In this edition of the elementary-finance stock market tutorial, let’s look at the overseas markets. Everybody talks about them but how important are they, really?

First, realize that as a market investor, it’s entirely possible to trade stocks 24 hours a day. When market is closed, another market is open. They’re always overlapping and because of that, some avid stock traders wake up at 3:00AM and start trading on the overseas markets.

That’s exciting isn’t it? Imagine telling your friends that you’re an international market trader. That sounds quite impressive but before you quit your day job and set your alarm for 2:30AM, this isn’t a strategy for the retail or part time trader. With international traders comes a lot of risk and the level of education one should have before doing this needs to be quite high.

Before you send your money around the globe, learn the ins and outs of trading in general and then practice those skills in the good ol’ United States or on the stock market exchange in the country where you reside. Then, years down the road when you’ve made your first million, consider trying international trading.

Sounds like the end of our stock market tutorial, doesn’t it? Not at all! The overseas markets are good for something else as well.

You have probably heard that markets affect one another. Investors are an emotional bunch and when something goes wrong somewhere else, investors around the world get nervous. When something goes right, investors around the world take more risk. Keeping an eye on the overseas markets may give you an edge in the trading day.

Let’s take a hypothetical example. Let’s pretend that this morning you woke up and turned on CNBC and heard that the Asian markets were down sharply. In fact, they were down 2% on a worse than expected report on the state of the economic recovery in Japan. Of course, I’m making that up but let’s pretend.

We know that while investing in overseas markets may not be the greatest idea for new investors, a lot of pros do it and the pros are where the big money resides. If the Asian market is down because of a bad report and they’re down that much, there’s a good chance it’s going to affect the American market. If we’re trying to be short term traders, we had better keep a close eye on the markets today.

Of course any stock market tutorial is going to tell you the truth and here’s the bad news: It isn’t that easy. The overseas markets tend to be a little bit unreliable. How do we know if the overseas markets are reacting to our market close from yesterday or if we’re reacting to them?

The truth is, sometimes, many times one doesn’t know. Other times there isn’t anything market moving going on in the world so there is no real indication one way or another.

The bottom line is this: It’s never a bad idea to look at the overseas markets to see what’s happening right now or while you were sleeping. Often, though, you aren’t going to get any hard and fast data so don’t make any big decisions solely based on this.