Tuesday, October 9, 2007

Building Wealth Gann Made $50 Million Here's How

W D Gann was one of the most famous investors of all time and a portrait hangs of him in the New York Stock Exchange in recognition of his achievements.

This article is all about how to build wealth and how to do it quickly.

Lets look at Ganns methods and how you can use his tools to make yourself some big profits to.

Ganns Methods

Ganns methods were all based upon the theory that market action repeats itself.

As humans our psychology is constant and as we are ones who create market prices this psychology repeats itself again and again in price action.

Gann used technical analysis to make his trades and when he traded at the turn of the century he employed a team of draughtsman to construct the charts.

Today, traders can simply use computer programs to do the work and there are many good ones about and plenty of Ganns courses, so you can learn the basics and apply them easily.

There are also money managers who use Ganns methods to trade and many have outstanding track records of success with 30% annualised gains and more. If you dont want to trade yourself then this option is open to you.

Trade to build wealth

In fact, you can do all your trades in under an hour a day, from the comfort of your own home. All you need is a computer and an internet connection and you are all set to build some serious wealth.

To trade Ganns methods you need to confidence in them. As with all trading methods you will have losses and it is essential to have the discipline to stick with the system even during periods of losses.

Trading success is based around the following equation:

Trading method + Applied with discipline = Financial success

This may sound obvious, but 90% of investors cant get the second part of the equation right. They cant trade with discipline. They let their emotions dictate their trading moves and end up losing.

Gann removed this emotional component by only doing what his charts told him.

When the majority thought share prices would go on forever in 1929, Gann got ready for the crash! And you guessed it he made a killing in the markets.

Stand Alone from the crowd

Gann was an individual he didnt care what people thought of his methods and he didnt care what people thought of his trades. He simply concentrated on building wealth $50 million dollars of wealth.

Gann can give you the methods and the tools, but only its up to you to use them to build wealth. Gann traded in isolation and you must to.

If you can apply the methods he created with discipline the path is open to you to.

You Have An Advantage Gann Didnt

You have computers where even computers with low specs contain more power than the computers that put man on the moon! We also have the greatest technological innovation ever: The Internet.

These tools can help you build wealth in under an hour a day. Take a look at Ganns methods and you will see a route that could lead you to financial success to.

FREE Gann information on how to build wealth with Gann's trading methods from a company applying Gann's tehcncial trading tools for over 25 years with outstanding success visit:


The Right Forex System Can Make You Rich

Whatever you think you should be doing in forex, the first thing you must consider when thinking about starting a profitable forex trading career is to find a forex system that will give you consistent gains. This means a system that will have a high percentage of successful trades over losing ones. No system is perfect, thats true, but you will make money even with losing trades, as professionals do, if you do things right with your system. Lots of people earn a living trading the forex and you can do it too.

A key ingredient in your forex trading system must be to have the proper money management rule sin place before you start trading. Bad money management can sink your trading career at the very beginning. So be wise and plan ahead in your system.

Also you should have clear chart setups in order to have a wide and detailed view of the market at the moment you are trading. With your charts in place you should load your trading system with the correct logic of when to enter a trade and when to exit. In forex trading these two critical times often means lots of money inside or out of your pocket. Never use a system that doesnt give you a clear logic for your trades.

It is always a plus if your system ha information of the best times of the day when to enter the markets and when you should better leave and take a brake. Forex trading session is all day but there are hours when the volume increases and trends show themselves more clearly. Taken note of this and considering when looking for a good forex trading system for you.

=>> http://5EMAsForexTradingSystem.googlepages.com/

Downloaders versus the Music Industry

Is it too late to find a peaceful compromise in the digital music revolution between record labels and consumers? It is not just record labels that are refusing to find a middle ground between ease of sharing digital music and ensuring listeners pay for it. Consumer attitudes and actions are not helping matters any. Has the gap between the two sides widened past the point of identifying a resolution?

The issue is enormously complex because it doesnt fit squarely into any one category. It is a business concern because record companies are rapidly losing revenue in sales of compact discs. And in 2006 at least, the industry is claiming that online music purchases did not make up the difference.

It is a technology concern because the industry leaders are still insisting that digital rights management, DRM, be incorporated into any digital music sales essentially protecting digital content from being copied and shared. So far, no one solution has successfully satisfied the consumer and the music industry. There is a minute push among the big labels to partner with major online distributors like Yahoo and Amazon.com to release digital downloads free of DRM. But the biggest push is a model much closer to that of Zune or iTunes a closed system that allows only for sharing of tracks among its own products.

It is a legal issue too, one of ownership and copyright violation, that has resulted in legal action against downloaders and file trading networks. Under the Audio Home Recording Act of 1992, consumers could make analog and digital recordings for personal use. That was back when music sharing was making a mix tape off of the radio, and didnt threaten record label revenue.

It is a political issue because the government has once again introduced a bill that aims to regulate digital music commerce. On January 11, the U.S. Senate introduced the Platform Equality and Remedies for Rights Holders in Music Act. This is the second iteration of the same bill that was originally introduced in April 2006, and it is plainly a major score for the recording industry. The act basically requires that music providers, including satellite radio and cable providers, take whatever means available to prevent music theft. For consumers, that means no more burning tracks to CD.

What is at stake is the relationship between the music industry and the consumer. Any faade of goodwill is rapidly crumbling. Even in the face of undeniable backlash from consumers, music execs are not any closer to offering a viable solution. The record labels are loath to describe it as a war on consumers. But consumers have taken the war to the record companies by freely and without qualm passing around digital tracks by e-mail and cell phones and portable music players.

Its probably useful to note that independent record labels and the artists themselves have freely distributed tracks to consumers without DRM. But the big record labels argue, rightly, that giving music away is not much of a business plan. And to drive the point home, a global pool of independent record labels announced a deal to negotiate terms en masse with download sites through an agency called Merlin. The move ensures that the indies will have a market share in fee-based digital music sales. Because at the heart of the argument is a very simple notion; listeners should pay for the music they hear.

This week at MIDEM, a music industry trade fair, the music industry will continue to debate endlessly its stance on digital music distribution. Whether it is fair or not, it is up to the music industry executives to find a solution to the problem. Consumers have drawn a line in the sand, and the record labels would be wise to find a way to make it work. There needs to be a system that is profitable for them and convenient for the purchasers.

The alternative is a move towards an entirely free and fluid music sharing system. As it is, we are already one foot in the door to that outcome. A generation of listeners has grown up in the age of free digital music sharing. Who will be able to convince them to go back to paying for the privilege? Its not too far-fetched to suggest that is it already too late to compromise.

Andrew Marx uses his legal education to provide practical information on how the everyday person can access legal resources. His weekly column can be read at http://features.smartremarx.com/

Stock Market Timing - Which Months Are Best to Invest?

The U.S. stock market at the time of writing, (August 16, 2007), has spent a large part of the summer so far in a seemingly unstoppable swoon that has spooked all but the hardiest of investors and traders. Many may wish that some kind of simple guidelines were in existence that could provide pointers as to which time of the year may be the most suited for bullish bets in the market and which constitutes the best time to take money off the table. How much easier it would be to make money in the market if buy and sell decisions could be made simply by referring to the calendar!

Techniques designed to time markets in order to maximize profits come in many shapes and forms and naturally there are many opinions as to when might be the most propitious times during the year to buy and sell stocks. Statistically, September is the month that shows the biggest tendency for stock market declines. October scares some people because some major market crashes have occurred in that month including those of 1929 and 1987. We hear about "summer rallies" but find that concept is contradicted by the old adage "Sell in May and go away." There is a Santa Claus rally, closely followed by a January Effect. But in our view Mark Twain probably summed up the best way to view the timing of stock purchases by month of the year when he wrote: "October. This is one of the particularly dangerous months to invest in stocks. Other dangerous months are July, January, September, April, November, May, March, June, December, August and February."

This article was written jointly by Aidan J. McNamara and Martha A. Brozyna

Aidan McNamara is associate publisher at The Deal LLC in New York, publisher of the weekly financial magazine The Deal as well as The Daily Deal and TheDeal.com. He holds an MA (with distinction) in Area Studies (Eastern Europe and Russia) from the University of London, 1981 and a BA in German from the University of Manchester.

Martha A. Brozyna received a Ph.D. in history from the University of Southern California in 2005 and a BA in history and political science from Rutgers University where she graduated Phi Beta Kappa in 1995.

McNamara and Brozyna are the authors of Contrarian Ripple Trading: A Low-Risk Strategy to Profiting from Short-Term Stock Trades, scheduled for publication by John Wiley & Sons in October 2007. Martha Brozyna published Gender and Sexuality in the Middle Ages: A Medieval Source Documents Reader in 2005 (McFarland & Co.)

The authors have additional information on themselves and their forthcoming book at their website http://www.ridetheripples.com

FOREX Trading Systems - Learn the Secrets That Made $50 Million Dollars

W D Gann amassed a fortune of $50 million dollars in the first half of the last century, although he died in 1955, his trading techniques are still used today.

If you have a FOREX trading system then Ganns trading methods are an ideal vehicle to seek big profits with low risk.

Ganns Method

Ganns method takes the emotion out of trading and like any successful FOREX trading system will liquidate losses quickly and try and hold the longer-term trends and milk them for profits.

Gann's method was tried and tested and many of his trades were publicly recorded and worked in ANY financial market.

1. He predicted improvements in the economy in 1921 and the huge Bull Run in stocks.

2. In 1928 he predicted the end of the Bull Market, a full year in advance of the 1929 crash. Not only this but he then bought stock in the Dow at the all time low that occurred in 1932.

3. In 1935, a newspaper verified 98 of his trades, in cotton, grain, and rubber.

The result?

83 were profits.

Why Was Gann's Unique?

Gann was a technical trader but introduced a unique slant to his method by calculating the interaction between price and time and its influence.

Gann believed that crucial price trend changes happened when price and time converged.

If price and time were not in synch, then time would always by the main determining factor over price. Time, was therefore the ultimate indicator for him as Gann once said:

All of nature was governed by time".

In the "Wall Street Stock Selector" Gann gave an insight into repetitive price patterns that would always occur and said:

"Just remember one thing, whatever has happened in the past in the stock market and Wall Street will happen again. Advances in bull markets will come in the future, and panics will come in the future, just as they have in the past. This is the working out of a natural law

Gann also had other unique concepts that he incorporated in his methods

He utilized such concepts as Gann angles as well as The Fibonacci Number Sequence which were revolutionary and are still used today.

Gann wrote extensively and produced vast volumes of work over his lifetime and all traders can learn from him.

Why Is Gann influential today?

Quite simply, as his methods are based on recurring price patterns they will never go out of date and savvy traders worldwide still use them to gain a trading edge.

FOREX markets are some of the best markets to trade and if you have a FOREX Trading system Ganns methods could help you in your quest for profits and give you the trading edge you desire.


On all aspects of Gann trading including an exclusive Gann Trading Course visit our website for a huge resource of articles, features and downloads and at http://www.net-planet.org/index.html

Why Online Forex Trading is Attractive

One major guide for successful forex currency trading is the identification of trend. That is what many forex trading software use in their analysis.

In FX trading there are always identifiable trends in the movement of forex exchange rate. These last longer and are more clearly defined than is the case in any other type of trading, be it stock trading or commodity trading.

A forex chart often displays a consistent trend which remains there for a considerable amount of time. If one can spot this trend early on, one can make big profits. That is how many successful forex traders have succeeded in forex market.

One can follow this trend till a new pattern or trend emerges.

Nobody can control foreign exchange trading for a long time. There may be short periods when the central bank of a country or any other major bank is able to influence the foreign exchange rate, but it cannot hold it for any longer time.

There is no insider information or market manipulation. Therefore, one can trade fearlessly. On the other hand one is always subject to foul play in stock and other types of trading.

In forex trading one needs to concentrate just on a few major currency pairs - and pure technical analysis. A Forex trader doesn't have to worry about 8,000 stocks or 72 commodities, and all the underlying trading rules that accompany those markets.

Forex Market is marked by simplicity. There are less issues relating to the execution and scrutiny in this marekt. Because of this simplicity, companies are able to devise most sophisticated technologies. The forex trading software so designed is small and simple.

One important attraction of online forex trading is the leverage factor. With this, one can hold fairly large positions with very small amounts. Thus with a leverage ratio of 100:1 and $1,000, one can have control over as much as $100, 000. If one happens to lose, one cannot lose more than $1,000.

A forex trader can cut the losses early on while leaving the profits to build. With this strategy, it is possible to be profitable in forex market.

Another beauty of forex trading is that one does not need a lot of learning. One can learn forex trading in relatively a short period of time and start trading.

One can start with mini forex trading. With this one can start with as little as $50 and in as little as 5 minutes.

There are no fees to be paid in currency trading. A forex broker makes up his fees from ask / bid spreads.

Forex currency trading can be done virtually 24 hours a day and 6 days a week. No other market provides this sort of facility. One can pick up ones own hours and work accordingly. One is not subject to opening and closing bells.

All the above factors make it extremely easy and attractive for online forex trading.

For a Free Forex Guide and For Learning More About This fantastic Internet Business, Please follow this link.

How The DOW Is Often Misused As An Indicator Of Likely Returns On An Individual Stock Investment

Every asset class at some time or other has its day in terms of being the investment that offers returns superior to all other types of assets. Real estate, gold, fine art, fixed income instruments such as bonds, even in recent times the so-called alternative assets of private equity and hedge fund investments can be kings of the hill. However, over any very long period of time measured in decades, all the evidence suggests that investing in stocks - equity stakes in publicly traded companies - is the best way to achieve real inflation-beating returns.

It is typical of writers in the investing genre to use the statistical history of the Dow Jones Industrial Average (the Dow) to indicate the wisdom of investing in stocks. At first blush, the choice of this index may appear to be strange, given that it contains just thirty stocks (out of many thousands of publicly traded companies) whereas broader indices such as the Standard & Poors (S&P) 500 and the Wilshire 5000 Total Market Index cover much more broadly-based groupings of stocks. However, the general usage of the Dow in this way reflects both its longevity, (it has been around for one hundred and eleven years now and has been a thirty-stock index since 1928), as well as its general acceptance by investors, the media and the general public.

When someone remarks that the market is up 35 points today, they do not mean that the S&P 500 is up by that amount, nor the NASDAQ 100, nor certainly the Wilshire 5000. If the market is up 35 points then you can be sure this refers to an increase that day in the Dow Jones Industrial Average. It is precisely for this reason that the use of the Dow, whatever weaknesses it may have in other ways, makes perfect sense as a day-to-day gauge of what the market is doing. In effect, precisely owing to this level of acceptance, the Dow is the most logical index to use to act as an indicator on movements within the market overall because, to all intents and purposes, the Dow is the market.

This general acceptance and longevity have the additional effect that the Dow is consistently used as a market proxy by investment writers wishing to demonstrate how over very long periods of decades and more investing in stocks has been the smartest investing practice. This is especially well illustrated by showing the upward advance of the Dow in graph form. The message is clear there is an obvious ever onward and upward progression of the index. This can be used to bolster the argument, very typically used by writers on investing, that if you had bought stocks say in November, 1972, when the Dow closed above 1,000 for the first time, then your investment would have been worth over thirteen times that initial investment in 2007 with the Dow today at well above the 13,000 level.

Leaving aside the fact that during the 35 years from 1972 to 2007 inflation would have eaten up a large portion of the nominal gain, (but also on the flip side the fact that over the same period dividend payouts would have made up a good part of any losses from inflation), our argument that the use of the Dow by investment writers in this way is misleading hinges on the fact that the Dow is itself in no way an immutable index. It is subjected to a kind of regular housecleaning by the editors of the Wall Street Journal who every few years bring into the Dow Jones Industrial Average companies that are dominant in the economy of the day, and throw out those that are not considered dominant enough, either generally or in their own industry sector. Therefore, they ease out the old-economy, smokestack, buggy-whip making has-beens of yesteryear, and replace them with the zippy bright new-economy stars in growth mode. This process over time can clearly be demonstrated by comparing the make-up of the Dow at the time that it first closed above 1,000 in 1972 and the make-up of the index today.

Then: Allied Chemical; Aluminum Company of America; American Can; American Telephone & Telegraphic; American Tobacco; Anaconda; Bethlehem Steel; Chrysler; DuPont; Eastman Kodak; Exxon; General Electric; General Foods; General Motors; Goodyear; International Harvester; International Nickel; International Paper; Johns-Manville; Owens-Illinois Glass; Procter & Gamble; Sears, Roebuck & Co.; Standard Oil of California; Swift & Co.; Texas Corporation; Union Carbide; United Aircraft; U.S. Steel; Westinghouse Electric; Woolworth.

Now: 3M Company; ALCOA; Altria Group; American International Group; American Express; AT&T; Boeing; Caterpillar; Citigroup; Coca-Cola; DuPont; Exxon Mobil; General Electric; General Motors; Hewlett-Packard; Home Depot; Honeywell International; Intel; IBM; Johnson & Johnson; JP Morgan Chase; McDonalds; Merck; Microsoft; Pfizer; Procter & Gamble; United Technologies; Verizon; Wal-Mart Stores; Walt Disney Co.

These different renderings of the Dow Jones Industrial Average demonstrate that the use of the index as if it is unchanging and somehow carved in stone can be misleading. The use of the index as a statistical proof of the history of the market is in truth compromised by the regular changes in its component parts. Yet it is convenient for those writing on long-term investing strategies to use the progress of the Dow over many years to demonstrate not just the general upward trend in the market over time, which is a fact, but much more tenuously that of individual stocks comprising the market.

Should a writer voice the opinion that an investment in the market in 1972 would be worth thirteen times that investment today, he or she would be ignoring the fact that any return would depend on which stocks had been selected for investment back in 1972. Buying into the market at that time could involve purchase of Dow component stocks that later did well, Dow component stocks that later did badly and are no longer part of the Dow and of course for the most part it would probably realistically mean investment in stocks that were not part of the Dow index then or now. Indeed, exactly the same issue would arise for a broader index such as the S&P 500 which is also constantly refreshed by additions of fast-growing companies and demotions of slower-growing ones. Moreover, companies that are acquired by larger, more successful companies are deleted and always replaced in the index by promising up-and-comers.

A straight comparison of an index at one point in time with the same index decades later masks the significant rotations of sectors within the overall market that are always taking place. Developments in technology, lifestyle choices and general business and consumer trends are subject to changes that can be cyclical in nature, as certain industries or companies and their products come in or out of prominence. Management miscues, competitive developments or even legal liabilities, (did we hear someone say Asbestos?) can also lay low a stock that looked promising at the time of investment and can make its performance over time very different from that of what is being referred to as the market.

The only way that comparisons of indices over many years as a measure of investment performance can truly be considered accurate is for the investor who puts his/her money into a market index fund which is managed to replicate the movements of the index on which it is based. Otherwise you really cannot directly extrapolate from the historical trend lines of any index, including the key Dow Jones Industrial Average, the likely success of any individual stock in which you may choose to invest over the very long-term. Put bluntly, individual stocks potentially have a shelf life and are perishable, even though the overall market over time may go marching on.

This article was written jointly by Aidan J. McNamara and Martha A. Brozyna

Aidan McNamara is associate publisher at The Deal LLC in New York, publisher of the weekly financial magazine The Deal as well as The Daily Deal and TheDeal.com. He holds an MA (with distinction) in Area Studies (Eastern Europe and Russia) from the University of London, 1981 and a BA in German from the University of Manchester.

Martha A. Brozyna received a Ph.D. in history from the University of Southern California in 2005 and a BA in history and political science from Rutgers University where she graduated Phi Beta Kappa in 1995.

McNamara and Brozyna are the authors of Contrarian Ripple Trading: A Low-Risk Strategy to Profiting from Short-Term Stock Trades, scheduled for publication by John Wiley & Sons in October 2007. Martha Brozyna published Gender and Sexuality in the Middle Ages: A Medieval Source Documents Reader in 2005 (McFarland & Co.)

The authors have additional information on themselves and their forthcoming book at their website http://www.ridetheripples.com

Day Trading Chat Rooms - What to Realistically Expect

About two years ago I entered a slump in my day trading. I decided to hunt the internet, and there I found many day trading chat rooms. One by one I signed up for trials to see what they were about. I had never been in a chat room before.

After being in a few rooms, my impression was that the members of the room were looking for a leader, a guru, someone with the answers. I guess I was too, although I already had about thirty years of trading behind me. Id like to think is was just more curious than actually looking for answers. Most of the room members seemed very naive. Im sure they thought theyd be given an indicator or method that would allow them to start making money right away. The other thing I noticed right away was the ego of the moderators. They spoke with great authority, and suggested that their way of trading was the one and only way. Only they had the answer. And the room attendees, in each of the rooms, seemed to agree.

I did not see much new in any of these rooms. Each one had some kind of gimmick or special oscillator. Some had a black box approach, where you were supposed to just sit there waiting for the moderator to call out the trades. I did not see many winning trades from the little time I spent in any of these rooms. From what I saw, I doubted if any of these people ever made a dime trading. I kept moving on.

Eventually I came upon a chat room that was free. Free was interesting. How could it be free? They must be selling something. I logged on.

I heard the voice of a very calm, relaxed man that had just taken a huge win out of one of the stock index futures. Dozens of traders posted congratulations to the moderator for the winning trade, but more so for such a wonderful, magic indicator, and all the wonderful trading patterns from this magic indicator.

The magic indicator being used was actually introduced around 1980, but this moderator had some interesting improvements on the way it was displayed and the patterns it produced. And the room was not only free; there was a charity involved. He asked everyone to donate a little out of his or her winnings. How could anyone criticize anything that was done for charity?

The moderator made the claim that he invented the use of applying patterns to an indicator. He did rename all the patterns, but I recognized many of the patterns that were well documented in many old books. He just put strange names on existing patterns. The mostly new traders did not know these were old patterns. Nobody questioned anything in this room.

Despite nothing new here, it seemed he did an excellent job of categorizing many different patterns and putting them all together into a package that would be more readily accessible to new traders. So that was good. And there were many good concepts offered on trading in general, and money management. Also, the chat room was upbeat and positive. Most of the previous chat rooms I attended were negative and angry. I thought I should continue on.

I spent the next few months learning as much as I could. As much as I wanted to believe he had wisdom worth listening to and a viable approach, many things started really bothering me. One was his insistence that his indicator could lead price An indicator, which is a derivative of price, cannot lead the price. Thats just mathematically impossible. Another was his insistence that you cannot be watching prices while you are trading. What?! You cannot see what you are trading? If you were driving a car would you cover up the windshield? The people in this room would if he told them to.

I had a hard time believing that nearly a thousand people would accept everything that was being said. Accepting it so readily. Were they all drinking Kool-Aid? It was an interesting study on the need to believe in a leader, a guru. Someone that can help make dreams come true.

But I persevered. His trading results certainly looked more encouraging than mine did. I would get the recaps after market close on days that they were available. Nearly every trade in the recap was profitable. I tried to write down the trades as they were being called, and then tried to reconcile them in the recap after the market closed. But I began to notice in the recap that the winning trades were selected very carefully out of the real time comments. Again, nobody questioned any of this. Was I the only one who noticed the discrepancies?

At this point I decided to do my own testing. I had been in the room long enough to know every pattern and every nuance. I was good at programming and had the data to test. I took each pattern individually so I could find which patterns had profitable or encouraging tendencies. For my tests I decided I needed thousands of samples. I decided to test each of the patterns on five years of data, and broke them up into one year segments. I was just looking for profitable tendencies and robustness.

After programming everything, I tested the signals by hand; just to make sure my programming caught all the signals based on the rules, and did not create signals that should not have been there.

After spending weeks and reams of paper for my printouts, I found that none of the patterns resulted in a profit in any of the previous five years when tested mechanically. A pattern that was touted as winning 90% of the time, actually lost money, and in most years had less than 30% winning trades. Results on the rest of the patterns were less reliable than the flip of a coin, far less in most cases.

To summarize my testing: nothing worked. Nothing came close to a favorable tendency. I tried to tell other people in the room about my research and the dismal results. Most of them would not hear it. They did not want to hear the truth. They were too invested in the method, and they had to believe they would eventually become successful if only they would hang on a bit longer, learn that secret that is just around the corner. But most of these people stayed in the room, some had been in for years, and kept showering congratulations onto the moderator for the great trades, and great magic, leading indicator. Did they ever look at their account statements?

You might assume my time spend in this room a waste of time. That maybe I thought that this guru did have the answer to trading success. I knew better than to expect this. The sad part is that so many other people dont know better. They are told something that they want desperately to believe, and they believe it. They don not test it. They do not question it. They believe blindly. They invest much time and money, and then they get past the point where they simply want to believe. Now they are too invested and they have to believe. They will disregard all common sense and all facts and proof in an effort to keep the dream alive. I certainly learned about psychology and the mind of chat room traders that I compete with every day.

Trading is hard work, and every trader has to find what fits his or her own personality and temperament. Nobody is going to easily give it away, whether in a free chat room, or a paid room or seminar, or a so-called trading school. Theres a whole industry out there that supply traders with tools and education. Very little of it is good. Most of it is a waste, taught and promoted by people who are not successful using the approach themselves.

Doug Tucker has a blog with daily commentary on stock indexes, precious metals, and other markets. There are many articles on technical analysis and indicator design and interpretation. To visit go to: http://tuckerreport.com

Currency Traders Secret Weapon - Support & Resistance

Do you know why only five percent of all currency traders are successful? Do they know something that we don't? The truth is that successful forex traders use the same technical indicators that you and I use. The difference lies in accurately interpreting these indicators. A common indicator used by forex traders is support and resistance. Let us see how support and resistance are used in forex trading.

Support and Resistance is the foundation of most of the top trading systems. Support and resistance levels represent pauses in the trend when investors reconsider all information. The idea of support and resistance is vital to understanding and interpreting the forex market. Support and resistance are basically price bands where the price will probably stop falling or rising respectively. Support and resistance are created because price has memory. Support and resistance are by far the most important forex trading technical indicator you will ever find, and the best forex trading option if you want to be on the right side of the market.

Support and resistance are like a floor and ceiling, with prices contained between them. Support like resistance is rarely a precise price; it is more often a relatively contained price range, frequently in the vicinity of past technical patterns. Support and resistance levels on bar and candlestick charts are a major component in the study of technical analysis. Support and resistance come in all varieties and strengths. The length of time that a support or resistance level exists helps to determine the strength or weakness of that level. When a level of support or resistance is penetrated, price tends to thrust forward sharply as the crowd notices the breakout and jumps in to buy or sell. When a level is penetrated but does not attract a crowd of buyers or sellers, it often falls back below the previous support or resistance.


Support is defined as a price level below which it is supposedly difficult for a currency pair or market to fall. Additionally it is a price level at which a currency pair or other security stops falling at least temporarily, hence the name. Support represents the level at which buying pressure is strong enough to absorb and overcome selling pressure. Support defines that level where buyers are strong enough to keep price from falling further. Support lines turn into resistance and resistance lines turn into support.


Resistance is the opposite of support and represents a price level or area over the market where selling pressure overcomes buying pressure and a price advance is turned back. Resistance defines that level where sellers are too strong to allow prices to raise further. By the time the price reaches the resistance level, it is believed that supply will overcome demand and prevent the price from rising above resistance.

So we have learned that: Understanding the concept and significance of support and resistance is important for profitable forex trading. One aspect of its unique quality is that support and resistance is defined as an area or a zone not a single price level. One of the basic precepts of support and resistance is that once a support level is violated it becomes a likely new resistance level and when a resistance level is penetrated it becomes a new support level.

Start practice trading using support and resistance on a demo account right away. Go out there and continue to research this indicator as well as other technical indicators. Once you master interpreting forex technical indicators profits will surely follow.

Have you ever desired the income and freedom of being a home based forex trader? Visit the author's (Kenneth Aikens) website for more powerful forex trading information: forex training - forex article directory.

How Can I Find The Best Performing Mutual Funds?

As the old saying goes, "You judge a horse by its track record," and that is probably true in most instances. However, it is not necessarily true when assessing the performance of mutual funds. Using past performance to determine a fund's future performance is much like looking behind you to see ahead. It is not exactly an effective measure.

There are several companies that assess mutual funds and assign them ratings based on specific criteria. Quite often, those criteria consist of viewing the fund's past performance over a five year or ten year period. However, this method has not proven to be effective in determining how a fund will perform in the future. So, short of polishing up the ole crystal ball and calling in to the psychic hotline, what is the conscientious investor to do?

Morningstar is one of the first companies that springs up when folks start talking about mutual fund ratings. As the most popular fund rating company, Morningstar uses a star system to rate funds, with five stars being top performers and one star being poor performers. However, the crux of Morningstar's ratings system is on past performance and that system may prove to be somewhat flawed.

Another source of fund rating is Lipper Leader Fund Ratings. Lipper uses five criteria in ranking mutual funds: total return, consistent return, preservation, tax efficiency and expense. They do factor in past performance, but the system seems to be more focused on analytical formulas than on past performance. Interestingly, investors must register with Lipper in order to access the fund rankings while Reuters uses Lipper rankings, yet allows immediate access to the information.

Business periodicals such as Business Week often publish their rankings of mutual funds, often on an annual basis. Business Week, for example, does publish the "Mutual Fund Scorecard" annually in their magazine, but it can be accessed online at their website. On the website, the Scorecard is updated monthly.

There are many magazines for business and investing that publish stock picks and mutual fund ratings. Some publish the information on an annual basis while others do so monthly. A discerning investor will be able to decipher the information and make an educated decision based upon the information from these publications as well as other sources.

Schwab's One Source Select List uses "rigorous criteria" to establish a list that is published quarterly and outlines their version of top ranking mutual funds. While the Schwab name is well known and trusted in the business and investing community, the disclaimer that precedes the ratings seems to be longer than the explanation for how the experts established the ratings. However, they do have an easy to understand table that lays out all the information on each fund. They even draw you pictures to show your risk level on each fund.

The bottom line here is that if you want to use ratings as a method of selecting the mutual funds in which you want to invest, it would be wise to assess several different sources with different ranking methods and see which mutual funds consistently rise to the top. Using just one rating source may not be an entirely effective method if you wish to invest wisely.

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Commodities Trading Online

With the advancement of the internet, commodities trading online is now made possible. Commodities trading online primarily deals with agricultural products such as sugar, corn, malt as well as metals such as gold and silver. It deals in relatively different products compared to the stock market which deals with financial instruments such as stock, bonds, securities, interest rates etc.

Before commodities trading online was available, certain places were designated as commodities exchanges. It is a place where buyers and sellers can negotiate upon a fixed price for the commodities.

However today, these services are available 24 by 7 on the internet and easily accessible. In online commodities trading, the orders by the customers to either buy and sell is transmitted to an electronic marketplace by the commodity exchange. No brokers are needed to act on behalf of customers as the brokerage approval process are automatically electronically generated.

One of the biggest advantages for commodities trading online is the price transparency. Since the top 5 current bids and offers are displayed electronically, it allows for fair trading and competition.

Online commodities trading as with any investment carries a certain amount of risk and should only be attempted when you have grasped an understanding of commodities trading.

Currently, there are many websites offering commodities trading online. Usually, there is a fee incurred when creating a new account. Some set a minimum amount in your account before you can start trading. Most online commodities trading websites provides extensive tools and knowledgebase such as helpdesk support, email support, trading research and technical analysis software to enable the user to make the best judgement on which commodities to buy and sell.

Though commodities trading online is very lucrative, it is also very volatile like the stock market and you should exercise caution when investing in commodities.

Ricky Lim is the online editor of a commodities trading site. Visit his website today for more info on commodities option trading and day trading commodities.

Options Offer Incredible Potential That Stocks Can Never Give Us - This Successful Trader Proves it

Dale Whaeatley was a contractor who traveled around the country helping the telephone companies with their excess needs that they could not handle in-house. As with any type of contract work, it was inconsistent. It was difficult for him to budget his money not knowing what his income or expenses would be. Dale went looking for an alternative source of income. He attended the usual Real Estate seminars, but realised he had no real interest in becoming a landlord or managing property. Instead he turned to stocks.

Dale had played in the stock market in his 20s, but didnt understand it. He decided to educate himself on stock trading. During this process Dale read how options offered limited risk and unlimited potential for gains, a strategy that appealed to him. To learn about when to trade, he read many technical analysis books and spent over $500 a month just for quotes and charts. he also plotted many charts by hand. Years later, he discovered a company called AIQ Systems and bought two of their programs, TradingExpert and OptionExpert. Still, all Dale was doing was spending money with no return to show for it. It was not until he sat down and examined his winning and losing trades, comparing them to the charts and indicators, that he finally began to discover the value in one particular indicator, the MACD, known as the Moving Average Convergence Divergence. He knew that when one line crossed the other it meant to buy or sell, but that did not work well or consistently, both requirements for trading options, since they are wasting assets. By examining divergences in the MACD indicator, however, one could tell when a stock was ready to change direction with a great degree of reliability. He concentrated on perfecting his entry and exit strategy using this indicator, but incorporated various indicator time frames, a process Dale had never seen done before. Soon Dale's returns were improving dramatically.

Why did Dale choose options rather trade the stock itself? Options offer incredible potential that stocks can never give us. Plus chart patterns develop clearly enough to see definite direction changes that will produce returns in excess of 1,000% in hours, days, or weeks depending on the strength of the pattern relative to the price. Dale's philosophy is simple, he doesn't want to ownanything! He just want to make money to do the things he wants, when he wants. Sometimes the chart patterns looks so strong that Dale is sometimes limited by the number of contracts he can buy at one time.

The pattern of the underlying security is of primary importance in Dale's trading system. He does not use any pricing models such as the Black-Scholes pricing formula or any other valuation method. These formulas are not designed to help make a profit on options, but rather to show what happens if the underlying stock performs in a certain fashion. There is nothing that can Dale can do about the options prices. Whatever the bid and ask prices are that is what he has to pay. It's the surety in the trading startegy that is paramount.

The pattern that Dale looks for is always the same, but it could be on different time frames (hourly, daily, weekly, monthly, etc) depending on the time left until the options expiration and distance from next strike price. Whathe looks for is a divergence in the MACD indicator compared to the price of the underlying security. he then looks to buy call options when a stock tests its prior low but has a positive divergence in its MACD indicator. The opposite is true for identifying tops. He uses this pattern because after much experimenting he found it to be the most consistent and accurate.

Here are some great examples of Dale's trades. LAM Research (LRCX). Lam Research hit an initial low on February 12 and then rallied. That low was retested on March 1-5. In effect, a double-bottom pattern was forming. The key to the entry, however, was the positive divergence in the MACD indicator A similar example can be seen in Nicor Inc. (GAS), the initial low came in mid-January, the stock rallied, and then retested on March 5. Once again there was a strong positive divergence in the MACD indicator. March 45 calls were purchased on 03/07/07. Finally the topping formation of Freeport-McMoran Copper & Gold (FCX) hit level highs in April/May at the same time that its MACD indicator was falling. That was a time to buy put options. On a daily chart, this pattern does not always signify major reversals, but in the Freeport-McMoran case, the weekly chart also had a huge negative divergence. Huge downside divergences under multiple time frames is the perfect setup.The options went from $0.20 to $12. Dale made sixty times his money in just one week! More recently, in May he entered Advanced Micro Devices (AMD) and General Motors (GM) call options, and both turned into 1000% gainers in only a few days! Dale beliieves that you can avoid losing trades with his technique. A losing trade is not the fault of the charts, but rather the trader. It is really just a question of discipline and knowledge coupled with action when the correct pattern appears. If you learn the correct technique and act only when everything is in place, you will always make a profit.

Determining which option Dale purchases depends on several factors, such as the stocks price, how far that is from the strike price, how many days are left until expiration, the cost of the option, and the options liquidity. dale almost always buy out-of-the-money options that expire in the near term month if the pattern appears on the daily chart. If it appears on a weekly or monthly time frame, he buys out-of-the-money options that could expire several months away.Dale's selling technique is simple when the momentum turns back against the move using the MACD divergence line, he exits the position.

Dale educates others on the technique in his Options Hunter weekly webinar service, information can be found at http://www.aiqsystems.com/optionshunter.htm He began teaching others when some investors asked him to explain his trading style and ever since then he has been talking about his discovery to everyone he meets. Dale has taught people around the world, some that he met on airplanes in the seat next to him and in other casual situations. He enjoys showing people extraordinary possibilities. Dale wishes he had someone to teach him in the beginning how to avoid the pain of investing but, as the saying goes, The harder the conflict, the more glorious the triumph. What we achieve too easily, we esteem too lightly. Dale learned that the separation between rich and poor is because rich people continue to do the things that produced their wealth and poor people continue to do the things that created their poverty. Dale believes it is a choice each of us makes and he wants to help others to make the same choices and to feel empowered in their own lives. There was a time when he worried about everyone catching on if he told them what he did, but after teaching so many people over the years exactly what he does, he is still amazed that only a small number of people actually apply the strategy. Dale has found it has more to do with individuals and their preconceived ideas about returns and investing, along with the fear within themselves that actually prevents them from being successful. People all need to look hard at their beliefs before expecting to become successful options traders, or succeeding with anything in life.

Dale'sOptions Hunter service began rather slowly because people came from different backgrounds and experience levels. Some were beginners and others experienced. As time went by, however, those who stayed have found many charts without Dale having to hold their hands. One week, as the market was beginning to change its momentum, many subscribers chimed in with about 15 stocks that all had the correct look and the next week some of the options were jumping over 1,000%. There have been traders in the group buy calls on QLGC, HD, CAL, AIG, MM, VLO and the homebuilders and mortgage related companies (even with all of the bad news out about subprime lending, etc).

Information on The Options Hunter Service can be found at http://www.aiqsystems.com/optionshunter.htm

Steve Hill is President of AIQ Systems. http://www.aiq.com For the past 14 years he has been involved in all aspects of AIQ Systems, from support and sales to programming and education. Steve is a frequent speaker at events in the U.S. and Europe, talking on subjects as diverse as Portfolio Simulation Techniques, Advanced Chart Pattern Analysis and Trading System Design. Steve is an avid martial artist and cross-country skier. currently holding the rank of Shodan (first degree black belt) in Shito-Ryu Okinawan Karate. He also serves on the board of the Ralph Parks Portfolio Trust.

AIQ Systems is a world leader in intelligent trading software. Their web site can be found at http://www.aiqsystems.com

Press Release Optimization - Increase the Pace of your Online Success

For years, businesses are using various techniques to establish a better relation with their consumers. Press release is also a vital part of every publicity campaign as it speaks volume about your business thought through the strongest mode of communication i.e. media. With ever-increasing use of internet it becomes essential for businesses to be present on web with same alacrity and aptness. Various news search engines are availing businesses the platform for perfect online business approach. Whether it is a place in editorial listing or a sponsored link, a good rank in search engine listing can bring heavy traffic to your link. Many press releases fail to attract readers just because their content does not support the keyword that makes their online presence noticeable. To avoid such problems press release optimization can be used so that your press release may solve its purpose.

Press release optimization is the greatest way to optimize the content of press release. It includes keyword research and page optimization with enhanced online press release distribution techniques. Its proper implementation can radically increase online market shares, press coverage and business revenues. For successful online business it is must to have press releases with content that hit the psychology of consumers. One must understand and provide what consumers want to read not what you want them to read. Simply, the purpose of press release is to let them know about what you have in your stock of their interest. It is futile if your press release is not able to make consumers aware of your new product, launch or achievement. Press release optimization is the best way to assure that your message has been successfully conveyed to authentic consumers and readers as it makes your press release available whenever someone searches for it.

There are many firms that offer the service of press release optimization. A wise decision of press release optimization can leverage the existing PR of your company. It is quite possible that you are having a tremendous public relation and marketing communication but it is not proving beneficial for your online business, in such a situation you can better utilize your offline goodwill with the help of press release optimization. With a little modification, this goodwill can be turned in to your online success. Your available documents can be used to solve the purpose of press release through optimization to match the high value terms and phrases that your target audience uses every day. From the business point of view this is able to add great value to your business so that it my flourish on web also.

It is proven fact that search engines are playing a vital role in developing a new concept of public relation improvement. In the present era of technology, it is no more difficult to establish a better communication channel with consumers. Press release optimization is the finest way to bridge up the gap between a business and its consumers as it makes every announcement readily available on web. Therefore, move ahead and make your promotion concept available worldwide.

Steve Waganer has specialization in Web Marketing. He is expert in Search engine optimization,Search engine marketing, Press release optimization To get the Search engine marketing tips for your website to get high rank and top position in major search engines visit www.cometsearchenginemarketing.com

Forex Trading - 10 Common Errors That Cause Equity Wipe Out

Here are ten common errors in forex trading tat cause equity wipe out. 95% of traders lose and they make some or all of these errors. If you do then you will wipe yourself out so learn them and avoid them.

1. Trying to Predict

Most traders try and predict where prices will go but this is simply relying on hope and you will see your equity disappear quickly!

You need to trade on the reality and that means waiting for price momentum to confirm the trend is going your way.

If you dont know how to use price momentum indicators learn or lose.

2. Following a Scientific Theory

Follows on from the above markets are not scientific so avoid theories such as Elliot Wave or Fibonacci numbers.

Its pretty obvious markets are not scientific, because if they were we would all know the price in advance and there would be no market PERIOD.

When you learn forex trading the most important part of your forex education is seeing forex trading as an odds game.

If you trade the odds you will make a lot of money.

3. Trading To Much

Most traders like to trade all the time in case they miss a move and end up trading signals that have poor odds.

Keep this fact in mind you get your reward for being RIGHT not for effort or how often you trade so trade only high odds trades and they dont dome around often

4. Buying From a Vendor

There are numerous sharks out there who say they will make you rich for a few hundred dollars!


If the forex trading systems were as good as they claim they would be to busy making money to bother you.

Avoid them and dont fall for the hype, they never have a track record to back up their claims

5. Poor Money Management

If you dont know how to place stops then you will lose also over leveraging will kill you. Play great defence first and the profits will take care of themselves

6. Not having The courage to Hold Profits

Most traders get so excited they have a profit they take it early! If you do this you will lose have the courage of your conviction to run trends for weeks or months if there going your way.

7. Chasing your Tail

Be patient with any forex trading strategy or system.

At some point you can expect to lose for weeks or months (thats not the systems fault its the markets) judge your gains over years not months.

8. Trading The News

Trading news stories is dumb you have huge volatility and as the news is discounted in a split second, its a lottery and you wont win - you will simply get murdered by volatility.

9. Mixing Fundamentals and Technical's

There two separate disciplines you cant mix them choose one and stick with it. In our view the best way to trade is with forex technical analysis.

10. Day Trading

You can make money day trading!

Why are some trades so stupid?

Its 100% guaranteed way to wipe out your equity as the data is to short and you cant use it to get the odds in your favour. If you cant get the odds in your favour, you will lose PERIOD.

This lead on from our point about vendors selling junk systems that have no chance of making money and day trading ones are the most popular try and find a real time track record and you will look for a long time!


There you have it 10 errors to avoid and if you do you will have a great chance of making big gains - fall for any of them and you will lose your equity and join the 95% of losers.

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Wall Street to Main Street: News, Views and Commentary: April 13, 2006

Its Thursday April 13, 2006, and the NAMC Newswire is making a few changes, beginning next week the Wall Street to Main Street daily segment and the Investors Corner segment in their entirety will only be available to subscribers. Keep in mind that all subscriptions are free and will remain that way. All that you need to do is go to www.namcnewswire.com and add your email address to receive the full segments.

Remember that you can always listen to the NAMC Radio on Streetiq.com, the leader in financial podcast. www.streetiq.com

We also want to announce that beginning on April 17, 2006 Wall Street to Main Street will be adding a new weekly segment called Wall Street Corner. This will feature the views from the Elder Statesman of Emerging Growth Investment Writers Larry Oakley. He will grace Wall Street to Main Street every Monday with his views on various companies that he sees value in and long term growth. So you are going to want to tune in to that.

Political Front

In Washington, Secretary of State Condoleezza Rice said it was time for the Security Council to take "strong steps" to bring Iran into compliance with United Nations demands that the Islamic Republic rein in its nuclear program. While Russia and China are reluctant to back economic sanctions, they have asked for all parties to exercise restraint to avoid increasing the level of tension that is currently at a peak.

In Italy when you lose an election you dont have to leave peacefully, case in point the defeat of Minister Silvio Berlusconi, he clearly lost Italy's general election to Romano Prodi, but he refuses to admit defeat. He is clinging onto his position and working hard to de-legitimize Romano Prodi in hopes of a miracle. If this should happen it would be a major blow to Italys center-right's legitimacy.

On the topic of Italy, Italys SANPAOLO IMI Group has gained control of the operations of the Central Bank of Albania by acquiring 80 percent of the shares of the Italian-Albanian Bank.

Movers and Shakers

Some major movers in yesterdays trading session include Mills Corp (NYSE: MLS) they traded up $3.98 to close at $30.33, Sybron Dental Specialties (NYSE: SYD) traded up $5.07 to close at $46.81, John Harland Co. (NYSE: JH) traded up $4.74 to close at $44.00, Datalink (NASDAQ: DTLK) traded up $1.19 to close at $5.46, BTU International (NASDAQ: BTUI) traded up $2.53 to close at $20.02, Pokertek Inc (NASDAQ: PTEK) traded up $1.70 to close at $13.49, Circuit City Stores (NYSE: CC) traded up $2.04 to close at $26.65 and Las Vegas Sands (NYSE: LVS) traded up $2.88 to close at $62.76.

Advanced Micro Devices

Advanced Micro Devices (NYSE: AMD) reported great growth for their first quarter on Wednesday after the close. The company posted net income of $185 million, or 38 cents a share for the quarter ended March 26, 2006, they beat the analyst estimate by 8 cents. This is compared to a net loss of $17.4 million, or 4 cents a share a year earlier.

AMD has been making their mark on the chip-making world over the past year as they have been taking chunks of market share away from Intel (NASDAQ: INTC). This was evident during the Consumer Electronics Show in Las Vegas as they aligned themselves with various companies. But even though the company showed great profits and growth, they gave guidance that their current quarter would be "flat to slightly down" compared to the first quarter. So based on that the stock fell in after hours trading, going from the closing price of $35.42 to $34.69, a 2% drop after trading up 2%.

This sounds like the other company that we mentioned in yesterdays segment by the name of Genentech (NYSE: DNA), they posted great numbers and still were punished by traders.

Over the past year AMDs stock has risen from a price of $17.06, which it was trading at on April 13, 2005 to $35.42 where it closed during regular trading hours on Wednesday, April 12, 2006. That is over a 100% gain in a 12-month time frame. Now the company still has some room to grow as technology continues to advance, we see Advanced Micro Devices trading in the $40 to $45 range in 2006. So this may present a buying opportunity for investors that were looking to invest in AMD.

General Motors

General Motors (NYSE: GM) has been seeing the dark side of the moon as of late, with rumors of bankruptcy, strikes, lawsuits and the instability of the company, this is all on the minds of the investment community. But according to Bob Lutz, Vice Chairman of Global Product Development and acting Chief of GM Europe, the powers that be at General Motors do not see a strike happening, as a strike does not benefit any of the three parties.

So whats next for General Motors, the company has been trying to trim the fat, tighten their belts and bring the company back from the abyss. One area of growth is China, as weve been speaking about all week China has been making major deals here in the United States prior to Chinese President Hu Jintaos U.S. visit. They recently signed a deal with Boeing (NYSE: BA) that essentially doubled what Boeing projected in sales for the year.

At this point General Motors has been increasingly popular in China as they accounted for over 18% of the 3.9 million plus cars sold in China last year. The company plans on investing over $3 billion to expand in the region. Here in New York at the New York Auto Show they unveiled the new 2007 Saturn models, which included the Aura midsize sedan, Sky Red Line performance roadster and Outlook crossover vehicle. They recently ditched the Isuzu stake, which eliminated their gateway in Japan but the fat had to be trimmed.

Now taking into account that a few months ago President Bush had adamantly stated that the General Motors should not expect a government bail out. This put GM in a position that forced them to stand on their own two feet, they have no choice in the matter. But looking at their recent changes from adding Jerry York to the board and eliminating divisions, shutting down plants and trying to expand overseas, the company has a long road but long-term investors may want to take a closer look at General Motors. If things settle down with strike talks, then you just may witness the rebirth of an American Icon, just keep in mind that this is a long-term turnaround situation but the rewards may just be worth the wait.

Stocks to Watch

The following are companies that you should know about, we are just making mention of them on Wall Street to Main Street and will have a more in depth profile on these companies, along with our outlook. Remember that only subscribers to the NAMC Newswire will be able to read the Investors Corner segment in its entirety, so go to www.namcnewswire.com to subscribe, its fast and free.

Bausch & Lomb (NYSE: BOL) the stock was punished in regards to the Renu product line. We mentioned that they may base out in the mid to high $40 range, I think that we are at that point. The stock closed yesterday at $45.61 and it may build a base there, so its worth taking a look at. Remember its always a good idea to buy on weakness and sell into strength.

Genesee & Wyoming Inc (NYSE: GWR) the stock closed at $32.61 on Wednesday.

Informatica, Corp (NASDAQ: INFA) the stock closed at $15,67 on Wednesday.

Stocks to Watch Featured on Wednesday April 12, 2006:

Abercrombie & Fitch Co (NYSE: ANF) mentioned at $56.55 on Tuesday.

American Eagle Outfitters (NASDAQ: AEOS) mentioned at $29.38 on Tuesday.

Las Vegas Sands Corp (NYSE: LVS) mentioned at $59.88 on Tuesday.

China Medical Technologies (NASDAQ: CMED) mentioned at $25.66 on Tuesday.

Investors Bancorp (NASDAQ: ISBC) mentioned at $13.03 on Tuesday.

Readers Speak

We received an email from one of our readers/listeners John from Los Angeles, he wanted to know what we thought about Shuffle Master (NASDAQ: SHFL).

John: Shuffle Master is in a great position for growth, with companies like the Las Vegas Sands (NYSE: LVS) looking to expand in Singapore and other regions, there will be no shortage of growth for the company. Actually we see Shuffle Master making new highs in 2006, possibly moving into the $40 to $45 range.

We cannot stress enough that investors need to do their due diligence, call the companies, get the information, consult with your investment advisor and if you do not have one consider getting one. Put the same time into investigating these companies as you do when you go to purchase a new television, its only for your protection. When it comes to thinly traded securities stagger your orders or put a limit order in to avoid a run up.

NAMC Newswire Note

Go to the NAMC Newswire for updates at www.namcnewswire.com and you can listen to the NAMC Radio for the audio version of Wall Street to Main Street at www.namcnewswire.com/namcradio

To register to receive the Wall Street to Main Street Free Daily Newsletter Click Here or go to our site and click on the Newsletter section. www.namcnewswire.com/newsletter CEOs that want to contact us can do so by going to www.namcnewswire.com or call us at 888-463-9237.

Louis Victor
NAMC Newswire

None of the information contained on the NAMC Newswire constitutes a recommendation by the NAMC Newswire, its journalist, nor its parent company that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific investors or person. Each individual investor must make their own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy featured on the NAMC Newswire or NAMC Radio Any past results are not necessarily indicative of future performance. The NAMC Newswire, its journalist nor its parent company does not guarantee any specific outcome or profit, and all investors should be aware of the real risk of loss in following any strategy or investments featured on the NAMC Newswire or the NAMC Radio. The strategy or investments discussed may fluctuate in price or value and investors may get back less than you invested. Before acting on any information featured on the NAMC Newswire website or the NAMC Radio segment, investors should consider whether it is suitable for their particular circumstances and strongly consider seeking advice from their own financial or investment adviser. Investors are also urged to do their own due diligence before investing in any security.

All opinions featured on the NAMC Newswire or NAMC Radio are based upon information that is considered to be reliable, but neither the NAMC Newswire, its journalist, its parent company, affiliates nor assigns warrant its completeness or accuracy, and it should not be relied upon as such. The statements and opinions featured on the NAMC Newswire by its journalist are based on their outlook at the time of the statement or opinion, and are subject to change without notice. NAMC may at times hold a position in the companies that it features, in these cases appropriate disclosure is made.

Louis Victor is the host of the syndicated podcast show and financial newsletter "Wall Street to Main Street" which is featured on the NAMC Newswire Radio. He has been involved in the financial industry for over two decades, on the retail and investment banking ends. He is also well versed in the advertising and marketing industries, which has given him insight into market trends and unqiue companies that may be under the radar.

Home Based Businesses - Getting Out Of The Rat-Race Forever

In early 2006 my wife Kath was looking for free finance ebooks on the web. We were both disgruntled about the pay and long dangerous hours in my contracting job, so she decided to do something about it. She came across an ebook from Jamie McIntyre at 21st Century Academy called "What I Didn't Learn at School But Wish I Had". After reading the ebook Kath was so impressed that she ordered the free DVD with the same title.

When we both watched the DVD we were convinced that this was the right system for us, so we ordered the 21st Century Homestudy Program. This was tough going, because we were down to our last $500 after a renovation on the trashed former drug baron's house across the road. We thought that the renovation road was the route to wealth and thats why we were doing it. Previously, we had been in Network Marketing for many years, but could not seem to breakthrough to the levels we needed to have a decent lifestyle. When we ordered the program, our one thought was, if this doesnt work, its getting returned!

After watching the Homestudy Program and putting it to work the results were immediate. We used the profit from the renovation as trading capital and in the first month we made more trading options on the Australian Stock Market than I made in my contracting business. This got my attention straight away, so we became information sponges for anything to do with wealth creation.

Excited by our immediate success, we attended a 21st Century Academy Internet Mastery Seminar in Perth and met a whole new group of very successful entrepreneurs including Jamie McIntyre, Tom Hua, Sean Rasmussen and Jean-Paul & Deborah Micek. Jamie was the keynote speaker and presented a complete education system for making money on the net. Tom presented his eBusinessBox system, Sean presented the Fishbowl system and Paul & Deborah got us up to speed on the new Web 2.0 systems.

We were so inspired after this seminar that we set a date for my retirement for 22nd December 2006. We decided that Kath would trade options and I would setup the internet businesses that we bought from Tom and Sean. We were very keen to set up Multiple Streams of Income, so we did not have to rely on a job. Job security is now an oxymoron. Even my old contracting job disappeared shortly after I left. It was good thing we dug the well before we needed the water.

It was a great feeling to retire from the conventional workplace 22 years ahead of schedule. Through options trading Kath had bought me the time to setup Tom & Sean's internet business systems. I thought that it was going to be easy since I had been working with computers since the first PCs hit the market in the early 80s. I discovered that I wasnt as smart as I thought I was. I'm now glad that 21st Century Academy put us in touch with Tom and Sean, so that I could start with proven systems to guide me through a minefield of internet marketing opportunities.

After setting up the Golden West Wealth web site using Seans Fishbowl system, we got a number of affiliate sales from 21st Century which paid for the setup cost, and then some. All the products that we are using to create freedom for ourselves are on the website. We wanted to have the integrity as well as the enthusiasm to share the information with a lot of new people.

Not long after setting up Great Wealth Ideas selling ebooks from eBookwholesaler.com, I sold my first ebook and got my first income from Google Adsense. The eBusinessBox system is great because of all the support you get from Tom's team. It's a wonderful feeling to wake up in the morning to find out that I have been paid while I slept. To top that off, the income is continuing to grow without spending more and more time working. The ebooks are the best quality I have seen and I love to work from home whenever and however I want to.

But it all didnt go completely smoothly, and life would be pretty boring if it did. After some accelerated learning experiences on the stock market, bought about by excessive ego, it was time to get some more advanced positive accelerated learning. Kath bought the Master of Stock Market Intelligence system from Nik Halik at The Financial Freedom Institute, watched it and learned from it. This was one of the best investments in ourselves that we have ever made.

The principles of advanced technical analysis are taught in a structured, easy to absorb method that makes sense. Not only is the program packed full of comprehensive knowledge, its also practical and fun. The knowledge from this is applicable across whatever market we are going to trade Australia, US, UK, Japan etc and across whatever we want to trade Shares, options, contracts for difference, Foreign exchange and other products.

At the moment we are just getting started. We have finally made the transition to a successful home based business with minimal risk and had a lot of fun. We have a whole new group of positive friends and have started a Social Support Group for 21st Century Academy graduates in Perth. No more boring traffic jams on the freeway or waiting in the cold for public transport. I like working with my best friend and having a lot more time with my family.

Our next step will be to tap into the knowledge base about property and to begin to grow our property portfolio. Well do it the smart way, and leverage off other peoples knowledge and time rather than sinking our sweat equity and health into it. We will have gone a full circle since the day Kath sat at home, unwell, looking for free ebooks. Thank God we found the one that changed our lives.

Our motto is DREAM IT, DO IT, LIVE IT. I love to walk on the local beach at 10 am Tuesday morning with my lover and best friend, and you know what? Theres no one else there. We have the beach to ourselves. We are now encouraging other like minded people to come and join us.

Bill Taylor has a background in The Royal Australian Air Force. He served for 24 years in many locations around Australia and overseas. In 2002 he resigned from The Air Force and after a sabbatical became a Technology Consultant with a helicopter company in Perth. He retired from the conventional workforce in December 2006 and is now a successful Web 2.0 Developer. He has established a wealth support site http://www.GoldenWestWealth.com and an eBook site http://www.GreatWealthIdeas.com as well as a lens http://www.squidoo.com/WealthinPerth Kath has a background as a Domestic Engineer, accounting and retail. She has recently established a successful derivatives trading business. Bill and Kath have established Havenesky Ventures Pty Ltd. They have raised three boys and live in Perth Western Australia.

How to Make $100-$200 a Day Trading

Does making $100-200 a day within a two hour time window sound appealing to you? Of course it does, who wouldnt?

The real question is are you willing to put in the time, effort and money to learn to do this? We might lose a few people with that question.

The final question is do you have $30,000 of risk capital to make this money and are you willing to lose that? Ok, that eliminates most of you, so you can hit the BACK button here. Sorry, but better you know now, than later. Bye.

Still here?
If so, you probably did the math and figured even at $100 profit a day times 20 trading days is $2000 a month which equates to $24,000 a year in profits which is an 80% return on investment. Thats an amazing return. Good thinking. The only problem is if you are just starting out, cut that figure by 80% if you are lucky. Thats the time, money and effort part. But that doesnt mean you wont get there, it just means you have to work your way there, slowly. You can hit the BACK button now

Still here?
If you are still reading, then there is hope, but its a long journey. Let us not fool anyone here. Trading is a skill that has to be taught but only to those who truly desire to learn. We call this hunger. The most costly way to gain hunger is to blow out your account and lose a ton of money in the process. We call this the learning curve. You get so deprived of effective trading methods that the process of elimination and contrast draws you to what eventually works and doesnt work. From here, the trader seeks out to fill in the void in his understanding of the markets and methods (if he lasts that long), unfortunately, he has no more access to capital. That is the tragedy of trading.

For all intents and purposes, we want to trim the learning curve as much as possible. Yes, it is POSSIBLE. Just like the markets, we like to let others test the support and resistance levels and then step in on confirmed breakouts. This way we avoid the risk ourselves. When learning how to trade profitably, you can also avoid the pitfalls by learning from the experience of others.

First, let me start off by saying, making money trading the market is not hard (if you know what you are doing). The hard part is keeping it. These are two separate statements. In order to even relate, you must have already earned your way in the form of experience and effort with learning the methods. Lets also get something straight. There are no shortcuts in this game. This isnt a cheeseball infomercial and there are no twelve part video/dvd series to buy.

How these statements pertain to you as a trader depends on which side of line you are standing. Are you on the inside or the outside? The inside simply means you have already built a solid foundation in regards to knowing and executing the methods effectively. The outside is everything else.

Heres a quick test to see where you stand:

Answer yes or no:
1)Can you identify a pup and mini pup pattern?
2)Can you identify a prime setup and perfect storm?
3)Can you identify the four parts of trend?
4)Can you explain a channel widening and tightening?
5)Can you spot a consolidation?
6)Can you identify a tradeable market environment as opposed to a flat and choppy untradeable market environment?
7)Can you walk away from the computer screens at any given moment?
8)Can you take a stop loss and reenter the same trade minutes later and explain why?
9)Can you determine when your premises are fading and keep stops?
10)Can you enter a trade long and reverse it short based on premise changes?
11)Do you believe a stock can be uptrending and downtrending at the same time?
12)Can you accept losses on a trading day?
13)Do you have to make money every trading day?

If you answered YES to all the above and NO to the last question, then you are already at the stage where you should be making $100-200 a day, so good trading!

If you didnt get all the answers right, then keep reading.
The first part is being able to make the money. In order to do that, you need to learn an effective trading method or system. This can take years to develop or you can learn a system someone else spent years to develop (namely me). I make my methods public so anyone who truly desires to learn it can. Naturally, being able to learn it and apply it can be separate things all together. The connecting of the two can be resolved by spending time in our interactive trading chatroom. We offer a free 10 day trial. Full membership allows the trader access to over 3,000 pages of materials and interactive privileges.

Changing your oil is not hard, if you know what you are doing. You can either figure it out yourself through trial and error or pay to have a mechanic teach you. With that thinking, the goal of UndergroundTrader.com is to put our experience to your use so that you can fend for yourself in the markets. Learning trading should be a dynamic real time experience just like the markets. This is what we do every day. Here is a sample log of a day in the trading pit http://www.undergroundtrader.com/samplelog.html and a sample trade alert http://www.undergroundtrader.com/graphics/jay/

Apply for a free trial and you will have access to the trial trader training slide slow which has all the answers to the above questions and much more. This will serve as a good starting point to building up your foundation. In addition, you will also be able to view the analysis and alerts in real time so that you can gauge the results for yourself to see if it is actually worth pursuing the effort. Hey if the results are sucking, then why even bother? Seeing is believing and first hand experience is the only true way to form an opinion.

Before this sounds too much like a pitch, let me show you a trade we played on a stock called HOKU on 7/9/2007. If this goes over your head, dont sweat it. The goal is to be able to eventually understand it.

At 12:19pm est, we alerted our members to consider buying shares of HOKU up to $11.85 based on the multi lane perfect storm setup which comprised of a 8/13 minute dual pup and mini pups along with a daily and 60 minute pup breakout. The 3 minute chart formed a nice consolidation breakout. The beauty of the perfect storm setup was the layered support levels at 12.70. Members were alerted to trim the heavier size shares up to 12.10 coil resistance at 12:24 pm est. At 12:57pm, members were alerts to trim out more shares in the 12.40 x 12.50 levels (stinky 2.50s call option strikes). We finally LOCKED the rest of the profits out in the 12.60 to 12.70s range at 1:20 pm est as it was forming a gap fill of prior daily highs, where we anticipated heavier selling. The trade played out beautifully and our members made money.

Is every trade this good? Hell no. Does my method work all the time? NO. Does it have to work all the time? NO. It only needs to work when we use it under the RIGHT circumstances--- thats all that matters. The key is to know when the method is most effective and use it ONLY in those situations. This is what the real time trading pit is for. Learn and move on to sustain yourself.

Making the money is not hard, once you learn how to do it. Keeping it is the tough part. This is addressed in the pacing article. Remember, this is a long road, but if you choose to take it, the end game can be lucrative and fun. Good trading.

Heres the free trial application:

Jea Yu is a co-founder of Undergroundtrader, an interactive active trader chatroom and training site that has served over 8,000 traders, fund managers and investors worldwide since 1998. His brainchild was voted Forbes Best of the Web for four consecutive years under the active trader category. Mr. Yu has published two best sellers through McGraw Hill "Undergroundtrader Guide to Electronic Trading" ,2001 and "Secrets of the Undergroundtrader",2003 as well as two popular trading videos titled "Level 2 Warfare" and "Beating the Bear" published through Traders Library. He has been a featured speaker all over the country at various expos and seminars who enjoys a standing-room-only reception in the largest convention halls. Jays energetic presentation style, along with his obvious mastery of the materials being covered makes him an audience favorite. He has been quoted in USA Today, WallStreet Journal, and the Financial Times. Mr. Yu is an active contributing writer for TradingMarkets

The Psychology Of Market Timing

The biggest enemy, when market timing the stock market via mutual funds, ETF's, even individual stocks (or in any trading for that matter), is within ourselves. Success is possible only when we learn to control our emotions.

Edwin Lefevre's "Reminiscences of a Stock Operator" (1923) offers advice that still applies today:

Caution Excitement (and fear of missing an opportunity) often persuades us to enter the market before it is safe to do so. After a down trend a number of rallies may fail before one eventually carries through. Likewise, the emotional high of a profitable trade may blind us to signs that the trend is reversing.

It is important to follow a tried and true timing strategy that puts you in the right position for established trends, and also gets you out of failed trends quickly to protect capital. Excitement results in losses more often than not.

Patience Wait for the right market conditions. There are times when it is wise to stay out of the market and observe from the sidelines.

Depending on your emotional ability to handle extreme volatility, that patience may result in a cash position or in bearish positions, which will trade that volatility. Do not underestimate the value of being in cash!

Conviction Have the courage of your convictions: Take steps to protect your profits when you see that a trend is weakening, but sit tight and don't let fear of losing part of your profit cloud your judgment.

When trading a timing strategy, do NOT abandon the strategy. Emotions are the most common reason for abandoning a strategy and when emotions rule your decisions, they WILL result in losses.

Detachment Concentrate on the (trading plan) rather than on the money. If your trades are technically correct, the profits will follow.

Many traders have had the experience of being profitable on paper, but losing money when they execute the trades real time. If the trading strategy is not followed absolutely, it will fail. Again, emotions dictate losses.

Stay emotionally detached from the market. Avoid getting caught up in the short-term excitement. Screen watching is a tell-tale sign: if you continually check prices or stare at charts for hours it is a sign that you are unsure of your strategy and are likely to suffer losses.

Focus on the longer time frames and do not try to catch every short-term fluctuation. The most profitable trades are in catching the large trends.

Subscribers to Fibtimer know our position on this. We are trend traders pure and simple and our strategies identify and trade trends. If a trend fails our strategies quickly exit.

Expect the unexpected Investing involves dealing with probabilities not certainties. No one can predict the market correctly every time. Avoid gamblers logic.

Many consider market timing as a fool's attempt to forecast the market. We agree with the their logic when the word "forecast" is used. NO ONE can accurately forecast (predict) the future direction of the stock market over and over. At Fibtimer we are trend traders. We do NOT forecast. We identify trends and when they are confirmed we trade them. Trend trading is ALWAYS a winner over time.

Limit your losses Use stop losses to protect your funds. When the stop loss is triggered, act immediately - don't hesitate.

The use of strict money management is the key to limiting losses. Fibtimer's strategies never allow losses to accumulate. When the strategy says sell, we do so without emotion.

The biggest mistake you can make is to hold on to losing positions, hoping for a recovery. Falling stocks have a habit of declining way below what you expected them to. Eventually you are forced to sell, decimating your capital. Human nature being what it is, most traders and investors ignore these rules when they first start out.

It can be an expensive lesson.

Control your emotions and avoid being swept along with the crowd. Make consistent decisions based on sound timing strategy and you will be profitable. Do not expect overnight profits. The stock market is where the profits are, but it is not a grocery store. You do not pick the profits off the shelves.

Profits will come if you follow the plan without deviation and do not make emotional decisions to jump ship based on news events, short term losing trades, or especially because the market is rallying today and you are in cash or bearish.

The strategy will win out over time. It will get you out of losing trades and keep you in the long-term profitable trends. Stay the course and win.

Managing Risk in Financial Sector

Risk Management is a hot topic in the financial sector especially in the light of the recent losses of some multinational corporations e.g. collapses of Britains Barings Bank, WorldCom and also due to the incident of 9/11. Rapid changes in business condition, restructuring of organizations to cope with ever increasing competition, development of new products, emerging markets and increase in cross border transactions along with complexity of transactions has exposed Financial Institutions to new risks dimensions. Thus the concept of risk has captured a growing importance in modern financial society.

By facilitating transactions and making credit and other financial products available, the financial sector is a crucial building block for private as well as public sector development. In its broadest definition, it includes everything from banks, stock exchanges, and insurers, to credit unions, microfinance institutions and moneylenders. As an efficient service provider, the financial sector simultaneously fulfils an important function in the overall economy. Various types of Financial Institutions actively working in Financial Sectors include Banks, DFIs, Micro Finance Banks, Leasing Companies, Modarabas, Assets Management Company, Mutual Funds, etc.

Thus todays operating environment demands systematic and more integrated risk management approach.


Risk by default has tow components; uncertainty and exposure. If both are not present, there is no risk. Definition of Risk as per Guidelines on Risk Management issued by State Bank of Pakistan is, Financial risk in a banking organization is possibility that the outcome of an action or event could bring up adverse impacts. Such outcomes could either result in a direct loss of earnings / capital or may result in imposition of constraints on banks ability to meet its business objectives. Such constraints pose a risk as these could hinder a bank's ability to conduct its ongoing business or to take benefit of opportunities to enhance its business.

Types of Risks:

Risks are usually defined by the adverse impact on profitability of several distinct sources of uncertainty. More or less all financial institutions have to manage the following faces of risks:

1.Credit Risk
2.Market Risk
3.Liquidity Risk
4.Operational Risk
5.Country Risk
6.Legal Risks
7.Compliance Risk
8.Reputational Risk

Broadly speaking there are four risks as per Risk Management Guidelines which surround Financial Sector i.e. Credit Risk, Market Risk, Liquidity Risk and Operational Risk. These risk are elaborated here under:

i.Credit Risk

This is the risk incurred in case of a counter-party default. It arises from lending activities, investing activities and from buying and selling financial assets on behalf of others. This risk is associated with financing transactions i.e.:

a.Default in repayment by the borrower and
b.Default in obliging the commitment by another Financial Institution in case of syndicated arrangements.

It is the most critical risk in banking and one that must be managed carefully. It is also the risk that requires the most subjective judgment despite constant efforts to improve and quantify the credit decision process.

ii.Market Risk

Market risk is defined as the volatility of income or market value due to fluctuations in underlying market factors such as currency, interest rates, or credit spreads. For commercial banks, the market risk of the stable liquidity investment portfolio arises from mismatches between the risk profile of the assets and their funding. This risk involves interest rate risk in all of its components: equity risk, exchange risk and commodity risk.

iii.Liquidity Risk

The liquidity risk is defined as the risk of not being able to meet its commitments or not being able to unwind or offset a position by an organization in a timely fashion because it cannot liquidate assets at reasonable prices when required.

iv.Operational Risk

This risk results from inadequacies in the conception, organization, or implementation of procedures for recording any events concerning banks operations in the accounting system/information systems.

Need for Risk Management and Monitoring:

There are a number of reasons as to why there is so much emphasis given to Risk Management in Financial Sector now a day. Some of them are listed below: -

1.Present structure of joint stock companies, wherein owners are not the mangers, hence risks increase; therefore proper tools are required to achieve the desired results by covering the risks.
2.The financial sector has come out of simple deposit and lending function.
3.The world has become very complex so the financial transactions and instruments.
4.Increase in the number of cross border transactions which caries its own risks.
5.Emerging markets
6.Terrorism Remittances

Risk monitoring in financial sector is very crucial and an inevitable part of risk management. Risk Monitoring is important in the financial sector due to the following reasons:

1.Deals in others money
2.Direct stake of deposit holder.
3.Much riskier sector than trading and manufacturing.
4.Previous / Recent problems faced by banks i.e. stuck portfolio that is credit risk.
5.Bankruptcy of Barings Bank due to short selling / long position that is market risk.
6.Operational risk does not has immediate impact, but important for continuity and progress of organization.
7.Appetite of a financial institution to take risk is related with the capital base of the institute so it caries a huge risk of over exposure.

Components of Risk Management Frame Work

Risk Management Frame Work has five components. First of all risk is Identified, then it is Assessed to classify, seek solution and management, after assessing quick Response and implementation of solution and the last phase is Monitoring of the risk management progress and Learning from this experience that such problem never occur again. Whole process is to be well Communicated during the entire process of risk management if it is to be managed efficiently.

The International Organization for Standardization (ISO) has defined risk management as the identification, analysis, evaluation, treatment (control), monitoring, review and communication of risk. These activities can be applied in a systematic or ad hoc manner. The presumption is that systematic application of these activities will result in improved decision-making and, most likely, improved outcomes.

Structure of Risk Management

Depending upon the structure and operations of organization, financial risk management can be implemented in different ways. Risk management structure defines the different layers of an organization at which risk is identified and managed. Although there are different layers or level at which risk is managed but there are three layers which are common to all. i.e.

Risk Management

For managing risk there are certain basic principles which are to be followed by every organization:

1.Corporate level Policies
2.Risk management strategy
3.Well-defined policies and procedures by senior management
4.Dissemination, implementation and compliance of policies and procedures
5.Accountability of individuals heading various functions/ business lines
6.Independent Risk review function
7.Contingency plans
8.Tools to monitor risks

Institutions can reduce some risks simply by researching them. A bank can reduce its credit risk by getting to know its borrowers. A brokerage firm can reduce market risk by being knowledgeable about the markets it operates in.

Functionally, there are four aspects of financial risk management. Success depends upon

A.A positive corporate culture,

No one can manage risk if they are not prepared to take risk. While individual initiative is critical, it is the corporate culture which facilitates the process. A positive risk culture is one which promotes individual responsibility and is supportive of risk taking.

B.Actively observed policies and procedures

Used correctly, procedures are powerful tool of risk management. The purpose of policies and procedures is to empower people. They specify how people can accomplish what needs to be done. The success of policies and procedures depends critically upon a positive risk culture.

C.Effective use of technology

The primary role technology plays in risk management is risk assessment and communication. Technology is employed to quantify or otherwise summarize risks as they are being taken. It then communicates this information to decision makers, as appropriate.

D.Independence or risk management professionals

To get the desired outcome from risk management, risk managers must be independent of risk taking functions within the organization. Enrons experience with risk management is instructive. The firm maintained a risk management function staffed with capable employees. Lines of reporting were reasonably independent in theory, but less so in practice.

Internal Controls

Para one on first page of the Guidelines on Internal Controls issued by SBP provides:

Internal Control refers to policies, plans and processes as affected by the Board of Directors and performed on continuous basis by the senior management and all levels of employees within the bank. These internal controls are used to provide reasonable assurance regarding the achievement of organizational objectives. The system of internal controls includes financial, operational and compliance controls.

The current official definition of internal control was developed by the Committee of Sponsoring Organization (COSO) of the Treadway Commission. In its influential report, Internal Control - Integrated Framework, the Commission defines internal control as follows:

Internal control is a process, effected by an entity's Board of Directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories:

Effectiveness and efficiency of operations.
Reliability of financial reporting.
Compliance with applicable laws and regulations.

This definition reflects certain fundamental concepts:

Internal control is a process. It is a means to an end, not an end in itself.
Internal control is effected by people. It is not policy manuals and forms, but people at every level of an organization.
Internal control can be expected to provide only reasonable assurance, not absolute assurance, to an entity's management and board.

Internal control should assist and never impede management and staff from achieving their objectives. Control must be taken seriously. A well-designed system of internal control is worse than worthless unless it is complied with, since the assemblance of control will be likely to convey a false sense of assurance. Controls are there to be kept, not avoided. For instance, exception reports should be followed up. Senior management should set a good example about control compliance. For instance, physical access restrictions to secure areas should be observed equally by senior management as by junior personnel.

Components of Internal Controls

Components of internal control also depend upon the structure of the business unit and nature of its operation. The COSO Report describes the internal control process as consisting of five interrelated components that are derived from and integrated with the management process. The components are interrelated, which means that each component affects and is affected by the other four. These five components, which are the necessary foundation for an effective internal control system, include:

I.Control Environment,

Control environment, an intangible factor and the first of the five components, is the foundation for all other components of internal control, providing discipline and structure and encompassing both technical competence and ethical commitment.

II.Risk Assessments,

Organizations exist to achieve some purpose or goal. Goals, because they tend to be broad, are usually divided into specific targets known as objectives. A risk is anything that endangers the achievement of an objective. Risk assessments is done to determine the relative potential for loss in programs and functions and to design the most cost-effective and productive internal controls.

III.Control Activities,

Control activities mean the structure, policies, and procedures, which an organization establishes so that identified risks do not prevent the organization from reaching its objectives. Policies, procedures, and other items like job descriptions, organizational charts and supervisory standards, do not, of course, exist only for internal control purposes. These activities are basic management practices.

IV.Information and Communication, and

Organizations must be able to obtain reliable information to determine their risks and communicate policies and other information to those who need it. Information and communication, the fourth component of internal control, articulates this factor.


Life is change; internal controls are no exception. Satisfactory internal controls can become obsolete through changes in external circumstances. Therefore, after risks are identified, policies and procedures put into place, and information on control activities communicated to staff, superiors must then implement the fifth component of internal control, monitoring.

Even the best internal control plan will be unsuccessful if it is not followed. Monitoring allows the management to identify whether controls are being followed before problems occur. In the same way, management must review weaknesses identified by audits to determine whether related internal controls need revision.

Tools for Monitoring of Risk

Management Information System

M.I.S or Management Information System is the collection and analysis of data in order to support managements decision with respect to the achievement of objectives mentioned in the policies and procedures and the control of various risks therein.

It is this area i.e. M.I.S, where I.T can play a vital and effective role as with the help of I.T large information may be analyzed efficiently and with accuracy, so that effective decision may be taken by the management without the loss of any time.

Asset-Liability Management Committee (ALCO)

In most cases, day-to-day risk assessment and management is assigned to a specialized committee, such as an Asset-Liability Management Committee (ALCO). Duties pertaining to key elements of the risk management process should be adequately separated to avoid potential conflicts of interest - in other words, a financial institutions risk monitoring and control functions should be sufficiently independent from its risk-taking functions. Larger or more complex institutions often have a designated, independent unit responsible for the design and administration of balance sheet management, including interest rate risk. Given today's widespread innovation in banking and the dynamics of markets, banks should identify any risks inherent in a new product or service before it is introduced, and ensure that these risks are promptly considered in the assessment and management process.

Corporate Governance Principles

Corporate governance relates to the manner in which the business of the organization is governed, including setting corporate objectives and a institutions risk profile, aligning corporate activities and behaviors with the expectation that the management will operate in a safe and sound manner, running day-to-day operations within an established risk profile, while protecting the interests of depositors and other stakeholders. It is defined by a set of relationships between the institutions management, its board, its shareholders, and other stakeholders.

The key elements of sound corporate governance in a bank include:

a) A well-articulated corporate strategy against which the overall success and the contribution of individuals can be measured.

b) Setting and enforcing clear assignment of responsibilities, decision-making authority and accountabilities that are appropriate for the bank's risk profile.

c) A strong financial risk management function (independent of business lines), adequate internal control systems (including internal and external audit functions), and functional process design with the necessary checks and balances.

d) Corporate values, codes of conduct and other standards of appropriate behavior, and effective systems used to ensure compliance. This includes special monitoring of a bank's risk exposures where conflicts of interest are expected to appear (e.g., relationships with affiliated parties).

e) Financial and managerial incentives to act in an appropriate manner offered to the board, management and employees, including compensation, promotion and penalties. (i.e., compensation should be consistent with the bank's objectives, performance, and ethical values).

f) Transparency and appropriate information flows internally and to the public.

Tools mentioned above can be utilized in identifying and managing different risks in the following manner:

I.Credit Risk

It is managed by setting prudent limits for exposures to individual transaction, counterparties and portfolios. Credits limits are set by reference to credit rating established by Credit Rating Agencies, methodologies established by Regulators and as per Boards direction.

Monitoring of per party exposure
Monitoring of group exposure
Monitoring of banks exposure in contingent liabilities
Banks exposure in clean facilities
Analysis of banks exposure product wise
Analysis of concentration of banks exposure in various segments of economy
Product profitability reports


Financial Institutions should also have an adequate system of internal controls to oversee the interest rate risk management process. A fundamental component of such a system is a regular, independent review and evaluation to ensure the system's effectiveness and, when appropriate, to recommend revisions or enhancements.

Interest rate risk should be monitored on a consolidated basis, including the exposure of subsidiaries. The institution's board of directors has ultimate responsibility for the management of interest rate risk. The board approves the business strategies that determine the degree of exposure to risk and provides guidance on the level of interest rate risk that is acceptable to the institution, on the policies that limit risk exposure, and on the procedures, lines of authority, and accountability related to risk management. The board also should systematically review risk, in such a way as to fully understand the level of risk exposure and to assess the performance of management in monitoring and controlling risks in compliance with board policies. Reports to senior management should provide aggregate information and a sufficient level of supporting detail to facilitate a meaningful evaluation of the level of risk, the sensitivity of the bank to changing market conditions, and other relevant factors.

The Asset and Liability Committee (ALCO) plays a key role in the oversight and coordinated management of market risk. ALCOs meet monthly. Investment mandates and risk limits are reviewed on a regular basis, usually annually to ensure that they remain valid.

Risk Management and Risk Budgets

A risk budget establishes the tolerance of the board or its delegates to income or capital loss due to market risk over a given horizon, typically one year because of the accounting cycle. (Institutions that are not sensitive to annual income requirements may have a longer horizon, which would also allow for a greater degree of freedom in portfolio management.). Once an annual risk budget has been established, a system of risk limits needs to be put in place to guard against actual or potential losses exceeding the risk budget. There are two types of risk limits, and both are necessary to constrain losses to within the prescribed level (the risk budget).

The first type is stop-loss limits, which control cumulative losses from the mark-to-market of existing positions relative to the benchmark. The second is position limits, which control potential losses that could arise from future adverse changes in market prices. Stop-loss limits are set relative to the overall risk budget. The allocation of the risk budget to different types of risk is as much an art as it is a science, and the methodology used will depend on the set-up of the individual investment process. Some of the questions that affect the risk allocation include the following:

* What are the significant market risks of the portfolio?
* What is the correlation among these risks?
* How many risk takers are there?
* How is the risk expected to be used over the course of a year?

Compliance with stop-loss limits requires frequent, if not daily, performance measurement. Performance is the total return of the portfolio less the total return of the benchmark. The measurement of performance is a critical statistic for monitoring the usage of the risk budget and compliance with stop-loss limits. Position limits also are set relative to the overall risk budget, and are subject to the same considerations discussed above. The function of position limits, however, is to constrain potential losses from future adverse changes in prices or yields.

III.Liquidity Risk

The Basel Committee has established certain quantitative standards for internal models when they are used in the capital adequacy context.

a.Allocation of capital into various types of business after taking into account the operational risks i.e. disruption of business activity, which has especially increased due to excessive EDP usage
b.Allocation of the capital is also made amongst various products i.e. long term, short term, consumer, corporate etc. considering the risks involved in each product and its life cycle to avoid any liquidity crunch for which gap analysis is made. This is the job of ALCO
c.For instance Contingent liabilities not more than 10 times of capital,
d.Fund based not more than 6 times of capital
e.Capital market operations not more than 1 time of capital
f.However these limits cannot exceed the regulations.
g.Parameters of controls
Regulatory Requirements
Boards directions
Prudent practices

For liquidity management organizations are compelled to hold reserves for unexpected liquidity demands. The ALCO has responsibility for setting and monitoring liquidity risk limits. These limits are set by Regulatory Bodies and under Boards directions keeping in mind the market condition and past experience.

The Basel Accord comprises a definition of regulatory capital, measures of risk exposure, and rules specifying the level of capital to be maintained in relation to these risks. It introduced a de facto capital adequacy standard, based on the risk-weighted composition of a bank's assets and off-balance-sheet exposures that ensures that an adequate amount of capital and reserves is maintained to safeguard solvency. The 1988 Basel Accord primarily addressed banking in the sense of deposit taking and lending (commercial banking under US law), so its focus was credit risk.

In the early 1990s, the Basel Committee decided to update the 1988 accord to include bank capital requirements for market risk. This would have implications for non-bank securities firms.

Thus, the formula for determining capital adequacy can be illustrated as follows:

= Tier I + Tier 2 + Tier 3 *- 8% .

Risk-weighted Assets + (Market Risk Capital Charge x 12.5)

IV.Operational Risk

To manage this risk documented policies and procedures are established. In addition, regular training is provided to ensure that staffs are well aware of organizations objective, statutory requirements.

Reporting of major/ unusual/ exceptional transactions with respect to ensuring the compliance of the principles of KYC and Anti-money laundering measure
Analysis of system problems


For any business to grow and stay in the market management style is a key and Risk management is basically the management style of managing the risks.

It is so important and that State Bank of Pakistan plans to replace Prudential Regulations with Risk management guidelines, which will be adopted by banks according to their size and complexity of operations.

Risk is inherent in every business and every organization has to manage it according to its size and nature of operation because without it no organization no organization can survive in long run.