The BRICS nations, Brazil, Russia, India, China, and South Africa have large and rapidly growing economies. They have a great deal of influence in regional and global affairs. These nations combined have more than forty percent of the world population and a GDP or nearly $15 Trillion. From the viewpoint of the stock trader, how can one make money trading BRICS stocks? Where do you need to go for trading BRICS stocks and what are the pitfalls?

Technical Analysis of Foreign Stocks

Going back to the era of the Cold War it was hard to figure out what was going on in either Russia or China. Much of what one knew was obtained from spy satellites and debriefing of refugees. Today both of these nations have opened up significantly to the rest of the world. However, they do not have the transparency that one sees in the US stock markets. Thus a practical approach to trading BRICS stocks, especially those of Russia and China, is to use American Depository Receipts, ADR’s. An ADR is a negotiable security. It represents the stock of a non-US company but it trades in the USA in financial markets such as the NYSE or NASDAQ. Shares of such stocks are called American depositary shares or ADS’s. These stocks trade in US dollars and pay dividends in US dollars. They can be traded like any other stock on US stock exchanges or over the counter. Because these stocks trade on US markets a trader can use technical analysis tools on a computerized work station in real time in trading these shares.

Just How Many BRICS Stocks

ADR’s of Russian stocks include the oil and gas giant, Gazprom, Sberbank, and Novolipetsk Steel. Chinese based ADR’s include China Eastern Airlines, China Southern Airlines, Shanghai Petrochemical Company Ltd and Yangzhou Brewery Company Ltd. ADR’s of Indian stocks include Tata Motors, Infosys Ltd, and HDFC Bank. When you think of South African ADR’s think of De Beers and diamond mines. Brazil based ADR’s include Petroleo Brasile, Rio Tinto Plc Co, Telefonica Brasi, and CPFL Energia S.A. And there are a lot more candidates for trading BRICS stocks where these came from. Whether you take a contrarian approach to day trading or use any of a number of profitable day trading strategies, trading BRICS stocks listed as ADR’s lets you use the market tools that you always use in analyzing and trading.

What Are The Dangers In Trading BRICS Stocks?

The more opaque the market the more dangerous it is to trade its stocks. The up side to trading BRICS stocks as ADR’s is that you are trading on a US exchange. The downside is that the action is still taking place offshore. To the extent that you take precautions to limit your losses trading BRICS stocks can be profitable. To the extent that you do not pay attention, losses can be substantial when previously unknown information leaks and torpedoes a stock that you believed was heading up. Always set your trading stops when trading BRICS stocks and always pay attention to the fundamentals that eventually drive all stock prices.

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