With the long holiday weekend, I am waiting to see what happens with the dollar the beginning of the week. This could have major consequences on many other markets. I suggest watching it very closely. After last weeks downward movement, I am hoping for some recovery over the next couple weeks. Silver still looks like it has more upside potential but after last weeks performance, I suspect we will have some profit taking which means a retracement of some sort. How big that will be we will only discover in the coming days.

In the meantime, I like the grains and energies as they seem to have additional upside as well. This weeks newsletters will be talking about technical analysis and chart patterns for both stocks and commodity futures. We will also be talking about options, my favorite. We will look at options strategies, valuation, and spreads so you will want to stay tuned. If you are not signed up for the newsletter, now would be a good time to do so. I would not want you to miss even one trading idea that might help you make money.

Well I am back from another undeserved vacation, back to comment on what to trade and why. Please keep in mind this all is only my opinion and just as I do, you should do your own research and determine what fits your portfolio and risk profile. Clearly some markets are not suitable for all investors/traders. All that being said, here we go.

Let's start with Stocks. As far as I am concerned, the old buy and hold or dollar cost averaging are pretty much an ideas that have come and gone. I believe any market one participates in should be on a rather short term basis. One might ask why I would think this. First is the economic climate we find ourselves in. Holding any position overnight carries with it what I consider additional risks. With electronic trading around the world people can get in and out of markets almost any time day or night. This means that unless you are watching your positions 24 hours a day, you could get a big surprise. Obviously this could work in your favor but could also be devastating to your portfolio. This is also why prudent money management is a must. If you are not using stops on your trades, I believe sooner or later you are going to experience rather unpleasant results. Stop Orders are available and from my experience "mental stops" don't work. I suggest using real stops or options to help mitigate downside risk. In my opinion, money management is the number one reason for success or failure in trading. Where to place stops and how far away from your entry is another subject and a lengthy one. That being said, I would also suggest risking 5% of your account value or less on any one position depending on your account size and risk tolerance.

In addition to the uncertain economic environment, I would also suggest shorter term trading for the most part because of political uncertainties. This may seem the same, and they are certainly connected, but there are differences. Countries around the world, ours included, seem to be all at risk of dramatic political shift in very short time frames. I would suggest having your money at risk for as short a time period as possible. Being able to turn your funds to cash and then your cash to tangibles quickly may allow you and me to survive with much of our savings regardless of what happens around the world or here at home.

Futures/Commodities have matured in the past several years in terms of electronic trade execution and will likely get even better with time. Now you can get into and out of trades on most domestic markets extremely quickly. You can take advantage of spreads, options, money management techniques and direction changes almost instantly. Another factor I like about these markets is the fact there is a high degree of regulation. The National Futures Association, an NGO, polices the firms active in these markets and keeps most firms on the straight and narrow.

Leverage is another factor I appreciate about the Futures and Commodities markets. Leverage in the Stock market is very limited while in the Futures markets it can be pretty dramatic. One only puts up "margin" which is a fraction of the actual value of a particular contract. This is simply earnest money required by and set by the exchanges to initiate a position. One should have considerably more in an account than the initial margin. Keep in mind, leverage is a two edged sword that can work for you, and can and likely will, work against you. Money management in these markets is even more critical.

Moving on to Forex, these are some huge markets with plenty of volatility. As a short term trader, one must learn to appreciate volatility as your ally but only to a point. If volatility is low, it can be very difficult to glean profits. If volatility is too high, stops have to be very wide to not get rattled out of the market on minor oscillations. This causes greater than usual per trade losses and can make it much more difficult to enjoy your trading.

Forex offers an opportunity to participate in markets with huge volume, often very little if any slippage on trades, and electronic platforms that can be quite robust and easy to use. There are plenty of good Forex, or as they are also known, FX firms out there. Currently one of the largest and I believe a very good firm happens to be one of FREECharts.com advertisers with another joining FREECharts.com very soon. As you go through the website you will see the banners for FXCM. You can get a practice account, education, and a little coaching to get you started.

Incredible leverage, electronic order placement, highly regulated, outstanding market liquidity all favor Forex. These markets are driven by economic and political events and as a trader, I believe this creates opportunity. Once again, sound money management is required to enjoy a successful venture into these currency markets in my opinion.

We have been able to provide FREE Quotes and Charts and a lot more as you will discover by going through FREECharts.com at an unbeatable price for nearly 12 years. FREE! The advertisers and sponsors make all this possible. If you want to trade Futures & Commodities, check out PFG. They are a very good firm and I have been familiar with them for many, many years. If Forex is more to your liking, check out FXCM. They also are an outstanding firm. For Stocks, we have a firm that we will be recommending soon but we have not inked the deal yet. They want to get to know us and we want to get to know them a little better before we start recommending them. On the other hand, if you are already trading Stocks and need some help with technical analysis, check out VectorVest. These folks are worldwide and highly respected. They are not cheap and when you get to know them you will quickly discover why. This reminds me of one of my favorite sayings "Chance Favors the Prepared Mind". These folks at VectorVest with help prepare your mind for trading Stocks.

As I mentioned earlier, I am back in town now and will be posting regularly as I see things that may impact the markets and will insert my bias making it clear as I can what my opinion is. I will also be getting more specific from time to time and try to really drill down on certain subjects so stick with me. Pass FREECharts.com along to all your trading associates and help make FREECharts.com an outstanding resource for past, current, or future Stock, Futures, and Forex traders.

Through history, gold and silver have been respected forms of wealth. They have provided for commerce and the import and export of goods. After nearly 6000 years of wealth representation, the world decided to change and store value and wealth in a new form, the US Dollar. This worked pretty well until our government decided to spend a lot more than it was taking in. Then came the big idea to sell our debt to folks outside the country and create money out of thin air. Hard to create gold and silver out of thin air.

This has led to a slow devaluation of our dollar. The folks in Washington are like the rest of us. Anything we enjoy, we like to do it a lot. The government liked creating money out of thin air so consequently they have done it a lot. Especially the past couple years with a plan to do a lot more of what they like to do in the coming years.

The problem with this plan, the Chinese, Japanese, Germans, Brits, and Brazilians. These folks don't like buying our debt and being paid back in devalued dollars. Jerks. Then when the debt instruments they purchased mature, they want to be paid back. Double jerks. Now their purchasing of our debt is slowing to a relative trickle, the Fed came up with a new idea. They call it "quantitative easing". Sounds good right? So what is the problem?

The problem with this plan is that quantitative easing really means the government is going to devalue every dollar around the world by creating lots and lots of new dollars out of thin air thus diluting the dollars (aka the money supply) that existed previously. The devaluing of a currency is in direct proportion to it's inflation in most cases. When the dollar gets devalued through dilution (inflation), we can't sell more bonds (debt) to our friends because they know they are going to get paid back with something less valuable that what they originally invested.

When we can no longer find anyone to buy our debt, we will have to "print" more money. When the government can no longer increase taxes to fund their projects, they will print more money. At some point, inflation will raise it's ugly head. It will devour existing dollars and the credit worthiness of the US.

Does this have to happen? No. Are past the point of no return? Not quite yet. What might be a solution? On a government level, cut spending voluntarily today so it does not become forced cuts in the next few years. On a personal level, what can we do? Diversify that portfolio with solid companies around the world. If your portfolio is large enough, hold a portion of your portfolio in foreign currency. Another action one can take is to buy precious metals. Not ETFs or funds. I mean real metals that you can put your hands on. Gold and silver. I read once that an ounce of gold 2000 years ago bought a man a loaf of bread every day for a year. 100 years ago, an ounce of gold would buy a loaf of bread every day for a year. Today an ounce of gold will buy a loaf of bread every day for a year and maybe some peanut butter to put on it. Can't say the same for dollars over the past 100 years.

Gold is a very concentrated form of wealth so for most folks I would suggest looking at silver. The gold/silver ratio is still pretty high at about 40 to 1 compared to what might be considered a more normal 16 to 1. This might mean gold should to come down or silver should go up. Based on the growing debt and the coming devaluation of the dollar I don't see gold going down. Please remember, this is only my opinion and however unlikely it may seem, I could be wrong. Do your research and if you come to a similar conclusion, start shopping for tangibles in the form of metals to hedge against the government and their continuing erosion of the dollar. In the next few weeks I will be introducing you to one of the finest suppliers of precious metals. We are currently negotiating with them to provide special consideration and pricing for FREECharts.com folks. I will keep you posted.

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