Wednesday, October 15, 2008

Trading the US markets (written by Daniel Kertcher)

Wise investors know that one of the secrets to success is to diversify. Not only between various market sectors, but also between different markets. The US market represents an ideal market to consider.

Benefits of investing in the US market

Trading the US market offers many benefits over trading the local Australian market:

● Enormous size and liquidity. The US market is over 100 times larger than the Australian market!

● Vastly superior brokerage services with much cheaper brokerage rates due to the greater number of stockbroking firms in America, which means increased competition.

● Similarly to Australia, the US markets are highly regulated, with protection systems in place to protect investors.

● There is far more information, more readily available about US companies than Australian companies, allowing investors to make more discerning choices about their investments.

Excellent websites to research company data include www.moneycentral.com and
http://finance.yahoo.com

Similarities and differences

Buying and selling shares on the US market is virtually an identical process to trading shares in Australia. The options market; however, has a few subtle differences.

Differences between Option Markets

Australia

● Options expire on the Thursday prior to Last trading Friday of the month

● 1,000 shares per contract

● Much more capital required for trading and writing covered calls

● Very few opportunities to trade due to very limited size of the market – Less than 10 highly liquid stock options

● Strategies limited to trading and covered call writing due to limited liquidity

US

● Options expire on the third Friday of the month

● 100 shares per contract

● Far less money is required for trading and writing covered calls

● Enormous number of trading opportunities – Over 500 highly liquid stock options

● Many different strategies are possible, such as Covered Puts, Spreads and much more

Education

To anyone with experience trading the Australian Stockmarket, the US market is a relatively simple transition, with respect to terminology and procedures.

However, it still pays to familiarise yourself with the various companies and strategies available before you start trading. There are quite a few books, homestudy courses and seminars available in the market. One of my favorite authors is Michael Thomsett, who has written numerous books on US stocks and options. There’s even the board game, Call Up Put Down which teaches players how to trade US options.

Looking to the future

Whilst many Australian investors have done extremely well over the past year, alas, no market can continue to rise forever. Savvy investors know the benefits of diversification. Today, it has never been easier to trade the US market, and participate in the Greatest Market on Earth!

Platinum Pursuits offer a wide range of live seminars, home study courses, DVD’s, Audio CD’s, software and other tools designed to teach investors how to trade US stocks and options. For more information, please visit: www.PlatinumPursuits.com

© Platinum Pursuits 2006. All rights reserved.

Disclaimer

The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.

Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:

1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
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