This is an interview with Jeff Tan, who had an amazing career as a serial entrepreneur. He has founded 6 companies dealing with computer graphics and television broadcast. He developed the CNBC financial graphics system that we watch to track the financial markets used by CNBC anchors around the world! For that, he received the International Broadcast Conference Award 1995 jointly with CNBC Europe and National IT Award 1996 jointly with CNBC Asia.
He was also the CEO of two Singapore mainboard listed subsidiaries and sat as executive committee member for a Cambridge based public listed company. He has worked in several US and European companies in a regional capacity.
He believes that everyone should find an additional or alternative source of income in these trying economic times.
He is into trading and teaching, and you will find out why and how here:
How did you get started on trading?
I got interested in trading in 2006 whilst I was working in Hong Kong. I saw how my friend can make money from the markets by looking at charts. Later on, another friend from US recommended me to watch the movie “Pursuit of Happyness” acted by Will Smith and his son. This movie drew a lot of parallels to my life at that time as I was a single dad supporting my 12-year old son. I left Hong Kong to return back to Singapore to be with my son and one of the first thing I did was to find more about trading. I signed up for a course on forex in 2007 and have been trading every since.
Right after my first course in forex trading, I wrote my first automated software. I was quite pleased that I can turn a demo account at US$10K to over US$450K in 3 months with average loss of only $350. That got me really intrigued how the market can behave with some form of frequency analogous to the way a computer clock works like an oscillator. I was and have been involved in designing television broadcast facility so I view the market from an engineering approach and notice that price indeed behave in a certain fashion and frequency.
Have you used the software to trade real money?
Yes, I used real money to test my software. At that time my exposure to the financial markets was barely more than 3 months and not all brokers are friendly towards automated trading software at that time. There’s a lot of stop loss hunting and slippage from many rogue brokers or market makers.
Along the way, I was mired in various trading methodologies and invested a lot in courses, books and DVDs to find out what more about technical analysis. I was straddling between manual trading and auto trading. On one hand, I was competing against my own software. The last beta software that I did, I made 68% returns on a live account in one month. Still I needed to do more research before documenting my design and committing it to code.
I have now perfected my trading methodology manually and my next phase is to design my software and put it into code. During the course of past 5 years, I have built a library of software tools which can be incorporate into my next software. Now the challenge for me is to decide on which platform and broker to use as I met many roadblocks to use auto trading of the shares markets in Singapore.
I am looking to develop a automated trading software for the US markets. I am not too sure I want to do High Frequency Trading (HFT) at the moment as the brokerage fees will be substantial.
What do you trade now?
I trade forex but my primary focus is in stocks and indices. It does not really matter to me as long as I have good historical data, I trade anything that moves.
Primarily for Singapore stocks, I trade long term in the cash market so that I am free to pursue other interest during the day. I trade US stocks using CFD for shorter term trading lasting few days to weeks.
What time-frame do you trade?
My strategy works on any time-frame be it years, months, weeks, days, 8 hours, 4 hours, 2 hours, 1 hour, 30 mins, 15 mins, 5 mins, 1 min or seconds. My method caters to scalpers, swing traders and long term investors.
Having said that, I do not do scalping as it is not sustainable for anyone as we got to have a life. There must be a balance and there is no need to glue to the screen every minute or hour. My trades can last for days or weeks or months.
The time-frame that I trade is mainly the daily charts. I go down to 4 hourly timeframe sometimes for precise entry but this is rare.
How would you describe your trading strategy?
I use median lines, Andrew’s pitchfork and Action/Reaction lines to structure the market. Just by using three data points in the chart, one can define the market structure into the future that can last for years.
This method dates back to the early 1920s and have been extensively researched by MIT.
In reality, the basic principles go back to Sir Isaac Newton Third Law of motion which state:
“For every action there is an equal and opposite reaction.”
The birth of median line studies using the famous Andrew’s pitchfork was developed by the late Dr Alan Hall Andrews. His friendship with Roger Babson and George Marechal set the early foundations applying Newton’s third law of motion in market predictions in developing the study of median lines.
Below is an example of how I apply the techniques and combined with my own to analyse and trade Facebook.
Price broke wl-2 as it begins renewed its previous association with the Upper Band and moved back to familiar territory. Price will possibly remain trapped in this Upper Band for a while..weeks or months until we see signs of breaking away from the Upper Band. Now price will head toward wl-3. It may ziggedy zag in the Upper Band and touch the ML but frequency has indeed shifted and direction is a major up. You can really see the beauty of how markets can be structured and captured within a price frequency band.
Next week, we are expecting price to break wl-3 and a dash towards wl-4 mimicking movement comparative and similar to this week. Facebook is firmly in a uptrend and the infancy of it as well.
For those who have longed early in the week, it is good time to move your stops to break-even. For those who missed the boat, next week will present a good opportunity but only if price breaks wl-3. It is abit risky as there could be some strong retracement but the energy build-up over the past 2 days may just provide the impetus to punch right through wl-3 with no turning back. Still..if you want to take the trade, be quick and nimble to move your stop to break-even. It has been an exciting week for this counter and we remain bullish on this counter.
For more stock analysis, please visit this link.
What was your best and worst trade?
My best trade is making 15 times what I risk. Worst trade is losing 3 times what I risk due to poor understanding of position sizing. I do not talk about actual amount as it is relative and subjective. I do not get impressed with people making claims that they made so much in few minutes or seconds. They never share how much they lost on that one big trade. They breed a gambling and punting mentality. This is highly dangerous and misleading at best.
It is all about making a good return on your investment.
Why do you want to teach?
I have started few companies and worked for few companies. I loved what I do but it is very challenging to create a sustainable business or hold on to a job. I have experienced several global crisis such as the Gulf War, Asian currency crisis, dotcom crash, SARS, subprime crisis realising that the interval between them are getting shorter with greater impact. As such, I feel the onus is on the individual to find a source of income that he or she can survive in good and bad times.
As such, I want to teach but only if what I can help make a difference in one’s life and it has to be something that is fundamentally different and giving a trader alot of edge.
Most courses out there focus on their strategy and their pet indicators sadly. It may work for a particular coach but it may not work for the general public. Tiger Woods is the best golfer in the world and no matter how much money you are willing to throw at him to coach you, you can never be a Tiger Woods.
There is a way to understand the market and structure it. Once you can do that, you have control of the market and will be able to project and predict how prices will behave.
What I teach is not found in Singapore or SE Asia. I have done extensive research and incorporate a lot of new ideas. I believe there is structure and frequencies in how price behave. There is structure in human emotions and this can be represented in a price chart. As such, a price chart embodies all human greed, emotions, fear and sentiments.
I have performance metrics that generates a trader performance quotient so that he or she will know which area they need to improve to hone in their trading skills. It is very systematic and no fuzzy logic.
The Holy Grail is not the trading method or strategy. If a trader reached a trading quality number of 7.0, he has achieved the Holy Grail of the trading and he is the Holy Grail.
Our temperament, risk tolerance, emotional make-up, analysis skills and execution discipline are all different. A Holy Grail trading strategy will not make an excellent trader. That is why I do not believe in cloning traders to be like me. I give them the right foundation, tools and strategy that is agnostic to who and what they are. The focus is not on me as a teacher but it is on them.
They have to learn how to read, analyse and trade the market without me. To me, that is the best way for them to learn.