiment and momentum indicators can help spot probable turning points.

What magazine cover stories about real estate really indicate.

Why you should be looking at trends in the IPOs of REITS.

The significance of tracking the total number of real estate brokers.

And a whole lot more on real estate trends …

Get started now! Get immediate access to Learn to Anticipate Real Estate Trends – For Buyers, Builders, Bankers and Brokers. You can view the real estate trends course video lessons on-demand, at your own pace, and even have Wayne answer your questions in the online course Q&A forum. This access lasts for an entire year.

Wednesday, September 05, 2007

Power Forex Profit Principles Free Report

Traders, read all this because it has a direct impact on you. Here's the story:

One of the top online trading mentors has just released a FREE landmark Forex report that's not only going to ruffle some feathers...

...it's going to challenge everything that 90% of most Forex traders hold to be true.

So if you have any interest in discovering how to ride the "coat tails" of the big banks to maximize your "pip potential", you're in for a treat.

To get your free copy, just click here to visit this web page right now.

The trader who put this 55-page monster together very recently surveyed over 50,000 traders to find out what their biggest concerns, questions, and challenges were around Forex trading.

And then he spilled the beans on the cold, hard reality of the Forex markets -

- to your benefit.

Here's why...

Not only does he reveal his answers to the top 20 questions his readers asked him, but he completely cracks open and obliterates the unfounded confusion that seems to plague most Forex traders.

Find out how the author spends just 20 minutes a day with TOTAL confidence in the Forex markets, identifying more pip potential in that time than most traders spend hours trying to squeeze out of their favorite Forex pairs.

You'll also learn:

How to "shake out" the good Forex brokers from the unscrupulous ones. Many brokers won't be prepared when you ask them these 5 questions (page 12).

His "insiders formula" on how to determine the best mix of technical indicators to use when trading Forex pairs (page 23).

Step-by-step tactics for applying his "Optimal Profit Exit Strategy". This is one of his favorite ways to enjoy profit-taking as quickly as possible (page 32).

How he was able to drastically reduce his "time in the trenches" trading Forex by spending only 20 minutes a day. These 2 discoveries made it all possible (page 42).

Plus, there's a TON more you'll get to sink your teeth into when you get the report.

When I snuck a look at a preview copy of this report, I thought for sure I'd see it for sale online in a few days. In fact, I'd personally pay at least 50 or 60 bucks for this, and probably more.

But here's the kicker - it's not for sale (at least not right now).

You can't purchase a copy.

But the author really has a deep-seated drive to "shake up" the Forex community, and that's why he decided to GIVE IT AWAY.

In his own words he says, "I want to de-mystify the Forex markets once and for all. So I sat down to write this report as if I was under oath, being grilled by an attorney. That's how direct and forthcoming it is."

To get your copy, just click here to visit this web page right now:

By the way, you also have the author's permission to give away copies of this report to anyone you think needs some "first aid" for their Forex trading.

I hope you enjoy it as much as I have.

Good Day and Good Trading!

P.S. This is a HUGE report. Take your time and read it all, but hurry and download it. Why? Because it's so large, it could be taken offline at any moment if the author's web server "bandwidth" gets eaten up with all the requests for the report.
You can get it by clicking here.

Tuesday, September 04, 2007

Stock Picks TBSI

TBS International Limited - Buy 09/04/07

Ticker: TBSI

TBS International Limited is a ocean transport shipping company for breakbulk, bulk, RoRo, container and project cargo, portside inland logistics, with comprehensive support services for ocean transportation.

With global growth on the uptrend, along with tanker rates rising also, it shows that shippers like TBSI will continue to benefit. TBSI’s PE ratio is currently reasonably valued at 17. Shipping prices are in direct relation to the strong demand in the commodities markets, and it is very evident that demand is outpacing growth in shipping capacity. A tripling in shipping costs starting 2006 has shown that the commodity super-cycle remains in place. The global economy should continue to grow through the rest of 2007 with no sign of a significant cyclical slowdown. Although the prospects for the U.S. economy are not so good, the positive growth forecasts rest of the world are in place we see.

TBS International Limited, an ocean transportation services company, offers shipping solutions through liner, parcel, bulk, and vessel chartering services. Its liner, parcel, and bulk services primarily carry steel products, salt, sugar, grain, fertilizers, chemicals, metal concentrates, aggregates, and general cargo. The company also provides short and long-term time charters that offer its customer an alternative means to contract for ocean transportation of cargoes and make the carrying capacity of entire vessels available to its customers. In addition, it provides frequent regularly scheduled voyages in its network, as well as cargo scheduling, loading, and discharge for its customers. TBS operates its business around trade routes between Latin America and China, Japan and South Korea, as well as select ports in North America, Africa, and the Caribbean. As of March 31, 2007, its controlled fleet consisted of 33 vessels. The company serves industrial shippers in various markets, including mining companies, steel manufactures, trading companies, heavy industry, industrial equipment enterprises, and construction companies. TBS International was founded in 1993 and is based in Hamilton, Bermuda.

Monday, September 03, 2007

Options Trading The Right Way

There are so many areas where options trading is misunderstood.

The result is an uninformed trader losing their money. But if you are ever coached by a qualified teacher, options trading will be the sharpest arrow in your investment portfolio’s quiver.

The key here is to be taught by someone who really knows what they’re doing. Not someone who read a book from Barnes and Noble, tried a strategy, was lucky with it, and is now deemed an Options Trading Wizard.

I must warn you: beware of the wizard. He can lead you way off course and your portfolio will take a huge hit because you received bad information.

What you need instead is someone with real world experience. Someone who’s seen a real trading floor. Someone with real experience who can teach you how to profitable trade options.

If that sounds of interest to you, and you’re ready to start generating some real revenue from options click the "Free Options Strategy Guide" link below to discover how to trade options the right way.

Free Options Strategy Guide



What are options?

Options are financial instruments that give the right, but not the obligation, to engage in a future transaction on some type of underlying security. Buying a call option provides the right to buy a specified amount of a security at a set strike price at some time on or before expiration, and vice versa buying a put option provides the right to sell. Upon the option holder's choice to exercise the option, the options writer who sold, or wrote the option must fulfill the terms of the contract.

Options Trading



Options Trading Software

Theoretically the value of an option can be determined by a variety of techniques, software, systems, including sophisticated option valuation software models. These software models can forecast and predict how the value of the option will change with changing market conditions. The risks associated with trading and owning options can now be better understood and managed with higher degrees of precision with these options software models.

Options Trading



Trade Smart - Not Often.