Elliot Wave Analysis was developed by Ralph Nelson Elliott in the early 1930′s, following what remains the most devastating market decline in U.S. history – the Crash of 1929.

Elliott’s main discovery was that market behavior could be identified and measured through a repeating eight wave sequence, consisting of 5 waves that he called “impulsive,” followed by a 3-wave “corrective” sequence. Impulse waves are labeled numerically 1 through 5, corrective waves are labeled A, B and C.

The wave patterns themselves subdivide into smaller patterns that trend in the same direction as the wave of one larger size, or, as Elliott termed it, “degree.”

Elliott, Frost and Prechter classified 21 corrective patterns, from simple forms to more complex structures and combinations. Three of the simple patterns, and those which form the building blocks of the more complex structures, are illustrated below. These are corrective patterns following an uptrend. The patterns would be inverted following a downtrend.

Zigzag: Zigzag patterns are sharp declines (or advances in a bear rally) that substantially correct the price level of the previous impulse sequence. Often wave B (the counter-trend wave of the ABC pattern) is the shortest relative to A and C. In zigzag patterns, the sequence may double or triple up until the price correction target is achieved. Zigzags internally subdivide 5-3-5 as follows: Wave A (5-waves, motive), Wave B (3-waves, corrective), Wave C (5-waves, motive).

Flats: Flats are triangular structures that tend to move the market in a what Elliott called a “sidewise” (sideways) pattern. The ABC waves also tend to be equivalent in length. In the flat pattern, wave B will often undo the work of A and frequently tops in the area of the previous wave 5. Because of this action, wave B’s tend to fake-out traders who think the correction is over. Wave C then undoes the work of wave B. There are also variations on the flat correction pattern, which include “expanded” flats (Elliott described them as “irregular”) in which wave B tops well beyond the start of wave A, and wave C is substantially larger than A, generally by 1.618 or 2.618 the length. In a “running” flat, waves A & B are similar to an expanded flat, but wave C is shorter than wave A. Flats internally subdivide 3-3-5 as follows: Wave A (3-waves, corrective), Wave B (3-waves, corrective), Wave C (5-waves, motive).

Triangles: Elliott described two distinct types of triangles: Diagonal and Horizontal. Diagonal triangles are part of ending sequences in a wave pattern, and therefore can occur within a wave 5 or a wave C. According to Elliott, diagonal triangles form when market action has moved “too far, too fast” and represent exhaustion of the trend. The 5th wave of the diagonal will frequently spike sharply above the upper trendline of the triangle in what Elliott called a “throw-over.” A trader should be alert to a diagonal triangle formation, as it signals an impending and sharp trend reversal. Horizontal triangles, on the other hand, are corrective structures. Also called “wedges,” horizontal triangles are identified by drawing parallel trend lines along the peaks and troughs of the wave labels. D and E labels are added to fill out the sequence. In heavily corrective and choppy markets, there can be as many as 11 to 15 waves within the overall horizontal triangle structure. In all cases, the completion of a triangle pattern is normally followed by a sharp “thrust.” The direction of the thrust is determined by the wave pattern in progress.One unique type of triangle, that is related to the family of “irregular flats” is the “Running Triangle,” which was described by Frost and Prechter as one in which Wave B of the triangle exceeds the start of Wave (A). Since Running Triangles are cousins to both flats and horizontal triangles, they are most common to fourth waves and other corrective wave patterns.

Since all waves subdivide into smaller waves, there is a hierarchy that is used to label wave movement that covers everything from broad expanses of time, to hourly market movement. Elliott developed a labeling method that was slightly revised by Frost and Prechter in their 1978 book. Most important are the wave degreesunder study, which include, in descending order:

• Grand Supercycle
• Supercycle
• Cycle
• Primary
• Intermediate
• Minor
• Minute
• Minuette
• Subminuette

]]> http://www.rcdc-rerc.com/2010/04/elliotts-wave-basic-principles/feed/ 0 http://www.rcdc-rerc.com/2010/04/stock-market-crash-in-2nd-semester-2010/ http://www.rcdc-rerc.com/2010/04/stock-market-crash-in-2nd-semester-2010/#comments Fri, 02 Apr 2010 02:28:39 +0000 redcodz http://www.rcdc-rerc.com/?p=311

Professor Nouriel Roubini returned to make predictions.Economists from the University of New York, United States (U.S.) is forecast, the stock market rally in the global market will end the second semester of 2010 dj.He guessed, the end of the party going as slow recovery in the State of the state with the largest economy in the world.

According to Roubini, the stock price bubble in emerging markets will be difficult because they are controlled by monetary policy in the U.S. and around the world the progress is not tight enough or loose.This will cause the correction of stock prices significantly and can destroy the economic growth scale.globally, “he said.

He said the world economy is gradually recovering.But, since March 2009, stock prices have reached the upper limit.

According to him, in the second half of 2010, economic growth in the U.S., Europe and Japan will slow down.”This could be the beginning of a market correction due to the macroeconomic news will be a surprise from the negatives” he said.

Thanks to the internet, stock market research has never been easier to come by, or less expensive to access. In fact, most stock research is completely free of charge!

There are two basic elements of stock market research – fundamental and technical.Fundamental stock research involves examining a company’s published financial documents. These include the income statement, the balance sheet, and the statement of cash flows.

Several web sites make this data available free of charge. Most have all three financial statements dating back three to five years for literally thousands of publicly traded companies. The best sites for fundamental research are Yahoo! Finance and MSN Money.

Technical stock research examines the price movements of the stock. Most technical analysis involves studying patterns in the charts of a stock’s daily pricings. This form of research has certainly been made easier by modern technology, as in the past, technical analysts used to plot charts by hand.

Now you can find great charts for stock research on Yahoo! Finance, and Smartmoney.com. If you’re willing to pay for your technical research, consider investors.com, which has a great service called Daily Graphs.

SmartMoney is probably the best monthly magazine for research purposes. They frequently profile stocks and mutual funds in easy to understand terminology, and therefore, it’s great for the novice investor.

Forbes is another great magazine for stock research. It is published bi-weekly, with about 1/3 of its pages devoted to the stock market. The politically sensitive should be forewarned, however, that Forbes has a very pronounced conservative bent. If you like your journalism free of partisanship, consider Fortune, which is also published every other week.

The Wall Street Journal is a daily newspaper, and probably the most famous source of research. It can be purchased on most newsstands for only $1.00 an issue, and it normally has promotions running that allow you to subscribe for much less than that. Despite the paper’s New York City headquarters, daily delivery is available in all but the most remote U.S. locations.

But in all honesty, The Wall Street Journal pales in comparison to Investor’s Business Daily (IBD), which is almost uniformly recognized as the best source of stock research for serious investors.

Although the paper’s editorial pages are aggressively Republican, its reporting is geared towards the individual investor – whereas The Wall Street Journal’s target audience is business executives.

Best of all, IBD publishes a special Monday edition (actually released on Saturday) that features detailed charts of its top 100 rated stocks.

As far as subscription web sites go, MorningStar (morningstar.com) is probably the most respected of all. It offers detailed research reports on over 1000 companies, in a simple, concise format.

Although MorningStar is best known for its mutual funds research, it is also a great source for research information. However, at $13.95 per month, it is a bit pricey – you could subscribe to SmartMoney magazine for an entire year at that price.

The good news is that there are a bevy of sources from which you can get your stock market research. The bad news is that there might be a little too much of it. Whenever conducting research, be sure to consult at least two sources.

Nobody can invest in stock market for any period of time and be right each and every time. It simply is not possible. Now that doesn’t mean that anyone telling you they never lose is lying. It depends on what they’re really saying. They are not saying that they never lose on a trade or on a specific investment. What they may be saying is that they never close out a year with a loss at the end. So how come they can make money every year even when they lose on some trades just like everybody else? The answer is simple; they are right more often then they are wrong. And more importantly, when they are wrong they limit their losses.

To illustrate this, let’s compare the stock market to a game of roulette. Some people could easily substitute one for the other. They live under the assumption that both are simply games of chance. Others may find this comparison ridiculous because the two are so vastly different. The two camps would probably never agree, so let’s not go into that discussion here. However there is something very important we can learn from roulette.

In a game of roulette the odds are actually divided in a reasonably fair way. If you were to continue playing by constantly just betting a small amount, say $10.00. And you would consistently play the same colour, say black. You would be right 18 out of 37 times on average. Of course you would also be wrong 18 times. If you would consistently play the game this way, you would probably never win much, but you couldn’t lose much either. As a matter of fact if you would just continue playing long enough, you would eventually lose on 1/37th of all your bets.

nfortunately the same cannot be said for the stock market. The odds are quite different there. Yes, the market can go up and down, and there is no zero, but there are many more factors to be taken into account than in a game of roulette. The same strategy that was described in the roulette example could work quite well in the stock market, but it could also cost you everything you’ve got. One part about being a successful trader is to be right as often as possible. And even though you cannot predict the market, at least not perfectly. You can do your homework by studying the technical analysis charts and doing some fundamental analysis into the company. If you know what to look for, this will greatly increase your chances of being right.

However, you still will not be right all the time. And that is where both the lesson from the roulette example and the title of this article come in. First of all, you have to place your ‘bets’ evenly. Stick to the $10.00 example. Don’t be persuaded to invest a significantly large part of your investment capital into any one trade just because you’re so sure this time. This may work out fine many times, but sooner or later it will hurt you, and it will hurt bad. You see it is not how much you make when you’re right that counts. It is what you keep yourself from losing when you’re wrong that really matters in the long run. You can be right 90% of the time and make some pretty good money. But it won’t do you any good if you lose it all on the 10% of your trades when you’re wrong. Of course diversification and proper asset allocation can help protect you, but that simply isn’t enough. You have to know when to get out.

So next time when you’re about to make a trade, ask yourself: “What if I’m wrong”. And then determine a price level at which you will take your loss and get out. Once you’ve determined this simple rule, just stick to it. It may cause you to lose a little money every once and a while. Even on trades that may bounce back just one day later. But in the long run that will hurt far less than the losing trade you so desperately hang on to, hoping it will recover. Only to find out that it won’t.

What is the correlation between stock market and internet ? These qualities of the Internet as anonymous, the ability to reach large audiences, high speeds and a much lower cost of distribution, as compared with traditional means, make the Internet a convenient and affordable tool for fraud. Investors who appreciate the simplicity of the network, appears annually in the millions. And the investment activity has always been the preferred medium for all kinds of scams. That means the Internet is a massive investment of money in a variety of projects, identified birth of a different kind of lastminute offers for those wishing to earn online.

Complex fraudulent practices in the field of investments is based on the normal human greed. People invest money through the Internet in the hope of easy profits. As a rule, the proposal was non-existent, but very popular projects, such as investments in “highly liquid” securities from banks and telecommunications companies. An indispensable condition of such proposals – guarantees a return on invested capital, together with the high profits

Often, scam artists, posing as independent analysts, or simply awareness of spreading false information about the company to build an aggressive demand for its shares. The authors of such statements refer to the possession of inside information about important corporate events or use a reliable system for selecting profitable stocks based on fundamental and technical analysis. But the authors are silent about the fact that they have bought these shares at a knockdown price, to then profitably sell them on a wave of interest in artificially heated.

As a result, thus created an artificial hype around the stock price for them is growing. The offender earns by selling its shares at an inflated price. Then everything goes back to square one, including the stock price, which returned to baseline. This is the most popular in recent years and very easy to organize a form of market manipulation. So Internet has a correlation and give some influences on the stock market.

The shadow of China’s economic contraction that began to uncover at the beginning of the year is apparently growing. The Fear of the second economic bubble is there. China’s rapid economic growth during the 2009 and also the high volume of property business has made many economic concerned. Moreover, China’s government plans to release a tight monetary policy to limit the frequency of credit that can cause such bad credit that had happened in the US in the 2008.

This condition was apparently not only responded by all market expert, economists like Prof. Nouriel Roubini was also quite worried about the condition. Economists and also the CEO of Roubini Global Economics is clear that the future global economic conditions are still shadowed by the threats of the crisis that still not over since 2008.

The fast recovery of Asian economies, including China which tend to be fairly resistant getting hit by the global crisis led to a prediction that the fundamental fragility of the economic opportunities make the area will not be strong enough in the continuing process of economic recovery.

Real estate became the primary focus of Roubini and he thinks it could be a “boomerang” for Asia economies, including China. After becoming a star in sustaining the economy in China, the rapid increase in China’s property sector became a frightening specter.Roubini himself agrees with what is done by the government of China that will impose a tight monetary policy before the occurrence of “asset bubbles”.

European Central Bank officials, Ewald Nowotny has said previously that currently many people are concerned about China’s property sector as it has the potential of “asset bubbles”. According to him, the current stimulus packages policies are also needed to encourage alternative sectors are safe from the credit crisis. Carefulness and accuracy of government policy application is very much needed at this time. China, now starting so-called “giant” new economy, must reduce the potential crisis in the property sector.

Roubini is also addressing the US economic development which he said has led to a positive level. Economic real sector data began to increase as the industry sector data, property and manufacturing, although on the other hand the unemployment rate still decreasing. Economic recovery is expected to slow in the US until the end of the first semester of this year. Despite corrections in the aggregate condition especially in the stock market is predicted to happen this year.

Poor condition will happen on the European economy.The threat of a Greek economic slump, which is also a member of EU concerned, became worse.The threat by the weakening euro will continue said Roubini.

Looking at a stock index chart, we see an apparent series of loosely identifiable patterns, some of which seem to repeat sporadically. We then ask ourselves if it is possible that these patterns can be modeled mathematically in the same way that other natural phenomena have been. For this to be true, we would have to first (1) identify the main underlying inputs to the model, and (2) assign such inputs their respective degrees of value. Even though we might miss a few inputs, our model should still be robust enough if we catch the main ones.

So, is it possible? The answer is no.

We can state the reason as follows: Stock prices do not move as a result of unknown unknowns that have yet to be BOTH identified and THEN valued. Were not looking for something mysterious and new–we in fact ALREADY KNOW the handful of main Input Identities that robustly explain stock price movements. We also already know that these inputs (often correlated) are themselves dependent on countless other, secondary inputs that we cannot accurately value, even if we occasionally can estimate some of them correctly. And here is our theoretical lynchpin: We ALREADY KNOW, a priori, that no single theory or mathematical model can accurately predict the values (Input Degrees) of certain of these secondary inputs.

To clarify the above more concretely, lets start by looking at an extremely important underlying main input that should enter into any mathematical model purported to predict the price movement of the S&P 500: next years earnings. Although a massively important input, the exact value of next years earnings would not alone allow you to predict the price direction of the stock market, although knowing this inputs exact value would give you a major advantage and probably make any model much more accurate. If you were to couple this input with a precise knowledge of the U.S. dollars value relative to other currencies at the end of next year, it would make your model even more robust. There are probably just a dozen or less such most major inputs that, when put together, would produce a mathematical model that was strikingly predictive if the actual (quantitative or ordinal qualitative) values of such inputs were known with certainty. The fact that many of these inputs (economic, behavioral, social, etc.) are correlated to various degrees does not change matters. Nor does it matter that these dozen inputs could be swapped with a dozen other similar inputs to yield a similar result (i.e. tell me next years Nasdaq earnings instead, and my S&P stock price model will still work robustly, due to correlation). As stated above, whats important is that these dozen (or so) interchangeable main inputs, or input categories, are themselves functions of countless (effectively billions) of other, secondary inputs that no one mathematical model (including EWT) can predict.

But how can we claim that we know this a priori? Firstly, we can show (in practice actually, not just in theory) that within the set of billions of secondary inputs, there are countless pairs of any two such inputs that cannot be expressed as predictive functions of each other no matter how much we try. Usually, basic common sense alone will identify such pairs of inputs (for example, average summer temperature in North America and probability that the Chinese minister of finance unexpectedly dies are two inputs that have miniscule mathematical interdependence, while both influence the S&P 500 to at least some very small degree). By definition, if the two secondary inputs making up any particular pair showed a strong enough degree of correlation (or indeed any strong enough mathematical relationship), then either one of the inputs would become redundant. This is because that particular input would not add much explanatory power to a mathematical model that already contains the other input in the pair. But we find instead (in practice) that when we do properly estimate secondary inputs individually, our overall predictions meaningfully improve in increments. In addition to this, we also know that the values of our countless non-interdependent secondary inputs are not totally random. If they were totally random, then we would have to treat them as errors (or potentially disregard them) within our main mathematical model. Note that I use the word totally because all of these inputs reflect at least some degree of effective randomness (even prior to being deconstructed down to the physical level of quanta, if that were even possible). Nowhow do we know that these secondary inputs are not totally random? Because IT IS POSSIBLE to sometimes predict, very accurately, the values of some of these inputs using direct, observational methodsi.e. imperfect but reliable, fundamental analysis. For example, a diligent analyst rolls up his sleeves, pours over tons of data, and then accurately (or at least robustly) predicts next years corn harvest. At the same time, he also correctly predicts some changes to certain of next years tax rates, after reading 21 articles on the subject. He looks at the data historically, and finds that the corn harvests and the tax rates show no meaningful correlation or other mathematical relationship to each other.

He plugs both of these values into separate areas of a larger mathematical model that he uses to predict agricultural sector profits for next year. He then plugs this figure into an even bigger model and uses it to predict the value of the S&P 500 slightly more accurately than he would have otherwise.

Note that our analyst has arrived at a value for each input deterministically from even more basic constituent data, and in total mathematical isolation from the other input in the pair. Now for Elliott Wave theory to make any sense, one would have to take the absurd position that these two inputs in fact are indeed mathematically related at an even higher functional level than what the analyst understands (perhaps you might refer to it as holistic or biblical?). With all due respect, I believe that it would be the Elliott Wave theoretician who should have the responsibility of proving this mathematical interdependence to the analyst, and not the other way around. It would need to be proven for each and every pair (or at least a heck of a lot of them) for the main mathematical model to be valid.

What our analyst has done is use two secondary inputs, each of which somehow fulfills the seemingly miraculous criteria of (1) being individually predictable by fundamental analysis of more basic data, (2) not mathematically interdependent with its counterpart, and (3) partially explanatory for the future value of the market. There is nothing odd about this unless you look at the problem with deterministic preconceptions. Nowthe fact that ALL THREE of these criteria have been fulfilled proves that the two inputs cannot both be variables within any deterministic mathematical function whose final output value (the market) we already know. If they were, you would be able to use such a mathematical function in reverse to robustly predict either of the inputs themselves in terms of the other. Try using Elliott Waves to predict next years tax rates in terms of corn harvests, and youll see what I mean. At the same time, nobody could argue that tax rates have absolutely no influence on the S&P 500. You could repeat this argument using thousands of other examples. Every time, you would find that no global mathematical function (such as Elliott Wave theory) would be able to robustly predict your independent variables in reverse. By their absolute (rather than just marginal) nature, these thousands of predictive errors do not cancel out each other in the aggregate to yield a convergent result. Elliott Wave theory just cant work, by definition.

At this point in the argument, an Elliott Wave adherent may cry foul. How could you use Elliott Waves in reverse to predict the value of just one variable in a massive function, when you dont know all of the other variables (and their relative influences) within the function as well? My answer to this question is that you cant have it both ways. If you accept the idea that fundamental analysis works at all (which I do), then that means that you also accept the idea that sufficiently robust (though hardly perfect) mathematical models of stock movements can be constructed using values determined by rigorous fundamental analysis (otherwise there would be no point to fundamental analysis). Now take your pick from any of these fundamental models that you care to choose. One by one, strip away the rigorously, independently determined value of each variable and replace it with the value (of that same specific variable) implied by plugging in the Elliott Wave prediction for the final output result (i.e. the future value of the stock market) while keeping the other variables the same. Soon, the model will begin to spit out nonsensical retro-predictions of crop harvests, tax rates, Alt-A mortgage defaults, or any other variable you care to name that might legitimately contribute to stock market movements. I bring this up because many Elliott Wave adherents claim to jointly use fundamental analysis, as if the two methods were complementary to each other. Ironically, they are in conflict. According to the logic behind the above refutation of Elliott Wave theory, every input variable correctly determined by fundamental analysis constitutes yet another reason why the remaining, undetermined input variables are not part of a deterministic mathematical function.

As you can see, the relationships of underlying inputs to stock values are totally different from the relationships of underlying causes to natural patterns that intrigued R.N. Elliott. When 19th century chemists could not understand why the elements of the periodic table displayed predictable, recurring patterns, it was the concept of electrons/orbitals that finally explained it all (just as gravity did for astronomers). For stock traders, there is no analogyno all-encompassing force, particle, or wave that will one day be identified, valued and then plugged into an equation to predict the future. Rather, there are dozens of major factors that have ALREADY BEEN IDENTIFIED, yet whose values are known to be unpredictable in the aggregateeven if we can occasionally predict some of them individually by rigorous analysis of their constituent elements.

Proponents of Elliott Wave methods are likely to contend that my theoretical arguments are not relevant if the EW theory yields practical trading results. I will not dwell on the many arguments against the notion that an individual traders success necessarily proves the perpetual validity of the underlying method that he/she uses. But I will point out that its impossible to either prove or disprove the Elliott Wave theorys validity by reference to its practical results. For this praxeological reason, a purely theoretical analysis is obligatory.

Finally, I should point out that, in practice, most Elliott Wave practitioners admit that their system is only meant to be a general guide with many possible outcomes (i.e. additional randomness and variability is introduced). That is, there is an ideal wave pattern according to the theory, but in practice there can be deviations from this pattern. Nothing about this admission refutes the above arguments, nor does it strengthen the underlying predictive power of Elliott Waves.

There are two basic elements of research – fundamental and technical.

Fundamental stock research involves examining a company’s published financial documents. These include the income statement, the balance sheet, and the statement of cash flows.

Several web sites make this data available free of charge. Most have all three financial statements dating back three to five years for literally thousands of publicly traded companies. The best sites for fundamental research are Yahoo! Finance and MSN Money.

Technical stock research examines the price movements of the stock. Most technical analysis involves studying patterns in the charts of a stock’s daily pricings. This form of research has certainly been made easier by modern technology, as in the past, technical analysts used to plot charts by hand.

Now you can find great charts for stock research on Yahoo! Finance, and Smartmoney.com. If you’re willing to pay for your technical research, consider investors.com, which has a great service called Daily Graphs.

Other Sources of Stock Research – Newspapers and Magazines

SmartMoney is probably the best monthly magazine for research purposes. They frequently profile stocks and mutual funds in easy to understand terminology, and therefore, it’s great for the novice investor.

Forbes is another great magazine for stock research. It is published bi-weekly, with about 1/3 of its pages devoted to the stock market. The politically sensitive should be forewarned, however, that Forbes has a very pronounced conservative bent. If you like your journalism free of partisanship, consider Fortune, which is also published every other week.

The Wall Street Journal is a daily newspaper, and probably the most famous source of research. It can be purchased on most newsstands for only $1.00 an issue, and it normally has promotions running that allow you to subscribe for much less than that. Despite the paper’s New York City headquarters, daily delivery is available in all but the most remote U.S. locations.

But in all honesty, The Wall Street Journal pales in comparison to Investor’s Business Daily (IBD), which is almost uniformly recognized as the best source of stock research for serious investors.

Although the paper’s editorial pages are aggressively Republican, its reporting is geared towards the individual investor – whereas The Wall Street Journal’s target audience is business executives.

Best of all, IBD publishes a special Monday edition (actually released on Saturday) that features detailed charts of its top 100 rated stocks.

Subscription Web Sites – Morningstar.com

As far as subscription web sites go, MorningStar (morningstar.com) is probably the most respected of all. It offers detailed research reports on over 1000 companies, in a simple, concise format.

Although MorningStar is best known for its mutual funds research, it is also a great source for research information. However, at $13.95 per month, it is a bit pricey – you could subscribe to SmartMoney magazine for an entire year at that price.

The good news is that there are a bevy of sources from which you can get your stock research. The bad news is that there might be a little too much of it. Whenever conducting research, be sure to consult at least two sources.

There are a lot of opinions out there, and in cyberspace especially, some investment opinions aren’t worth the paper that they’re not printed on.

Profit is all about to understand the market conditions clearly, before trading and doing right things at the right time. This is said easier than done. For a new investor, the beginning has to be on cautious premises. Choose blue-chips companies, whose reputation is above board and which have been consistently paying dividends and bonus/right issues. Alternatively, in the course of your research, you spot some companies whose share prices are low, it means that you have managed to beat the market and this investment is likely to fetch you good profits.

When you are unable to catch the trends of the market, and move away from them, instead of beating the market, you are beating the retreat. In such conditions, take advice from reputed stock analysts, who can tender appropriate advice, on the basis of the inputs secured from the fundamental and technical analysis. No method provides one with 100% guarantee of success, but workout such plans so that the odds are in your favor. The results of the research before you provide confidence, you understand the market better, and catch the right signals. In addition, your psychology and sentiments are important part of your trading and they are the practical elements in making money. When you provide suitable cut loss limits, they will keep you off trouble and you are able to prevent major losses.

Profit from share trading is not a profound science. The methods to deal with the exchange are amazingly simple. Only you need to employ them effectively and in a timely manner. If you are able to catch the signals of early stage of price rise movements, one can take advantage of the maximum profit opportunity with minimum chances of risk and losses.

Any condition is a good condition for a shrewd investor. The market bows before such investors, and provides them with a series of profit opportunities, whether the shares are moving up, down or sideways. Those are the masters of option trading. Such people wear ‘all weather proof jackets.’ They are mostly stock trading millionaires.

In any given market conditions, as far as possible, avoid day trading. Howsoever great are your strategies, risk looms large in such trades. Intra-day trading in the same security is fraught with great risk. Some one with limited resources and trading experience and with low risk tolerance should not enter this trade zone at all. Those who claim large profits from day trading, are perhaps are conducting their clandestine business to promote a particular share of the company, with some hidden agenda. Even in the normal course of day trading, your competitors are professional licensed traders engaged by securities firms, institutional finance companies and the commercial banks. A small investor stands no chances of engaging them in voluminous trades.

For immediate profits, option trading strategy is less risky and the chances of profits are more. There are many kinds of option trading strategies. Call Option, Sell Naked Put Option, Bull Put Option, Bear Put Spread, Straddle, Covered Call, and Short Straddle etc. Use these strategies as per your specific portfolio needs.

When you think of making profits in all market conditions, it is important for the investor to know, in which condition the market is passing through at a given moment. Unpredictability of the market is well-known to all investors. It so happens, when the well is full, you do not have the drums to store water, and when you have enough empty drums, the well is empty! Such are the tantrums of the share market; one fails to appreciate, its behavior. You can not question it with your reason, only accept the fact and respect the trends. There is no other way to do business dealings in the share market.

If we look at the history, it shows that the capital markets crisis always starts from the financial sector since 1900′s. By further investigation, it shows that the earliest indicator of the financial problems isthe default.We just heard that there is delay in payment of obligation by Nakheel Company (a subsidiary of Dubai World) is submitteddirectly by the Government of Dubai.This together with the pessimisticglobal capital markets are haunted by a lack of U.S. GDP(only 2.8%) with 10.2% unemployment rate.

Dubai World is a Dubai government-owned company thatengaged in various fields of infrastructure, one of which isNakheel.One of the famous Nakheel project is the Palm Island, a housing block in the middle of palm tree-shaped sea.Its funding sourcescome from obligation (3.52 billion USD), which expirationdate of payment is on 14^th December 2009, is proposed to be postponed until 30^th May 2010.This delay is certainly a negative effect for the holders, who are in desperate need of liquidity.

Subprime Mortagage part 2?

One of the major concerns is when the obligation price further dropped. This will led to the collapse of related investment such as mutual fund, unit link, and retirement funding, even banks (there are some banks that are predicted to suffer losses due to this case).These can effects on the portfolio investment.If the investorsrespond quickly and the withdrawal of funds was done in large amount andsimultaneously, then the rush will occur.Portfolio value can fall dramatically!

However, it is different from the subprime mortgage that is happening in America, where there is no underlying asset of this,so the value could actually completely go.However, the market value of real estate in Dubai havedecreased by 70%, this will certainly affect the warranty orunderlying asset given by Nakheel (sourcewww.bloomberg.com).In addition, a lot happens by default in the payment of such property, this will impact on liquidity in the Dubai property companies in general.

It can affect the price of other bonds that actually have better outlook(domino effect).Therefore, when this happens, it can impact together on the economic turbulence if the Dubai government did not immediately anticipate this problem as soon as possible.In addition, many analysts describe these event is similar as the case that occurred in Argentina.