Self Development Idea (17): Working Harder On Yourself than Your Job

Here is a simple idea from Jim Rohn: 
"You should work harder on yourself than on your job. Because... If you work hard on your job, you can make a living. If you work harder on yourself than you do on your job, you can make a FORTUNE."
And, Jim Rohn also said that this is a simple idea and simple to carry out. But, on the other hand, it is simple not to do it... Simple thing accumulated over years is your current result.

The attached diagram is a pictorial illustration of my understanding and experience with the idea over the past ten over years...

"Success is one thing we can't pay for,
we buy it on the installment plan
and make payments everyday."
- Zig Ziglar

-----------------------------------  Add on 06 Jan 2015   -----------------------------------
Recently, I'd read a comment by a philosopher in Taiwan, and think that there is valuable insight in it...

                ---------------------------------- cut and paste----------------------------
             ------------------- end of cut and paste -------------
è For any specialized knowledge, 10,000hours is fundamental; After 30,000hours, there is an opportunity for him to form his own wisdom; After 50,000 hours, than one can fully master the subject and create.  In olden day of China, the student must study for 30,000hours as fundamental before he went for state exam – which took ten years.
è As Mozart became famous at the age of 22…  He had practice piano 16 hours a day for 12 years.  So, he got famous after practice 70,000 hours.
                -------------------------- end of translation ----------------------------

This is tally with the books – Talent is Overrated, and The Talent Code.

I once read in a book in the library that Jesse Livermore, Richard D. Wyckoff, and W.D. Gann had spent around 10 years in their research before they mastered their skill.

Bless You
KH Tang


Trap for Investor (9) - Awareness of the Dark Pools in the US Market that Distort the Accuracy of Tape Reading

For those well trained traders and trading professional, they know that trading volume is a very important indicator to judge the state of the trend for the stocks - as it is a measure of money flow.

And, the classical books on Jesse Livermore and Richard D. Wyckoff emphasis on the importance of volume through Tape Reading....

Now here is a video clip from CNN showing that the trading volume of the Dark Pool is up to 40% of the total trading... Which means that there is a Change in Rule on Technical Analysis as on How to Interpret the Volume.  Be aware!


So, what’s the Impact???
Though the above video trying to project an idea that these activities does not affect the public...Yes, it is true for the untrained traders that don't use volume indicators and mass public who don' trade.
Actually, it shows that “Volume” information is distorted (US Market).  So, even if the historical speculation king like Jesse Livermore and Wyckoff methodology would lose their accuracy in selecting stocks if they were re-incarnated with full knowledge of their past live, as their method is heavily based on price-volume relationship (money flow direction) – The Fundamental Rule had Changed.   So... Higher weightage in judging the trade should be based on Price dynamic, and that is the Multiple-Time-Frame Relative Price Strength.


Here is another excellent short video illustrate how the dark pools work in more detail:-




Games that People Play (5) - Fueling a Giant Stock Market Bubble

This post is self-explanatory...
Click on the link for more details...

Deutsche Bank "Raises The Warning Flag": 
What The Most Important Chart For The Market Reveals

Is the Fed Fueling a Giant Stock Market Bubble?
(Yes, of course)


Other Games that People Play


Trap for Investor (8) - The Most Popular Trading Indicators in the World

I remember...

While I was working in the corporation more than a decade ago, I started some investment through hearsay, then studied some fundamental analysis on companies...  It just did not workout.

Then, I studied some Technical Analysis and learn some technique on trend line, resistance, and support with some Moving Averages...  It did not help much.

Then, someone told me that I needed to attend some professional course... And, I said Yes.

I happened to come across a course advertised by "Business Wxxk" for about USD3000 for a day course that come with internet-based Technical Analysis Tools Box with annual subscription of USD600.  It promised (or I should use the word advertise, and reader perceive as promise) that after the training, the student would only need 5 minutes a day to successfully manage his portfolio for success!

What's made me more convincing was that, IF I don't satisfy with the course after the day, I can get my full refund!  

The set up was great... More than 300 participants...  At the end of the day, I didn't see anyone ask for refund!  That's was a very positive sign (my thought at that time...)

So, what did I got to learn from the course in one day?
1.  Some Fundamental Analysis Skill...  Such as P/E, PEG, etc... (Things that you can find in Yahoo, and countless trading sites for free.)

2. Basic Technical Analysis - Trend line, Resistance Line, Support Line, etc.. (Any basic Technical Analysis books or website has this.)

3.  MACD Indicator - Moving Average Convergence/Divergence with arrows firing at the crossing points telling people when to buy and sell...  (Any first timer to come across this would be impress with it.  And, it indicator is SO POPULAR that it is freely available in any trading website.)

4. Stochstics Indicator - A kind of momentum indicator that with arrows firing at some boundary saying buy on oversold and sell on overbought.. (Available in any trading website.)
And... The course comes with Video CDs for revision, and Self Study Course that cover Options.
That was basically ALL!

And, more importantly...  It does not produce Result as stated...  At least to far far majority of them...

Now. Looking back...
That's funny, but to any person who don't have any background or know someone who can share the knowledge, that's probably the path he needs to go through and price to pay.

Recently, I come across a new book - New Frontiers in Technical Analysis.  It is a compilation book with many authors with each author wrote a chapter.

What's interesting is that... In Chapter one, the author provide a statistics on what's the most popular indicators, charts, tools that used by the trader across the global at different regions from East to West.

And, I find the attached information worth THINKING!!!

Anyone who do some research know that, in long run, at least more than 95% of the public lost money in the stock market.  YET, those trading courses out there are mainly consist of these few indicators for the beginners... Doesn't it sound more than Interesting???

Nevertheless, these indicators - as already learnt, believed, and practiced by a mass of traders - do have value and that's called the "Self Fulfilling Prophecy".  I read a book quite sometime ago by Joe Ross (Professional Trader).  Although he created his own indicators, he would also learn some popular indicators - for the reason of knowing what the Public probable Entry and Exit points in order to take advantage of it...  So, knowing is good, but use it Creatively is the Point!



 "It Ain't the Things You Don't Know That Hurt You, 
It's the Things You Know That Ain't So."
- Mark Twain


Games that People Play (4): Push "RESET" Button on World

Good day,

I came across this very strange news about few weeks ago...
It was talking about Pushing the Reset Button or World Economy!

And here are the sources:
1)  World Economic Forum website: IMF Director, Christine Lagarde, Publicly Talks About Global Financial Reset and Recovery

2)  USA Today


So, what does it mean by the term RESET when these people discussing about it?!

In the first link above, World Economic Forum Website:
In the video, 05:40min to 11:15min
Chirstine Lagarde, Managing Director of International Money Fund, was talking about the 3 Rs of global economy, which stands for  1) RISK,  2)RECOVERY & 3) RESET.
And, she further described there are three aspects of RESET:
A) Monetary Policy need to be reformulated
B) Financial Sector Reform 
C) Global Structure Reform 

In the second link above, USA Today Link:
-------------------------------------------  Cut and Paste  ---------------------------------------------------
Klaus Schwab (Founder of World Economic Forum) said: "We need to push the reset button. The world is still much too much caught in a crisis-management mode. We should look at our future in a much more constructive and strategic way. That is what Davos is about."
------------------------------------------  Cut and Paste  ----------------------------------------------------

As usual, these people in the financial world always creates term that the meaning are so confusing to the public, such as Subprime Mortgage for substandard investment fund, and Quantitative Easing for "printing more fiat US Dollar", etc...

As I did more research... I found that these documentaries, "Hidden Secrets of Money Episode 1 to 5"  by Mike Maloney,  seem to bridge the gap and explain what the term RESET is...

Hidden Secret of Money Ep 1 - Currency vs Money

Here are the links for the 4 sub-sequence Episodes:

Hidden Secret of Money Ep2 - Seven Stages of Empire

Hidden Secrets of Money Ep3 - Death of the US Dollar

Hidden Secrets of Money Ep4 - The Biggest Scam In The History of Mankind

Hidden Secrets of Money Ep5 - When Money is Corrupted

Well, though these videos do contain some sale speech (you may ignore that), the contains of the video are very educational!


--------------------------------------- Added on 24 Mar 2014 -------------------------------------------------

In fact, there are some reset activities going on.

Venezuela sharply devalues its currency...  start with 50%.  and now... 88% as shown:

Relevant Info:

There is a interesting site,   GLOBAL CURRENCY RESET.NET  , that put these information together.


Code Red: How to Protect Your Savings From the Coming Crisis

The Big Reset: War on Gold and the Financial Endgame

The Money Bubble

The Death of Money: The Coming Collapse of the International Monetary System

Well, it is 100% sure all currencies will be reset like the kingdoms and dynasties changes in the history... Just that NO ONE would be able to predict EXACTLY WHEN.  So, it give the Gurus a chance to continue to predict until it comes. :-)

Nevertheless, awareness is good.

-----------------------------------------  Added on 19 Apr 2014 ----------------------------------------
Some relevant books on this topic:

---------------------------------       Add on 16 May 2014        --------------------------
Yet another perspective:


Stock Market Tools (13) - Using Correlation as Pattern Recognition

The above slide shows the concept of correlation formula of two set of data.  In application wise, it can use for pattern recognition.  Such as image or voice recognition, etc.

In his latest book, "Cycle Analytics for Traders", John F. Ehlers even uses it to calculate the dominant cycle in the stock chart.

So, in broad term, Correlation can be used to find the similar patterns in stock market charts.
There are various usages:

* Such as using one index or ticker to confirm another - like Dow Jones Transport Index to confirm the bull or bear state of Dow Jones Industrial Average in the past (may be not so valuable now as internet age taken over, and many software products can be download online.)

* Find some current patterns that highly correlated with historical patterns, and use it for prediction that it will follow through in the short future.  - Such as head and shoulders, scourers, etc.

* Correlation of season in the year for commodity trading, etc...

* And, correlation would work for even more complex type of waveform, as it can use as the engine for image recognition algorithm...  And, here comes the story...

Well, I suddenly think of posting this article because, just a moment ago,  I come across another article - "SCARY PARALLEL" that could be of high interest to others and would like to see how it develops over the next few months.

The link of the original article is Here "Scary 1929 market chart gains traction".

From the chart patterns, though I don't have the access to the raw data to compute the correlation value, but experience would tell me that the correlation value would surely be higher than 0.8.  So, in theory wise, it has the Prediction Value until Proven Wrong!

On the other hand, when applying this concept...
This short video clip is an excellent example of illustrating the concept of pattern recognition - One can only confirm the actual answer after thing happen.

Will come back here in 2 months time to see the outcome. :-)

Bless you
KH Tang


Stock Market Tools (12) - A Better OBV and Time Segmented Money Flow

Part 1: A Better OBV

In the classical OBV (On-Balance Volume) indicator, it simply takes the idea from traditional tape reading - treat the "up tick" as Buy, "down tick" as Sell, and it assumes no change in price as neutral* (*which is not the case in tape reading).

When it comes to interpret the daily volume as such, errors will add up cumulatively.  For example, there are days when a Doji Star with high volume just merely one cent higher than yesterday price and the whole day volume would be taken as a BUY Volume....

Here is a gentlemen, William C. Garrett, attempted to break down the daily volume into two parts in his book - "Torque Analysis of Stock Market Cycle".   And, I think it makes sense.


William showed his method in Fig. 4.3 in his book, and we can derive the formula from it as follows:
He made the assumption that the trading volume is about linear over the trading hour, and thus it can derive how the paths the stock was traveled and workout the Buy Volume and Sell Volume accordingly as shown in the below chart:

Now a better OBV formula can be written as the cumulative number of  (Buy Volume - Sell Volume).
It should named as Garrett OBV.
And, it can multiply the daily average price to it and named as Garrett Money Flow.

The following chart shows the plot of it and the comparison to Classical OBV.

(Click on the Chart to Zoom in)

Part 2: Time Segmented Money Flow

There is a proprietary volume indicator known as Time Segmented Volume (TSV).  Since it is proprietary, probably the public would not know about the exact formula.  But the concept is not difficult.

Let say for the Classical way of plotting of OBV, there is no clear sign for both entry and exit.  We can then fix a look back period to compare it accumulation/distribution over it's own historical value.  One simple way is to perform a MACD operation on the Garrett Money Flow.  

Now we can compare the Garrett Money Flow Indicator to the Classic MACD indicator.  In the above chart, they are using the same look back period for short MA, long MA and Signal.
From the chart, there are some very interesting point to take note.
Since the Volume Action is taken into account in this new indicator together with price.  The Time Segmented Money Flow behave differently at couple of  place on the above chart.
For examples:  On March, April and July, the RED Line maintain above the Zero line to prevent any short trades - this happened as a result of  more Buying Volume than Selling Volume.

Note on Divergence:
When using a indicator as Time Segmented Money Flow, divergence would surely occur on and off.  This is where Wyckoff 3rd principle comes into play - "Effort vs Result" that is not matching.  Meaning that the cumulation of shares goes in one direction while the price goes another direction.

"It ain't what you don't know that gets you 
into trouble.  It's what you know 
for sure that just ain't so." 
- Mark Twain

Attached is the AFL formula:

//  Formula Name  : OGTS Time Segmented Money Flow
//  Author        : KH Tang
//  Company       : Wealth Resonance
//  Last Update   : 15 Jan 2014
//  Date Updated  : 22 Nov 2013 // Update with opening price as direction*
//  Origin date   : 5 Jun 2007
//  Origin        : KH Tang
//  Version       : 1.01
//  Level         : Volume Analysis
//  Description   : Key Usages:
//                : 1.Tape Reading for Direction of Breakout in Trading Range
//                : 2.Tape Reading for Divergence in Trending
//        : Note: Enhancement to include Opening price as direction.
procedure BackgroundSetting()
SetChartBkGradientFill( ParamColor("BackgroundTop", colorSkyblue),
        ParamColor("BackgroudBottom", colorWhite),ParamColor("TitleBlock",colorWhite));
SetBarsRequired( -2, -2 );
_SECTION_BEGIN("Display Setting");
GraphXSpace = 10;
_SECTION_END();//Display Setting
//William C. Garrett's Approximation:
//GPaths   = IIf(C>Ref(C,-1),((H-Ref(C,-1))+(H-L)+(C-L)),IIf(C
//GUpShare = IIf(C>Ref(C,-1),((H-Ref(C,-1))+(C-L)),IIf(C
//GDnShare = IIf(C>Ref(C,-1),(H-L),IIf(C
//Expansion for clarity:
PathA1= Ref(C,-1)-L;
PathB1= H-L;
PathC1= H-C;
Path1 = PathA1+PathB1+PathC1;
UpShare1 = PathB1;
DnShare1 = PathA1+PathC1;
PathA2= H-Ref(C,-1);
PathB2= H-L;
PathC2= C-L;
Path2 = PathA2+PathB2+PathC2;
UpShare2 = PathA2+PathC2;
DnShare2 = PathB2;
Paths  = IIf(C<Ref(C,-1),Path1,    IIf(C>Ref(C,-1),Path2,   1));
UpShare= IIf(C<Ref(C,-1),UpShare1,IIf(C>Ref(C,-1),UpShare2,0));
DnShare= IIf(C<Ref(C,-1),DnShare1,IIf(C>Ref(C,-1),DnShare2,0));
FlowFactor = Avg;
FlowIn  = UpShare/Paths*Volume*FlowFactor;
FlowOut = DnShare/Paths*Volume*FlowFactor;
NetFlow = FlowIn - FlowOut;
TotalFlow = Cum(NetFlow );
PlotType = ParamList("Type of Chart Plotting:","Cumulative|Time Segmented",1);
LBP = Param("LBP for Time Segmented Plot",26,10,50,1);
FastSmoothMF     = EMA(TotalFlow,int(LBP/2));
SlowSmoothMF   = EMA(TotalFlow,LBP);
DailyNetFlow= IIf(NetFlow==0,MA(Netflow,30),NetFlow);
    Plot(TotalFlow ,"Garrett Money Flow",colorRed,styleThick);
else if (PlotType=="Time Segmented")
    TSMF=FastSmoothMF - SlowSmoothMF;
    Plot(TSMF,"Time Segmented Money Flow",colorRed,styleThick);
    TSMFsig = EMA(TSMF,9);
    Histogram = TSMF-TSMFSig;