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Software Demo Trading ? Things to Look for
2008-03-01 13:33:00
Today most brokers offering online stock and Forex trades offer free demo trading of their trading platforms for a fixed period of time. Traders can make use of this offer for get familiar with the software and the market, and to test different trading strategies. Although demo trading is not that similar to real trading, it is advised to paper trade when you are new to trading, whenever you open an account with a different broker or whenever you change a trading platform. There are many things to get familiar with before you enter in to actual trading with real money.Make sure that the platform works for you. It is simple enough for you that you understand everything. Make sure the platform offers enough features like charting, news alerts, quotes, account balances, etc.Understand the order entry options and methods.Know how to place limit orders with the system.Know how to place stop losses with the system.Know the type of spreads in the software ? fixed or variable.Know lot size,...
More About: Software , Trading , Things , Demo

Arms Index ? Stock Trading Indicator
2008-02-29 13:03:00
Arms index is a popular stock trading indicator developed by Richard Arms in 1967. It is also known as TRIN (TRading INdex). It can be used for finding both short-term and long-term trends for stocks and also can be used for finding oversold and overbrought conditions. Arms index is a volume based trading indicator, defined by the formula,Arms Index =(Number of Advances/Number of Declines)(Advancing Volume/Declining Volume)The resulting value is them smoothed by applying simple moving average, of which length differ according to trading style. Usually short-term traders use 4 day moving average, mid-term traders 21 day moving average and long-term traders 55 day moving average. The oversold and overbought positions differ with number of days of moving average.When Arms index is on 1.0, the market is considered as neutral with equilibrium in buying and selling trends. When the value drops from 1.0 the market is considered bullish and when it is above 1.0, is considered as bearish. Us...
More About: Trading , Stock , Arms , Indicator

What are Watered Stocks?
2008-02-28 16:25:00
Watered stocks are stocks issued by companies having less asset value compared to the value of stocks issued. Watered stock issuing was a common practice around the world in 18th and 19th centuries, but now because of the changes of laws regarding stock issue by corporations this is practiced rarely. Water stock trading involves high amount of risks and often results in huge losses.Watered stocks derived its name from livestock market, where livestock owners feed large amounts of water to their cattle just before the marketing day. Like livestock, water stocks are overvalued to their actual asset and the stock holder is liable for not only losing the capital he invested, but also for face value shares of stocks issued. For example if the trader holds stocks of value $20,000 with a contribution of $10,000, in an event of foreclosure of the company by creditors, he may loss $10,000 he contributed and alos is personally liable to loss another $10,000.Watered stocks are usually presente...
More About: Stocks

Mixed Large & Small Cap Stocks Trading
2008-02-27 12:19:00
Choosing the right stock to trade is most often the biggest hurdle a stock trader faces. Although trading large cap stocks and small stock caps holds many advantages of their own, it is advised to take a mixed way. Trading both large and small cap stocks offers some more advantages to traders, especially to beginners.Mixed large and small cap stock trading is an excellent method of diversifying your trading portfolio. It seems that the prices of large cap stocks are more vulnerable for general or industry specific news and they often produce high highs and low lows. So, often the profit of loss you get/suffer will be of high level. Small cap stocks on the other hand produce delayed effects to news; high fluctuations occur for company or product specific news. So by mixed trading you can make sure that you are not going to loss too much, and you have moderately high chances of good profit.Large cap stocks help you in reaping long-term successes, as most of them show steady growth rat...
More About: Stocks

Stock Market Trading Newsletter February 25
2008-02-26 13:30:00
The Week Ahead: News that the Philly Fed Index reached its lowest level since 2001 indicates that the economy is still sliding lower and increases the chances of the Fed lowering rates again by 50 basis points. Listen to Ben Bernanke's testimony to Congress on Wednesday and Thursday for clues to this possibility. Existing home sales are due on Monday and the PPI on Tuesday. Durable goods numbers and existing home sales are released Wednesday while preliminary 4th quarter GDP is out on Thursday.Stock s to Watch: Intuit (INTU) shares reached levels not seen since 06' after reporting lower 2nd Q earnings and sees the 3rd Q below street estimates. Calgon Carbon (CCC) had a big turnaround in numbers as sales rose 21% and earnings went from a loss to a sizeable gain. Omnicare Inc. (OCR) turned up from an important low after announcing an an important new director to its board. Orthofix Int'l (OFIX) which makes orthopedic products collapsed after announcing a 4th Q loss versus a gain a y...
More About: Stock Market , Market , Trading , Newsletter

Trading Silver Futures
2008-02-25 12:43:00
Silver is always considered as a good investment especially to hedge against inflation. Silver is the least expensive among precious metals and thus easy to own. Trading silver commodities can offer you many advantages, but as an experienced trader it is better to trade silver futures and options on them. Trading silver futures gives you many advantages.You are trading with standardized contracts ? for both quality and quantity.Hedging against future price volatility of underlying metal.Trading leverage allows you to control more valued underlying commodity. Futures contracts give you more flexibility to go short and long.No counterparty risks.No silver metal storage risks. Like gold futures, silver futures are also traded dollar per ounce. Two types of contracts are available, standard silver futures contact for 5,000 ounces are traded in both COMEX and eCBOT. eCBOT also offers mini silver futures contract for 1,000 ounces. The market is fairly liquid, not as much as gold futures. ...
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Keep These Simple Trading Tactics
2008-02-23 12:11:00
We are sure that, many times you have wondered ?How successful traders success from market?? The answer is simple: successful, dedicated and experienced traders reap success from the failures of confused, uncommitted novice traders. Novice traders in any type of market will face extreme challenges from experienced ones and as Darwin?s theory explains ?Over production (crowding) leads to natural selection and survival of the fittest.?But a small portion of novice traders succeeds in competing with the experienced ones. The reason is their strong basics. They are less confused and are well aware of their goals. Here are some tips to keep your head cool.Never be over ambitious. If you aim for big goals instantaneously you will end up with big losses.Never be confused. Stick to the basics.Never go for extreme strategies straight-away. Why to go extreme when basic strategies can give you enough profit. Never be the last one; most common mistake that all novice traders make is buying late...
More About: Tactics , Trading , Simple

What is Dutch Auctions IPO?
2008-02-22 12:57:00
Dutch auctions IPO is a newer method of IPO (Initial Public Offer) bidding, which is proposed to offer most price to stock for releasing firms and democracy in IPO bidding. The bidding process of Dutch IPO is just opposite of traditional IPO. In traditional IPO the bidding start from a low fixed price set by firms using data from market researches and evaluators. In Dutch IPO the bidding starts from high fixed/no-fixed price and bidders place bid of low prices.Dutch IPO auctions takes comparatively more time than traditional IPO, and is most suitable for internet/online IPO auctions. Interested bidders continuously places bids of lesser/greater amounts per share for number of shares they wanted and at the end of the option the shares are disbursed according to the last bidding price (lowest bidding price) required for fill the share quota. In short, in Dutch auctions IPO all users placing high amount bids (greater or same as lowest bid to fill the quota) get shares for lowest bid pr...
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Collar Options Trading Strategy
2008-02-21 13:43:00
Collar is just one another multi-legged options trading strategy which is practiced when the trader is not so sure about the underlying stock price movement. Collar options trading strategy is a low risk low profit options trading strategy which is followed by traders holding stocks to protect them from falling of the stock price. In collar options trading, the maximum profit and maximum loss are predefined values.Collar options traders usually employ a 1:1 ratio of call and put options; usually both are out of money. The trader, in order to protect the stocks he holding, buys a protective put option and writes a call option, usually by ensuring a credit. The maximum profit occurs when the call option expires in the money; where the profit is the strike price of call option minus purchase price of the stocks holding plus the credit of setting up the position. The maximum loss occurs when the put option expires in the money; where the profit is the purchase price of the stocks holdin...
More About: Strategy , Trading , Options , Options Trading , Trading Strategy

Weekly Stock Trader Newsletter, Feb 19
2008-02-20 12:57:00
The Week Ahead: News that consumer sentiment is at 16 year lows as we enter this holiday shortened week could weigh on stock prices. Overall profit growth in the 4th quarter declined sharply primarily because of financial companies. Watch housing sector stats with the NAHB housing index on Tuesday and housing starts on Wednesday. Also, the CPI and FOMC Minutes report will be released Wednesday. Finally, an important leading economic indicators number is due on Thursday.Stock s to Watch: Food companies have been strong recently as stocks like Campbell's Soup (CPB) which beat earnings estimates and HJ Heinz (HNZ) gave a positive sales and earnings outlook for 08'. Clear Channel (CCU) beat earnings estimates and its stock vaulted up near the 50 day moving average. NetSuite (N ) which went public in December broke to a new low after showing a 4th Q loss when analysts expected a gain. Coal companies like Consol Energy (CNX) and Massey Energy (MEE) fell on a sector downgrade by Goldman S...
More About: Newsletter , Weekly

Backspread Options Trading Strategy
2008-02-19 13:13:00
Backspread or reverse ratio spread options trading strategy is a limited loss unlimited profit multi-leg options trading strategy employed by options traders, when they think the price of underlying stock can raise or fall considerably with time. Backspread options trading strategy is just the reverse of ratio spread options trading strategy. Backspreads are of two types as call backspreads and put backspreads.Call backspread options trading strategy is useful when the options trader predict a rally in price of underlying stock. He/she often employees a 2:1 ratio of long and short calls of same expiration date with different strike prices. Maximum loss occurs when the options expire on the long call strike price, i.e., when the short call options expire in-the-money. There is two no-profit no-loss situations (not considering the credit/loss involved in options setup) on breakout points of either side of long call strike price; defined by long call striker price +/- maximum loss poin...
More About: Strategy , Trading , Options , Options Trading , Trading Strategy

What is Risk Aversion?
2008-02-18 13:28:00
By simple explanation. Risk Aversion is the inverse of risk tolerance. Risk averse is defined as the behavior of a trader to stay away from risky trading practices, even if those have high chances of profits. Risk averse traders prefer low risk, often low profitable, products to trade. Risk aversion is seen in trading of all products including stocks, bonds, funds, options, futures and currencies.When trading, risk averse traders often stick to government securities, index funds, low-risk currency pairs, long-term options, and stable price commodities and futures. Although seems simple and less followed, risk aversion is the major factor for major market changes. A good example is now a days Forex market, where US Dollar is gaining against many other currencies, even in a period of US recession. This is because many investors and funds are now fear to invest in countries which have USA as major trading partner. Any recession in US market can produce magnified effects in those countr...

Setting Stop-Losses in Trading
2008-02-16 11:46:00
Stop loss orders are the most important risk and loss minimizing tool a trader has so far. Stop loss trading strategy is perhaps the most used strategy in trading, but only a few traders know the art of setting them. Once you learn this art you will soon be joined the list of ?Successful Traders?. Here are some tips for setting stop losses when trading.Any stop loss order will consider a variety of situations, the volatility of market, the volatility of the product you are trading, trading account size, the margin you owned, long-term market direction and your trading style. Use tight stop losses when you are trading with large account size. Use moderately relaxed stop loss when your account is so small. If you are a day trader, it is better to set tight stop losses, if you are an investor think of expanded stop loss orders. Use relaxed stop losses when you are certain about the bullish trend of the market and the product trading. Else tight ones.Use relaxed stops when the product y...
More About: Trading , Stop , Losses

LEAPS Options Trading Advantages
2008-02-15 13:28:00
LEAPS or Long-term Equity AnticiPation Securities are one of the most traded option types. Although not so popular like short-term options, LEAPS can provide better profit as they are traded for extended periods. Today many experienced option traders use LEAPS options trading as a good alternative of trading stocks and other option types.Advantages of LEAPS Options Trading Traders can profit from long-term growth of underlying stock or index.They minimize the risk associated with short-term options, as LEAPS do not require instant market movements.Traders can earn more number of underlying stocks, twice the number compared to marginal trading and four times compared to trading with real money.As with all other types of options LEAPS are less risky than trading underlying equity or index.LEAPS give traders a chance of roll-over for extended periods.No marginal call from brokers.Disadvantages of LEAPS Options Trading As with any other options, the value of LEAPS decreases with time.It t...
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Currency Carry Trades Strategy
2008-02-14 13:23:00
Currency carry trades strategy is one of the most used Forex trading strategies, which especially work well when the currencies of the pair stay study. Carry trades are the products of currency rollovers, and are designed for magnify the effect of interest rate difference between currencies.The principle behind carry trades is simple; you buy a currency of higher interest rate like New Zealand Dollar (NZD) or Australian Dollar (AUD) spending lower interest rate currency like Japanese Yen (JPY) or Swiss Franc (CHF) you may have an interest rate difference around 5%, which approximately equals a profit of $13 per day for a standard lot. Remember if you are only trading with $1000 and using 100:1 margin. Trades can maximize the profit by increasing the trading lot, by retaining the pair for an extended period and by increasing the leverage.Carry trades are advantageous when the currency you buy yields over the other, when Central Bank increases or going to increase the interest rate of...
More About: Strategy , Currency

What is Forex Rollover Interest?
2008-02-13 13:34:00
In Forex market, most of the trades are done as spot trading, in which the deals are due to settled after 2 days. For overnight holding of positions, the forex broker automatically close all positions at the end of the trading day (10pm ? London time and 5pm EST) and simultaneously open new positions. The forex traders will credited of debited an rollover interest rate in his account according to the difference between the inter-bank interest rate of the currencies he trading.Forex rollover fee is credited to the traders account if the countries currency he buys has greater interest than that of the pair, and vice versa. If the trader sells the currency, having higher interest rate, then the rollover fee is deducted from his account, and vice versa. The fee is calculated with respect to the trader?s full position, not to his actual traded amount. Thus the effect of rollover fee is magnified with marginal trading. And also remember there will be increased rollover fee for trades in W...
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Weekly Stock Market Newsletter Feb 12
2008-02-12 14:29:00
The Week Ahead: Recession fears continue to grip Wall Street as the DOW had its worst week in almost five years. The service industry reported its worst slump since 2002. Key statistics this week include: business inventories and advanced retail sales numbers on Wednesday, jobless claims on Thursday, with import prices, industrial production, and the University of Michigan Consumer Confidence Survey on Friday. Also of note, Ben Bernanke and Henry Paulson give testimony before the Senate Banking Committee on Thursday.Stock s to Watch: Investors may want to avoid MGM Mirage (MGM) as it issued an earnings warning do to rising expansion costs and weakness in hotel revenues. Health insurer Centene Corp. (CNC) missed its 4th quarter forecast by a wide margin as its stock collapsed below the 200 day moving average. Cognizant Technology (CTSH) gapped up after it showed strong 4th quarter profits on a 41% jump in revenue and raised its '08 forecast. Brush Wellman (BW) profits dropped 60% on ...
More About: Stock Market , Market , Newsletter , Weekly

Goodman?s Swing Count System
2008-02-11 13:34:00
Goodman?s swing count system was developed by M. Duane Archer based upon the trading principles of Charls Goodman, one of the most successful traders ever. The trading principles of Goodman were simple but were powerful enough to earn him huge amounts of profits. He was a very conservative trader who does only one or two trades per month; the trades which he figure out has highest chance of profitability and lowest chance of loss. In short Goodman?s believe was that avoiding a losing trade is better than looking for a winning trade.Goodman employed the 50% retracing rule to facilitate his trades and for getting most out of the market. The rule states that after a reasonable upward movement, if the market moves back the equilibrium should be the 50% range of the initial upward movement. And the length of resurgence of market will be roughly equal to the initial upward movement length.Although sound simple, Goodman?s swing count system is not that easy to follow. Trades must maintain ...
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Importance of Automatic Trading Systems
2008-02-09 13:08:00
We trade in a world of high competition, where everyone wants to outperform us. There for staying on the market necessitates us to adopt competitive strategies and behaviors. If they use advanced trading systems for generating signals and finding opportunities, we need one too of same strength or more powerful. Automatic trading systems are now common for all type of trades and every day a broker come up with a new system or an update of existing system.Automatic trading systems offer many advantages to traders which include,Easiness in performing serious market calculations and determining market momentum.Integration of many market indicators helps us to find opportunities.Automatic trading signals help us to concentrate on better opportunities.Real-time alerts help us to limit our losses.Easy to understand graphics, graphs and charts help us in planning better trades.Real-time news alerts help us to swiftly capitalize on opportunities.They help to minimize trading errors, that oth...
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One-Cancels-The-Other (OCO) Orders
2008-02-07 12:55:00
One-Cancels-The-Other orders are just another type of orders which traders can use to minimize the effect of market volatility. The practice of OCO orders is much more common in Forex trading compared to stock and futures trading. One-Cancels-The-Other orders, as the name suggests, are combination of two orders, of which execution of one order will trigger the cancellation of other order.The trader can place orders for trading two stocks, currencies or for other financial instruments. Both orders will stay live on market, unless the start of execution of one of them. The broker will start executing the trades with maximum profit chance or minimum loss. The starting of execution automatically triggers the canceling of other order and the second order is cancelled even if the first order is partially executed.Like stop-limit orders, most brokers charge more fees for executing OCO orders. OCO orders become handy when you are not sure about the market direction or the future of currenci...
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Most Important Forex Market Indicators
2008-02-06 13:29:00
Unlike stock or commodity markets, the profit and loss of Forex trading largely depends on international matters. A Forex trader should therefore be have knowledge about international matters, what happening within other countries and what happening between countries. Globalization have made things much more complex; you hear a news of policy change by one country whose currency you are not trading, but suddenly will notice that you are profiting or losing with that news, because your country of interest have strong trade relationships with first country.Below are some important indicators or news types which you want always to monitor and to take concern.GDP of a country; all Forex traders know its importance.GDP of countries having warm relationship with your favorite countries. Federal Open Market Committee (FOMC) meetings ? this become more important as most other countries? main trading partner is United States.G8, EU, OPEC, ASEAN summits, meetings, ministerial conferences, etc...

Weekly Market Letter, February 4, 2008
2008-02-05 12:59:00
The Week Ahead: Employment growth has turned negative for the first time in 4 years led by housing, manufacturing, and construction jobs. This prompted many to believe more interest rate cuts are coming as stocks posted there best week in nearly 5 years. Look for confirming evidence in the factory orders report on Monday and the ISM non-manufacturing index on Tuesday. Same store sales data, pending home sales, and the jobless claims numbers are due out on Thursday. Friday brings the wholesale trade figures.Stocks to Watch: Arch coal (ACI) in the energy sector beat earnings estimates handily and was rewarded by making a new 52 week high. Altera Corp. (ALTR) in the semiconductor sector came in with lower earnings but beat estimates as its stock rebounded sharply off of recent lows. Oshkosh Truck Corp. (OSK) fell short on their earnings report and the stock may have reversed a near term uptrend. Millipore Corp. (MIL) stock reversed sharply lower on higher earnings but was downgraded af...
More About: Market , Letter , Weekly , February , 2008

Using StochRSI for Trading Equities
2008-02-04 12:55:00
StockRSI is the using of Stochastics method for finding the relative value of RSI (Relative Strength Index). It was developed by Tushard Chande and Stanley Kroll, and is best used for finding trading opportunities between over-brought and over-sold positions of RSI. The idea behind StockRSI is simple and has produced some good results. StockRSI for RSI value is defined by the below formula,StockRSI = (Actual RSI ? Lowest RSI) / (Highest RSI ? Lowest RSI)All values are for a specific period, usually 14 days. The StockRSI value ranges from 0 to 1, Zero when the RSI touches new lowest point for the period and One when RSI touches new highest point. 0.2 is defined as the oversold value and 0.8 is as overbrought value. A crossover of 0.5 is taken as the conformation of a trend. Buy signal is constituted when positive divergence occurs above 0.2, and a sell signal is constituted when negative divergence occurs below 0.8. Failed signals occur when values move back below and above oversold ...
More About: Trading , Equities

What is Value Averaging Strategy?
2008-02-02 12:22:00
Value averaging is one another stock or mutual fund trading strategy which can be used to hedge losses due to market falls. The idea behind value averaging strategy is just like Dollar Cost Averaging (DCA) strategy except an added value factor. Here, unlike buying equities for a fixed amount the investor buys equities for fulfill a targeted portfolio value.For example you start an investing portfolio that you opt to grow $300 a month. You brought the equity for $300 for first month but at the end of first month, due to the growth in equity price, your portfolio value has increased to $350. So for next month, instead of investing $300, you should invest $250 (300 + 300 - 350). At the end of second month, due to market recession, your portfolio worth only $550, instead of $600. So you should invest $350 for achieving your target value. And so on.Value averaging is a more evolved strategy than DCA. In long-run it offer more profit than DCA. You can add more equities when market falls a...
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Every Market Holds an Opportunity
2008-02-01 15:19:00
Playing with money by putting that on stocks, futures or foreign currencies always include risks and this risk is also responsible for the profit they can offer. A wrong move on a day can evaporate your money and a right move can profit you thousands of dollars. We can successful traders successful because they have held their grounds in periods of wash-offs and energetically reaped successes at every chance they got.If you go through the history of stock exchanges, you can find that periods of recessions are always followed by periods of long upward movements. The only requirement which you need to fulfill is to maintain enough resources for the future bullish market. Periods of recessions gave an opportunity review you how effective is your trading and investing strategies was, what were the mistakes you have made, and what are your alternatives. The greatest lesson an extended bear market can teach you is you must diversify your portfolio and you must always have a back-up plan.Y...
More About: Market , Opportunity , Holds

What is Dollar Cost Averaging or Constant Dollar Plan?
2008-01-31 14:49:00
Dollar Cost Averaging (DCA) also known as Constant Dollar Plan or Pound Cost Averaging is a method of profiting from stock or any other similar market for a long-term. In DCA, the investor constantly buys the stock/unit for a fixed amount per month, increasing his/her trading asset.Dollar cost averaging is considered as a method to overcome market downfalls as it let the investor to buy more number of stocks when the market is falling and buy lesser number of stocks when market is on high. The profit really comes from the long-term performance of stocks, which is nearly 11% per year for US stock markets irrespective of economic ups and downs.The greatest advantage of dollar cost averaging is it is independent of market timing. One can buy stocks irrespective of market condition. This type of stock investing is also helpful eliminating the risk of investing large amounts at a wrong time. DCA investing strategy is best suited for investors who can spend a part of their monthly earning...
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Using Benchmarks to Find Good Stocks
2008-01-30 15:48:00
Finding quality stocks and mutual funds is a difficult job, especially for long-term investors who want to secure their future by investing in a quality stocks or fund. One way of doing so is to compare the price and growth rate with an already estimated benchmark.Although any stock or index can take as a benchmark it is better to choose one with reasonably steady growth and is liquid enough to trust. The best option is the S&P 500 index; it is old and is growing every year with a reasonably constant speed, around 11% annually and around 100% in every 10 year. By taking this index as a benchmark you can classify stocks and mutual funds in to 3 main groups as those performed better than the S&P 500 index, those performed worst than S&P 500 index and those which are unstable to fit in any previous groups. Now the options before a trader will be much more clear, only look for stocks which outperformed the benchmark consistently.It is better to put money on firms or funds wh...
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Weekly Market Newsletter January 28
2008-01-29 13:43:00
The Week Ahead: The markets will obviously be watching many significant economic reports this week after one of the most turbulent weeks ever on Wall Street. For the President's stimulus package to work, investors need more data to see if its too little too late. Durable goods numbers along with the consumer confidence data are due on Tuesday. An expected interest rate cut by the Fed and the 4th quarter GDP will be announced on Wednesday. Personal income and spending numbers are reported on Thursday, and a highly anticipated employment report will be released on Friday morning.Stocks to Watch: Besides the important economic reports, this week brings hundreds of earnings releases from a diversified list of large companies. Significant ones to watch include: Google (GOOG) and Yahoo! (YHOO) in the tech sector; Proctor and Gamble (PG) in the consumer discretionary sector; Eli Lilly (LLY) and Merck (MRK) in the pharmaceutical area; Exxon Mobile (XOM) and Chevron (CVX) in the oil patch; ...
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What is Relative Strength Index or RSI?
2008-01-28 13:14:00
Relative Strength Index or RSI is a popular momentum indicator, which can be used for figure oversold and overbrought positions for a give stock. RSI was developed by J. Welles Wilder in 1978. Relative strength index follows a simple mathematical calculation for finding market momentum, of which value ranges from 0 to 100. The formula employed is,Relative Strength Index = 100 ? [100 / (1 + RS)]RS is the Relative Strength for a specific time period. Its value is determined by the formulaRS = Average gain / Average lossBoth average gain and average loss are calculated for a time period, the standard one is 14 market days. As the value for average gain increases the RS value increases, so does the RSI; and as value of average loss increases RS and RSI value decreases. Relative strength index is a running process and the market understanding improves with time, because of more accurate and detailed data.As said earlier the most important use of relative strength index is to figure out o...

Decoupling Theory of Emerging Markets
2008-01-22 12:17:00
After the first symptoms of recession of US stock and other financial markets, many investing firms and funds have changed their focus to emerging markets of Europe and Asia. Decoupling theory is postulated in this context for assisting the firms to reap from these emerging markets, but the validity of this theory is arguable.Decoupling theory, as the name suggests, decouple emerging world markets from US markets. The followers of this theory believe that ?because of the strong GDP growth of many developing countries, especially of China and India, their markets will remain bullish even at the time US recession.? The theory was pretty right till the end of last year, but things have changed considerably in this year. Most Asian markets are now on big recession after the crash of Dow John?s. Indian, Chinese and Hong Kong markets fell considerably in the last one week or so with around 10%, 18% and 3% respectively.The major drawback of Decoupling theory is that it not considered the m...
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