From our global research division and the subsequent strategy analysts, the following financial excerpts (including forecasts) are from report revisions recently completed:

Research Observation (from report No. D3: Optimal Finance Research™ (USA) Aggressive Investing):

Theme: Investment Bonds vs. High Yield Bonds

(1) Observation of the Relative Strength: Results in the relative strength analysis of G. Sachs Invest Top Corporate Bond (LQD) versus High Yield Corporate Bond (HYG) indicate that LQD is underperforming HYG on a relative basis. Since the relative strength ratio measures the strength of the numerator versus the denominator, it has predictive potential. In this observation, the price path of the numerator G. Sachs Invest Top Corporate Bond (LQD) is decreasing relative to the denominator High Yield Corporate Bond (HYG). Therefore, at least in the near term, the implication is that HYG has the potential of outperforming LQD. Caution: LQD price path is currently neutral with a fairly horizontal direction.

(2) Observation of the Price Performance: G. Sachs Invest Top Corporate Bond (LQD) shows a shift from an upward price direction to a flat path.

(3) Observation of Market Type: Security demand conditions (measured by money flows) indicate potential continuation of the current market direction because the change in money flow is weak. This is relative to strong money flows going into equities. However, this status is dependent on the outcome of upcoming economic statistics.

(4) Possible Implication: The overall implication of the stated observations for LQD is Neutral, and has near term Neutral implications; therefore, LQD has neutral trend potential for at least the short-term. The analysis of LQD relative to HYG is useful as a sentiment indicator. When G. Sachs Invest Top Corporate Bond (LQD) is underperforming High Yield Corporate Bond (HYG) on a relative bases, it indicates that bond investors are bullish on the economy as a whole and on small business growth in particular.

Theme: Growth Stocks vs. Value Stocks

(1) Observation of the Relative Strength: Results in the relative strength analysis of DJ Wilshire Large Cap Growth (ELG) versus DJ Wilshire Large Cap Value (ELV) indicate that ELG is outperforming ELV on a relative basis. Since the relative strength ratio measures the strength of the numerator versus the denominator, it has predictive potential. In this observation, the price path of the numerator DJ Wilshire Large Cap Growth (ELG) is increasing relative to the denominator DJ Wilshire Large Cap Value (ELV). Therefore, at least in the near term, the implication is that ELG has the potential of outperforming ELV.

(2) Observation of the Price Performance: DJ Wilshire Large Cap Growth (ELG) shows a continuation of an upward price direction.

(3) Observation of Market Type: Security demand conditions (measured by money flows) indicate potential continuation of the current market direction because the change in money flow is quite strong for most of the growth based ETFs. This is relative to weaker money flows going into value based ETFs. 

(4) Possible Implication: The overall implication of the stated observations for ELG is Bullish, and has near term Bullish implications; therefore, ELG has bullish trend potential for at least the short-term. The analysis of ELG relative to ELV is useful as a sentiment indicator. When DJ Wilshire Large Cap Growth (ELG) is outperforming DJ Wilshire Large Cap Value (ELV) on a relative bases, it indicates that investors are bullish on the economy as a whole and on small business growth in particular.  Whether this observation holds will be determined by the economic indicators going forward. Currently, growth stocks outperforming value stocks indicate the bets are predicting a bottom near-term to the U.S. economic recession. We’ll see.

Research Observation (from report No. RT-USA: Finance Trading – Strategically Ranked USA Securities):

Theme: Gold and Economy

(1) Observation of the Relative Price Performance: Market Vectors Gold Miners ETF (GDX), a top price performer, currently has a 3 month versus 6 month relative return in which the 3 month is dramatically less than the 6 month return. This indicates the rate of change in the 3 month return relative to the 6 month return is decreasing. Since the relative price performance measures the strength of money flows to a security, it has predictive potential. Thus, the implication indicates that GDX is strongly underperforming relative to 6 month historical performance. Therefore, at least in the near term, the implication is that GDX has the potential of continuing underperformance. The price performance of gold, and its derivatives, will depend on future economic developments.

(2) Observation of the Price Performance: Market Vectors Gold Miners ETF (GDX) shows a shift from outperformance during the last quarter of 2008 to a more neutral path during the first quarter of 2009. While having a more neutral price path, GDX still has shown dramatic volatility that can be seen in the year high of $51 with a year low of $15.  

(3) Observation of Market Type: Security demand conditions (measured by money flows) indicate potential continuation of the current horizontal market because flows are quite weak. This will dramatically change, however, if the economy shows any further weakness.

(4) Possible Implication: The overall implication of the stated observations for Market Vectors Gold Miners ETF (GDX) is Neutral. While dramatically outperforming other asset classes over the last 6 months, its current performance indicates that most market participants are betting on the current U.S. economic contraction bottoming. 

Hedge: Alerts, Exit Stops, or Options

In any strategy, possibly hedge your risk on positions taken by using alerts, exit strategies that contain protective stops, or options. Additionally, you might consider protecting your capital by possibly placing a small starter position (say 25% of the desired allocation) at first.  If you choose to use actual exit stops, just realize that tighter stops will mean possibly getting “stopped out” frequently during volatile market swings. 

Additional considerations:

First, for most investors, a diversified investment portfolio approach combining stocks, bonds, money market securities, etc., is optimal. While financial diversification cannot protect against a loss from a declining market, it can reduce the volatility of the overall portfolio.

Second, with the globalization of information technologies, college education becomes a prerequisite to most careers.  Thus, a goal of successful investing in a variety of assets becomes crucial in providing the upper level education necessary for the future of your children.  In consideration of that goal, studying the information available on this site, which has been kind enough to host our research in this article, will help. At www.StrategicCapitalResearch.com, we provide additional finance educational materials to what you find here in both investment books and videos. Between the two sites, you should be able to find enough information to get started toward achieving your education investment goals.

Third, to the above analysis excerpt, the usual disclaimers apply: (1) Company policy prohibits employee purchase of research securities until after an email has been sent to our revision notification subscribers; by the time this article is published, however, some SCR employees may own shares of the reported securities, and (2) Since all Strategic Capital Research publications provide research that is conducted using historical data, a reminder needs to be made that the analysis of past market reactions cannot predict future market actions. In particular, no amount of historical data can predict the sudden changes that occasionally occur in financial markets. In both types of risk scenarios, initial capital loss, and profit loss, we prefer prevention techniques that include exit strategies with stops that adjust for a security’s volatility. An “Ultimate Collection” that include these more advanced exit techniques is can be found on the “Strategies: By Type” page in the “SCR: Strategies” section of the SCR site. We recommend that you study and use the more advanced techniques.

Properly executed, these strategies have the advantage of minimal expenses – something everyone can appreciate during these troubled times. The following example will demonstrate how this is done.

Technical Tip: The seller of a Put Option is obligating himself to buy the stock at the striking price. For assuming this obligation, he receives the Put Option premium. For the more technical readers we have provided an in-depth article link at the bottom of this article.

On August 21, 2009, the day your August Put Option expires, two scenarios are possible: Either the stock price is greater than or equal to $50, or it is less than $50. Let’s evaluate both scenarios.

Scenario 1: The stock trades at $50 or above: in this case the Put Option will expire worthless and you get to keep the $400 that you received earlier. You can now repeat the strategy month after month. When carefully executed, you would have earned around $7,200 in 18 months without ever paying a dime and without even owning the stock.

Let’s assume the share price for the stock has gone up 41% to $72 over the course of those 18 months. If you now purchase the 100 shares of XYZ Corp., the cost of ownership to you is ZERO, as you would have offset the $7,200 required for that purchase by your strategy earnings. You are now the proud owner of 100 shares XYZ Corp. at no cost to you.

Scenario 2: The stock trades below $50, say at $48 (a drop of 11% from $54). In this case the August Put Options will be In-The-Money (ITM) and now you need to buy 100 shares of XYZ Corp. at the strike price of $50. But here is the best part: You get to keep the $400 that you earned earlier selling the Put Option. Your effective cost for this trade is $4,600 after adjusting for $400.

Compare this with someone who bought 100 shares at $54. Share traders ended up with a loss of $600 while you had a modest profit of $200 instead. Well not as good as Scenario 1, but not bad either!

The strategy acts like a low-cost replacement for actual stock ownership, BUT you must be prepared to take ownership of the shares under Scenario 2 circumstances. Keep in mind that this is a long-term strategy.

There are many different ways to construct these strategies – conservatively or aggressively. Just like regular investing, different people have different levels of risk tolerance. If you want higher profits, you’ll have to be willing to take higher risks.

At TradeGreeks we avoid high risks that MIGHT hit the big jackpot. Our focus is on conservative strategies with medium to long-term consistent, predictable returns. This will ensure great profits that beat anything else you might try in this market – sometimes well over 100% per annum. What’s even more important: Our strategies ensure peace of mind!

This is an article from the TradeGreeks’ “Tactical Series”

More in-depth explanations of this strategy can be found in our article “Uncovered Put Writing – Insider’s Guide”. We invite you to visit http://www.tradegreeks.com/ and register for free no obligation membership. This will allow you access to the article and many other educational resources regarding trading of Options.

The key here is leverage. But if you’re just starting out, it’s wise to be cautious and think about your moves. For practice, a newbie in forex trading can practice through paper trading. But in the real market, he can start small with mini forex trading. This kind of leverage is greater than stocks or day trading. With a leverage of 200:1, the trader can trade in a commodity regardless of the amount of money available to him.

There is lesser capital involved and the practice builds up the trader’s trading gameplan for future explorations in regular, higher stakes forex trading. In the world of foreign trading, mini forex accounts provide the wisest and best option especially for a neophyte. It requires a smaller capital compared to regular forex accounts, a minimum of $3 With mini forex trading, you can control a $10,000 currency position.

In this way, the trader also builds up his confidence in his trading skills at the same time slowly increase his profit and trading position in the market. Of course, it is recommended to start with a manageable leverage that allows greater flexibility in transactions. Because of it’s high liquidity and speedy transactions, forex trading is becoming a popular game among players in the field of business and marketing.

It requires lesser capital, lesser emotional investment, and slowly builds up your skills and confidence as a trader. The trader likewise gets to develop a sound trading strategy without getting too emotionally involved in possible losses and profit. Forex trading is one of the most viable options for someone who’s looking at bigger possibilities, bigger profit and greater ease in trading and business.

With just a small stake involved, you get to enjoy free trading platform and benefits that regular forex traders get to enjoy. Because of leverage, a trader can trade in a commodity more than the money available in his account. Mini forex trading also allows for lesser losses as the contract size is only 1/10th the size of a standard forex account. He gets to manage his money before going for the higher stakes in regular forex trading.

What are the perks of mini forex trading? They say that business is for the risk-taker. Although the standard trade size is 10,000 units, you are free to trade as much as 50,000 units or more. If you trade in units of 10,000, the trader is given more flexibility in terms of customizing his trades and lessening the risks of loss.

While it’s traditionally for companies and corporations with big capital and experience in the field, it has also proven itself to be a good venture for a neophyte though what one calls a Mini Forex account or mini forex trading. On a regular account, a 25-pip stop loss is equal to a loss of $2 Since a mini forex account is just 1/10th of the standard forex account, this is amounting to $25 only.

In a way, it’s a way to prepare the trader for the higher stakes in the more advanced world of foreign trading. Say with a $250 deposit, one could trade a maximum of 5 mini lots. Mini Forex trading is good for people who have just started in the forex market and with not enough funds to open a regular account.

To illustrate the concepts, let’s go on a shopping trip.

You’ve been thinking about buying a MacBook Air, Apple’s thinnest laptop, for a few days and you’ve done some research to find the best deal. You head for the mall on Saturday and spend most of the day trying to find the lowest price. This turns out to be $1799 for a 2.13 GHz MacBook Air.

Suddenly you realize that you have a dinner guest coming this evening and need to get groceries. Fortunately, the nearest store is right in the mall. Unfortunately, you discover that you forgot to bring your credit card and need to pay cash for the groceries. This leaves you with $150 plus some change.

On the way to your car you discover another electronics store, and to your amazement, the 2.13 GHz MacBook Air is advertised at $1499. Not believing your eyes, you go in and the store manager confirms the price but says that they have only one unit left. How are you going to nail down that price without sufficient cash and without a credit card?

You ask the store manager if he will hold the unit for you in return for $100, and that you will return in two hours to purchase at $1499. If you are not back in two hours, the store manager can sell it to someone else.

You make a written agreement, signed by both parties, that the unit cannot be sold to anyone else for next 2 hours but only to you at $1499 in exchange for $100, and that the $100 is forfeit if you do not return within 2 hours.

You have just engaged in “Options trading” The following options trading terminology should now make a lot more sense to you.

Options Contract – is what the note is called that you and the store manager just signed.

Underlying (underlying stock/share) – is the MacBook Air 2.13 GHz that you have agreed to pay ($1499).

Strike Price – is the agreed upon purchase price (in this example $1499).

Call Option – the type of contract in this example is a “Call Option.” It gives you the RIGHT but not the OBLIGATION to buy the MacBook Air. In order to exercise the “right to buy” you must return within 2 hours, and the store manager must sell it to you at $1499. If you change your mind, you do “not have an obligation” to buy. You simply don’t return and lose your $100 hold money.

Option Expiry – for this example the expiry is 2 hours, meaning that the option contract will cease to exist after 2 hours.

Option Premium – this is the $100 hold money you paid. It’s the cost to enter into this contract. This is not a deposit against the purchase price, but money the store will keep either way for providing you with the convenience. So, your effective purchase price will be $1599, which is still better than the $1799 “best deal” you had identified earlier, and it is the reason you entered into the contract.

Long Call and Short Call – for this example you have the “Long Call” since you are buying the contract for $100, and the store manager has the “Short Call” since he is selling the contract and gets to keep the $100.

Now let’s evaluate the risk exposure for both parties to the contract:

Your risk is limited to the $100 hold money you paid, i.e., a Long Call Option buyer’s risk exposure is limited to the premium paid. If, hypothetically, the price for the MacBook Air tumbles to $1000, then there is no way you would return and purchase it for $1499! If, hypothetically, the price shoots up to $2599 within the 2 hours, then your immediate profit would be $1000.

The store manager, on the other hand, has unlimited risk and limited profit potential. A Short Call Option seller’s risk exposure is unlimited while the profit potential is limited to the premium received. Yes, he gets to keep the $100 in case of a price drop where the buyer is not returning to purchase, but if the price for the MacBook Air shoots up to $2599 within the 2 hours, he stands to lose a lot of money because he cannot sell it to someone else for the revised price.

Hopefully, this will have taken some of the mystery out of options trading and its lingo. As illustrated by our example, we are engaged in these types of transactions in some form or other in our daily lives. We’re just not aware of it. As you gain knowledge and practice, it will come to you quite naturally.

At TradeGreeks we focus on educating investors in the world of options, where profit potential is unlimited and is not restricted to a bull market. We have created options trading strategies that are so strong and so predictable, that we can solidly stand behind an unprecedented guarantee: You will get the return we promise, or your money is refunded with no questions asked.

Visit us at http://www.tradegreeks.com for more options trading articles and register for a free membership.

This was an article from our series ‘Covert Life of Investment’.

Software That delivers Gives You a Successful PlatformChoosing the Right Program Is like Hitting the Jackpot. As far as software platforms, the following suggestions I strongly feel are necessary for any software to be useful.1. It must be able to offer live streaming technical data. (Otherwise the program is merely educational)   2. The platform should defiantly include candlestick charting.3. Visually it has to be large enough for all the data to be seen easily. (Many of the online brokerage’s technical data is too small to be useful) 4. It must be cost effective. (Most good systems can be purchased for between one and two hundred dollars)If you can acquire software that gives you even the slightest edge in your favor, it is well worth the Investment. I don’t profess to being an expert, but I do know of some. I obviously don’t have the time to go into all the details now, but at my site  Market Mentalist you will find all you need to know about investing online. There is access to some of the top trading systems available including software, books, newsletters, and Forums. Whether you are an inquisitive novice or a seasoned pro,Market Mentalist offers the online investment resource, you just might be seeking.