Breaking Project Work Down

The Work Breakdown Process At the outset of every software project everyone’s attention is focused on defining the scope of the project. This can be a very demanding undertaking; the project is often an integral part of a strategic objective that is of vital importance to the whole organization and getting the requirements properly defined … Continue reading “Breaking Project Work Down”

The Work Breakdown Process

At the outset of every software project everyone’s attention is focused on defining the scope of the project. This can be a very demanding undertaking; the project is often an integral part of a strategic objective that is of vital importance to the whole organization and getting the requirements properly defined is key to success. Of equal importance to gathering the right set of requirements is defining the work that must be done to build a software system which meets those requirements, and then performing the work. Breaking the work down and creating the project schedule is the first step in building the system. Failure to break the work down properly can lead to miscommunication with the project team or missing work necessary to deliver a requirement, and could ultimately result in failure to deliver the system the organization needs.


Breaking the work down must meet 2 objectives: the resultant work packages must represent a tangible deliverable that makes sense to the team member responsible for producing it and the project manager must be able to control it. By controlling the work package, I mean that it should be monitored by the project manager in such a way as to alert them that a corrective action is called for to preserve the schedule. A work package that fails to meet the first objective will confuse a worker who attempts to create it and if that person is reticent about pointing out the confusion, will lead to wasted time and effort. Failure to deliver on the second objective will make it difficult for the project manager to determine when there are problems that would require correction.

The PMBOKĀ® describes an iterative approach to breaking work down, ending when the work package can be assigned, budgeted, and managed with a minimum amount of effort. This guideline is fine, as far as it goes but it doesn’t go nearly far enough to help the project manager of a software development project. In defense of the PMIĀ®, it couldn’t be precise enough to make it helpful to managers of software projects without making it irrelevant to managers of projects in other areas. The purpose of this article is to provide some tips and tricks which will help managers of software projects determine when they have defined the proper set of work packages.

Work should be broken down using all the documented information available that is relevant to the project. This documentation will include everything which describes the scope of the project: the Project Charter, the SOW, the Scope Statement, requirements matrix, etc. It will also include historical information such as schedules for similar projects, changes to the previous project, and Lessons Learned from similar projects. Each organization will approach projects differently and each project will have a unique set of documents available to it. Your job as project manager is to seek out all the documentation that could be helpful and determine which you will use.

To do a thorough job of breaking the work down, you should start with the tool you intend to use to manage the schedule. For most managers of software projects this will be MS Project (note: this is not a plug for Microsoft, just recognition of the dominance that tool has in the market place). Throughout this article I will refer to the project schedule in describing the process of breaking the work down and that is because MS Project integrates the Work Breakdown Structure (WBS) with the schedule. Attempting to break work down for even the smallest project without such a tool will be very time-consuming and tedious. It will be impossible for larger projects.

Breaking work down becomes simple when the project under development is a repeat of a previous, similar project. Use the schedule (MS Project plan or other similar file) as a base for the new schedule. Use the plan from the previous project as your starting point, changing the names of the various components of the system to suit the new project. You can simply copy the old plan into a new file and make the necessary changes to the new file, or create the new file and copy and paste relevant lines from the old file into it. Obviously, the work required for the new project won’t be the same as the work in the old plan, but the way in which the work is broken down should be the same. The way in which the work is done will likely remain the same, even when the new project introduces new tools. For instance, if your organization’s QA process calls for unit testing of individual modules the work package that delivers a unit tested module will be required in the new plan as well.

Testing performed by a QA organization will require the similar work packages in most projects.

The one drawback I find with MS Project is that, because it automatically creates a schedule at the same time it breaks the work down, start and finish dates are automatically provided when you enter a work package or summary task. Don’t worry about dates when you break the work down. MS Project will default the start and finish dates based on the date you are working with it and the default settings. You will schedule the work later when you estimate the effort and duration of each of the packages and the dependencies.

Don’t forget to consult other historical information when converting the information in the old plan into the new one. If you are lucky, the previous project will have Lessons Learned collected and archived in an orderly fashion and all you need to do is an intelligent search for any lessons pertaining to the definition of work packages. You could scan each lesson, where the total lessons are manageable, otherwise you’ll need to use a search tool to perform the scan. Some search strings to consider: “estimate”, “late delivery”, or “schedule slippage”. Frequently lessons are captured because something went wrong. Things that a bad WBS could cause would include missed work, poor quality (where a work package to perform unit testing was missed for example), or misunderstandings about the nature of work to be performed.

Not all organizations undertake Lessons Learned sessions for their projects and even when they do, all the information that could help you break the work down may not be contained in them. Among other artifacts that could yield useful information are change requests which implement preventive or corrective actions, implemented to prevent schedule slippage caused by poor work breakdown. Other sources will include risk registers, issue logs, action registers, or decision logs. If your organization is behind the curve in using these tools you should be changing that with your project. In the meantime, you may have to search e-mails to find evidence of the damage done by a faulty WBS. Referencing these artifacts should yield a good draft WBS. Do not forget to consult your organization’s policies, standards, and guidelines when creating the WBS. These may have changed since the project(s) you are using as a reference, or the previous project manager may have failed to comply with them so make sure that your WBS supports them. Pay particular attention to standards, guidelines, and policies that pertain to quality. Failure to organize the work such that these are adhered to will lead to project failure.

Project managers undertaking projects that break new ground will need to do more investigative work to create their WBS. A project which uses new tools (e.g. a new programming language or new web platform), or techniques (e.g. SCRUM) will have a new set of summary tasks which will not be found in a previous project schedule. Starting at the project level, define a sub-project for each application to be developed. The software development methodology chosen will determine the summary tasks within each of the sub-projects (applications) in the plan. For example, if the Waterfall methodology is chosen, each application will consist of the complete set of requirements that application must support. The project will contain multiple sub-projects if an iterative approach such as SCRUM is chosen, one for each iteration. Each of these sub-projects will contain the set of summary tasks which support the way your organization does the work. This set of summary tasks may include summary tasks for writing the code, unit testing each piece of code, testing groups or sets of modules, QA testing each application, and QA testing each system. The project manager will determine the set of sub-projects and summary tasks necessary to support the methodology used.

Your project schedule should contain at least 3 hierarchical levels at this point. There is one possible exception and that is when the project is so large that breaking the work of each sub-project down into summary tasks and work packages would produce a schedule with too many items to be managed efficiently. I find that a schedule of 600 to 1,000 items is about the maximum that I can manage efficiently. Any more than that and the dependencies will create a schedule that cannot easily be altered without a time-consuming analysis of those dependencies. You may not be able to make a decision on whether your project calls for one schedule or several schedules but, if your schedule contains several hundred items at this point you should consider multiple schedules. The schedule at this point should facilitate sub-division into one plan for each sub-project, or multiple schedules containing multiple sub-projects.

The summary tasks that you have defined at this point will depend on what your project delivers and the software development methodology chosen. The summary tasks for a project which calls for the development of software applications and systems will differ from those required for a project requiring the implementation of an off the shelf software application which will differ from those required for a project implementing a customized off the shelf application. There will be a set of summary tasks for each different activity called for by the approach, one for each application or system to be developed, customized, or implemented. At this point, you may want to break the summary tasks down one more level, to produce a 4th hierarchical level. For example, where the summary tasks are of the nature of “create XXXXX application”, “code XXXXX application”, or “customize XXXXX application” you may want to further break the work down into sub-components, one for each pieces of the application or system. One way to identify these sub-components is to consider who will be responsible for doing the work. Where multiple people will be responsible for delivering the summary task, break the summary task down into one component for each person who will work on it.

Your software methodology should dictate how the set of requirements is to be translated into a working system. This process may call for the translation of those requirements into multiple Functional Specifications and each Functional Specification may call for one or more Detailed Design Document. The determination of what set of specifications that are required to support your project will be determined by the nature of the organization: do you have a separate department for Business Analysts, Software Analysts, Programmers or are your programmers all Programmer/Analysts? The specification set will also depend on what your project needs to deliver. The documents required for a project delivering applications built from scratch will differ from those required for a project delivering customization and implementation of an off the shelf solution which will differ from those implementing a standard off the shelf solution. Each of the documents to be produced will call for a work package. There should be one or more work package for each document to be produced. There should be a separate work package for each set of activities required to produce a working document. For example, a work package to develop the document, one to review it, and another to update it from the output of the review.

Excluding any areas where work packages have been defined, you should have a schedule containing either 3 or 4 hierarchical levels by this point. A schedule with many more than 4 levels is likely to produce a WBS and schedule which cannot be managed efficiently. Likewise, beware of a WBS which would call for the assignment of work packages to more than one team member. It may be OK to have a junior programmer assist a senior programmer on a package, depending on your organization, but work packages that call for several senior programmers should be avoided. Now that you have a break down containing the optimal number of levels you are ready to break each level down into its component work packages.

The set of work packages each summary task should contain will depend on the nature of the software system to be delivered, the tools used to do the work (tools), how the work will be done (technology, policies, procedures, and standards), and who will do the work. Let’ take the case of a project which will deliver a new system built from scratch first. This project will call for the building of one or more new applications, which will in turn call for the coding of several sets of modules per application and one or more modules per set. Each module must be developed, then unit tested. The work of coding the module should be done by one programmer, unless a senior programmer is responsible for training a junior programmer. A project which calls for the customization and implementation of an off the shelf solution would call for the analysis of each configurable feature or function, the provision of configuration information and testing. A project which calls for the implementation of an off the shelf solution might call for the analysis and configuration of ancillary applications necessary to integrate the application into an existing system, or analysis and configuration of existing applications in the system. Breaking the work down in these cases calls for you to determine who will be doing the analysis and be responsible for configuration of the application(s).

The work packages you define for the project should all belong to a preceding hierarchy level and will be the “child” or “leaf” nodes of the hierarchy. These will be the items that you will use to measure performance to schedule, and possibly performance to budget if the packages are cost estimated. You have not estimated the duration of the work required for each package at this point but your rule of thumb should be that the packages should be at least as long as the intervals between your status reviews. My experience has been that weekly status review meetings are optimal for most projects so you should be looking for packages that are 1 week in length or more. This may not be possible when assignment of the work forces you to define packages that would take less than a week to produce. This means you either bundle those packages with others to produce a package of at least 1 week duration, or review the status of the items of shorter duration on their due dates.

Your last step will be to verify the breakdown with the project team members responsible for the work. This will also be an ideal time to estimate the effort and duration for the package and identify dependencies between the various packages. There are 2 approaches to this activity. One is to review the packages with the team one member at a time and the other is to conduct a workshop to review the entire schedule. The advantages of using the workshop approach are that you can bring the entire team’s expertise and experience to bear on the schedule, you can identify all the inter-dependencies and you can identify any packages that you have missed.

The disadvantage is the time it takes to conduct the workshop; depending on the size and complexity of the project, the workshop could last for days. Don’t make the mistake of rushing the workshop though, as this will lead to a deficient schedule. Interviewing each team member individually has the advantages that everyone can speak out without fear of disapproval of others on the team, and the time required from each team member is much less than that for the workshop. The disadvantages are that all the dependencies may not be identified and work may be missed.

The activities just described are not all related to breaking the work down, however doing them in parallel with the process of verifying your WBS makes sense. Team building is an additional benefit of bringing the team together in a workshop, especially if the members have not worked together before. Asking them to spend the amount of time that a workshop requires, several times before implementation begins will probably not be possible.

Principles for Project Success

Leadership Principles for Project Success

We all need and thrive for successful projects. But what exactly does project success mean? Is project success the successful and timely delivery within budget? Or is it the path to glory? Do results always matter the most? What else does project success mean? And what does it take to achieve project success? Does success fall from heaven? Is it limited to a lucky few who happen to be in the right place at the right time? Is it coincidence? Or can we actually plan success?image11

There is no doubt that good project management is a critical factor of project success. That is, a project cannot be run without project management, be it formal or informal. You need to have something that holds things together. Underlying is the assumption that we need some form of order to organize and run a project. Someone has to do something. In this sense, project management helps set a frame, providing structure and order to potential chaos. Without this structure a project leads to nowhere; it will most likely fail, if it ever takes off.

If you want to generate results out of seemingly chaos you have to build structure that enables creativity, innovation, and results. Project management provides excellent tools to build this structure. They are important and necessary for project success. But are they sufficient? I don’t think so. As a matter of fact, I claim that unless you gear them into the right direction, they remain ineffective. If you really want to secure project success you have to understand what it takes to set the right direction. Project management alone will not do the trick. What it takes is leadership – your leadership.

Without project leadership there is no direction in project management. Leadership is the decisive factor for improving the chances for projects to succeed. Consequently, effective project management needs to have a solid foundation based in project leadership. Without leadership, chances are that a project will be “just another project.”

Based on my own experience in project management and the review of literature on leadership, project management, business, systems, and complexity theory I have identified five simple yet powerful leadership principles which, if applied systematically, can help you pave the path to project success. The five leadership principles for project success are as follows:

Build vision
Nurture collaboration
Promote performance
Cultivate learning
Ensure results

Let’s have a look at each principle one at a time.

Principle 1: Build Vision

Sharing a common vision and goals and having the same understanding about tracking the progress towards this vision is one of the key factors in the success of a project and team.

A project vision sets the overall picture of your project. Project objectives qualify this vision, make it specific. Both project vision and project objectives are crucial for project success. Together they set the direction and tone of your project journey. They complement each other. The vision inspires your journey. It defines the purpose of your project.

The key to building vision is that people need to be able to relate to the vision in their daily activities. Give them the chance to identify themselves with the vision. Involve them in building this vision and participate in making it real. This helps build rapport and the necessary buy-in from those people to realize the project. Make them fans of the vision. Let it constitute their motivation and passion. Let them rave about it.

The story of a visitor who was curious about construction site illustrates the power of a common project vision. This visitor approached a group of workers to find out more about the construction. The first worker replied that he was a brick layer. The second worker told him that he was building a wall. Then he asked a third worker. This one explained that he and the other people in his team were building a cathedral. The interesting thing was that each worker was actually doing the same activity. Yet the motivations and their attitude differed a great deal. The third worker knew what he was devoting his time and effort to something big. His project may have been to build a wall. But it was the project vision of building a cathedral which enticed him.

A project vision without project objectives may give you an idea of the direction, but you may never get close enough to the destination to produce tangible results at a certain time. On the other hand, project objectives without a vision may describe the desired end result and time frame, but they cannot inspire the necessary enthusiasm in your team to drive the project to success. They do not form an underlying meaning for the work.

As a project leader you must make sure that both project vision and project objectives are in place. Project leaders do not start a project without a project vision and objectives. If you want to be or become a project leader, you either build vision and project objectives or make sure that both are in place, are crystal clear, and are mutually understood by every single person actively involved in the project. This is the meaning of the first leadership principle. Start with a unified vision and know where you stand before and during your project. Know your environment, know your potential, and identify your limits and overcome them. Build and involve your team and nurture effective collaboration across the board. This brings us to the second leadership principle: nurture collaboration.

Principle 2: Nurture Collaboration

A performing team yields synergy effects; the impossible becomes possible. This is why active team collaboration is crucial.

Project success is not about individual accomplishments. The project team delivers the project. As such, the team is the heart and soul of the project. Corollary, project success is, or at least should always be, the success of the team. Effective project leaders understand the value and huge potential of teamwork. This is why they actively nurture collaboration. They serve as role models and are part of the team. They thus actively participate and contribute to teamwork.

Collaboration is necessary for the team to achieve the vision and project objectives. By the same token, the project vision must include the concept of collaboration; it needs to be part of the vision as well as the project objectives. Collaboration is a means to achieve the objectives and thus to come closer to achieving the vision. It is a central element of every project. This is why vision and collaboration go hand in hand. You cannot move achieve project results without collaboration. On the other hand, collaboration without a common cause leads nowhere.

Collaboration is the juice of teamwork; it is what makes teamwork possible in the first place. It encompasses communication, individual and joint execution, as well as the delivery of results on both the individual and team level.

If you want to nurture collaboration you need to start with yourself. Be a role model to others: Share information openly. Give and accept open and constructive feedback. Be a good team player and work with your team.

Understand that the project is about the team. Project leadership becomes team leadership. It implies that if you want to be an effective project leader you have to be a good team player, too.

Nurturing collaboration can be hard at times. It takes a lot of effort and can be quite time consuming. The payoffs, however, are worth every minute invested. Having mutually understood and supported rules of engagement, characterized by open communication and effective collaboration, makes project life much easier. Once you have helped create an atmosphere of trust, team spirit, and fun, team synergy effects emerge. Magical things can happen, productivity increases, and the quality of the team’s deliverables is higher. Nurturing collaboration prepares the ground for performance on the individual and team level. As a project leader you want to cultivate this soil of performance. This leads us to the third leadership principle: promoting performance.

Principle 3: Promote Performance

Planning is good and important. At the end of the day you and your team have to perform. As a leader it is your responsibility to create an environment that promotes performance, on both the individual and team levels.

Building vision and nurturing collaboration are prerequisites for project success. Alas, they are useless if you cannot move your team to the performance stage. This is why you want to create an environment that helps promote performance. The following rules help achieve this.

Rule 1: Be a role model.

No matter what project you are working on, be aware that as project leader you are a role model to your own team and others. Act as such. Walk your own talk and be true to your own principles. Demonstrate authentic leadership.

Rule 2: Create the right environment.

If you want to promote performance in your team, take the time and find out what motivates each individual team member and the team as a whole. Discover what the individual team members and the complete team need to perform. Learn how you can help the team perform.

Rule 3: Empower your team.

You have to enable your team to do its job and perform. Give your team the power and all the information it needs to do its job and perform. Give your team the opportunity to excel and have an active hand in project success.

Rule 4: Develop a solution-and-results orientation toward problems and risks.

Performing teams focus on solutions and results rather than problems. A problem or risk is not seen as a potential show-stopper but a chance to learn and prove skills and competencies on the individual and group levels.

Rule 5: Invite productive competition

Productive competitiveness can actually help promote performance – provided that the competitiveness aims at improving team performance and is linked with collaboration and social sharing.

Rule 6: Let it happen

When you and your team have jointly built a common vision and developed collaboration rules, there should be no need to micromanage team members. Trust your team and let the team do its job.

Rule 7: Celebrate performance

“Look for behaviors that reflect the purpose and values, skill development, and team work, and reward, reward, reward those behaviors” (Blanchard, K. H., et al (2001). High Five! The Magic of Working Together. New York: HarperCollins. p. 190). Make sure that this celebration coincides with the successful project delivery.

Lasting performance can be achieved. It takes practice, training, endurance, and a results-driven attitude toward project challenges to develop and sustain it. Yet, performance and project success do not fall from heaven. You have to prepare and work for them, learning from mistakes and failures. There cannot be performance without training or learning. This leads us to the fourth leadership principle: cultivating learning.

Principle 4: Cultivate Learning

As humans we all make mistakes. Effective leaders encourage their teams to explore new avenues and to make mistakes and learn from them. An effective leader builds in sufficient time for the team to learn, create, and innovate.

As project leader, you serve as partner and coach for learning and information sharing. You facilitate learning. You are not the sole source of information. Instead, create a learning environment in your team. Set the expectation that you want everyone in your team to join and support you in cultivating learning for the purpose of the project.

Learning is not a one-time activity, say, in the form of formal training prior or at the beginning of your project. It is ongoing and should become daily routine in your team. Establish regular sessions with your team where you review past performance, share information about planned accomplishments, address and resolve impediments together. Invite external reviews. Outside views offer different perspectives; fresh and unspoiled perspectives. If they aim to help the team identify formerly unknown risks and issues and overcome them, external project reviews can be a great learning opportunity.

When you or your team make mistakes, learn from them. Correct your shortcomings, improve your performance, and continue to work toward accomplishing the project vision. Cultivate learning from the beginning of your project. It significantly increases the speed at which your team can perform and sustain performance throughout and thus secure delivery.

Create room for your team members to be creative, to try something new, share their ideas, and learn from each other. Plan in sufficient time for your team to think outside the box, beyond the known path traveled, and to find new avenues to reach the goals of the projects. Empower your team to perform, make mistakes, learn, and innovate. This helps reduce uncertainty as information flows more freely. Team members are not afraid of making mistakes. They see mistakes as learning opportunities and they help each other solve problems. Corollary, if you want performance to yield the desired results you have to cultivate learning. There cannot be lasting performance without learning, and there cannot be results without performance.

Principle 5: Ensure Results

Delivering results is both a prerequisite and an outcome of effective project leadership. Project delivery is a team effort, not an individual effort. The effective project leader builds and guides the team to deliver results by incorporating the first four leadership principles.

Ensuring results is not solely about end results. Neither is project success and project leadership. The fifth principle calls on us that in all our activities we keep the project vision in mind and produce results that benefit the purpose of the project. Project success is not defined by a single product or service delivered at the completion of a project. It is the accumulation of the many results yielded from each and every leadership principle. Vision, collaboration, performance, and learning are just as important. They culminate in results. When you talk about project success, the path to project results matters too. Corollary, an effective project leader always looks beyond the delivery of results.

The fifth principle of ensuring results reminds us that we have to make sure the results of the other four principles are aligned with the project vision and objectives. They have to serve the project purpose. Ensuring results is thus not an activity focusing only on the final project deliverables. It appeals to us that all of our project activities shall be results oriented, keeping the end deliverables in mind. It is a call for solution- and results-oriented leadership.

Ensuring results offer excellent learning opportunities, which in turn help boost collaboration, improve performance, give rise to innovation, and thus move us closer to realizing the project vision. Ongoing project results serve as a reflection of project leadership and how well the five leadership principles practiced. They reveal the true quality of team collaboration, team performance, and team learning. It is a form of quality assurance of effective project leadership for project success.

Dynamic Project Leadership

No single principle is the most important. It is the combination of all five leadership principles that helps secure project success. Building vision is the principle to start with, but you cannot achieve results if you do not embrace all five principles together as one system. Leadership is not merely the sum of applying the five principles. It is understanding and living the dynamics within each principle as well as all five principles as a unit.

If you want to gain a deeper understanding of one particular leadership principle, you need to account for the remaining four principles and how they relate to the one you are looking at.

Applying the five leadership principles in daily project life requires the project leader to practice all five principles constantly and consistently. It is an ongoing exercise. Depending on where you are in a project, there may be a stronger emphasis on one or two principles. But you cannot isolate one from the others. Holistic leadership comprises all five principles.

The five leadership principles serve as a guideline to effective leadership and how it contributes to project success. Following and practicing them is no guarantee for project success, but they make it more likely. They address the core of project success and thus improve the chances for success significantly.

Project success starts and ends with project leadership. However, as much as the leadership principles can be applied by every team member regardless of his or her role, leadership is not limited to a single person or role. We know that as project leaders we cannot succeed by ourselves. We need the help and support of our teams. This is why it is important to build teams and empower them to perform and deliver. Project success is not about individual accomplishments. It is a joint effort and should be treated and honored as such. Understanding the principles can be the first step toward project success. It is up to you to take this step and move forward.

Understanding Fundamental and Technical Analysis in Forex Trading

Understanding Fundamental and Technical Analysis in Forex Trading

To become a successful Forex trader you need to understand how to analyze the market. Market analysis in case of Forex Trading is usually done in two different ways. These are Fundamental Analysis and Technical Analysis. So what really is fundamental analysis and what is technical analysis? Let us understand what these terms mean and how can one use these techniques to trade in a better manner.

Fundamental Analysis: Fundamental analysis deals with analyzing the economic, social and political position of a nation as a whole to determine the value of its currency and to determine whether the currency’s value will rise in the near future or whether it will fall down. The main principle behind this is that if the economy of a nation is doing very well then its currency would also do well. Certainly the value of a currency of a nation which is having a growth rate of 10 % per year would be better than the value of a currency of a nation whose progress is very slow. Similarly the currency of a developed nation will have higher stability than that of a developing nation. Fundamental Analysis basically means that a good economy leads to higher currency value and a bad economy leads to a lower currency value.
Technical Analysis: Technical analysis deals with Forex Trading at the root or basic level. Technical analysis is the study of the price movement of a currency pair.By this we mean that in Technical analysis we analyze the price of a currency pair with respect to time and find out the change in the value of a currency pair over a certain interval in order to ascertain which is the best currency pair to invest in and at what time should the investment be made. One of the most important thing that one must learn or try to interpret is trend. A trend is a situation when the value of a pair is either falling or rising constantly. A trend can earn you money in forex trading. If you are able to find a trend and follow then you would surely gain from it. So it is important to find out trends and follow them to earn a profit.

From the above discussion we can conclude that Forex Trading has two aspects that need to be understood in order to gain an advantage over other investors as well as the market. Complete understanding of Fundamental and Technical analysis techniques can help you earn a continuing profit in the Forex Market.

Trading Analysis of Stocks Successful Results Revealed

Trading Analysis of Stocks Successful Results Revealed

Trading Analysis of stocks employs different tools and models to give investors and traders the best edge. The 2 principal tools employed are Technical and Fundamental Analysis.

The market activities of the last decade provide a good look at the merits of Technical VS Fundamental Analysis.

The Dow Jones Industrial Average started the decade of year 2000 at 10, 937.74, saw a high of 14,198.10, crashed to a low of 6,469.95 on March 2, 2009, partially recovered from its low and ended the decade at 10,572.02.

Similarly, the S&P 500 Index started the decade at 1,394.46 saw a high of 1,576.09 and ended the decade at 1,136.52.

The NASDAQ Composite Index fared not better. It started the decade at 3,961.07, saw a high of 4,696.69 and ended the decade at 2,308.71.

What a ride! Many people who panicked and got out at the bottom suffered huge losses. They also lost double because inflation did not follow the pattern of the Dow; it increased.

Those whose Trading Analysis of stocks was based on Fundamental Analysis were hurt miserably. Investors who were buying and holding securities over that period saw their portfolios shrink.

Even worse were those who panicked and got out when the market bottomed in early 2009 thereby suffering and turning huge paper losses into actual loses before the market recovered partially from the bottom.

The rebound off the bottom is actually astounding – over 60% in many cases as of this writing.

For younger investors, as painful as this was, they have time on their side to play catch up. However, older investors, especially those nearing retirement saw their 401Ks and other retirement vehicles crash and badly damaged putting their retirement income in jeopardy.

Was there a way to sidestep this market collapse, especially in the final years of the decade? Yes there was! Doing a stock trends analysis or pattern analysis of stock prices and movement would have given a clue.

Proponents of Technical Analysis ride the Trend whether the Trend is going up or down and get in or get out at Support or Resistance.

Technicians following the trend would actually have made money going down and on the way back up.

It will be worthwhile to point out some of the main differences between Fundamental Analysis and Technical Analysis.

1. Fundamental Analysis focuses on:
A. Macro Economic Factors

Supply and Demand
Other Market Data

B. Company Specific data like

Valuations including Ratios of Price/Earnings(P/E), Price/Sales, Price/Book, PEG Ratio
Profitability: Gross Profit Margin, Operating Margin, Net Profit Margin
Growth Rates: EPS and Revenue
Financial Strength: Total Debt/Total Capital, Quick Ratio
Effectiveness: Return on Equity, Return On Assets, Return On Investment

2. Technical Analysis

Price action
Chart patterns
Volume, stochastic analysis and open interest
Human Psychology

Fundamental Analysis is very important and it predicts the long term direction of the stock. However, it has a serious flaw. It usually works with a lag. It is also difficult, even impossible perhaps, to tell when it will be driven by it’s fundamentals. The eminent Economist John Maynard Keynes put it best when he said that markets can remain irrational far longer than people can stay solvent.

Technical Analysis on the other hand offers an immediate clue as to the stock’s direction which is signaled by the behavior of the stock price. Technicians also believe that all the fundamentals of the stock are baked into the price anyway and just studying the price pattern will also justify the fundamentals.

Although there might be some credence to that, what is even more important is the fact that Technical Analysis has so many followers and users all of whom are observing the same Trends, Support and Resistance and they behave the same way based on the same observations.

In Trading Analysis of stocks, technical stock market analysis provides the rationale that makes Trends, Support and Resistance ultra important. They are self fulfilling particularly Support and Resistance Levels especially when they occur at nice round numbers.

This is because many traders do the same things at the same time resulting in a herd mentality thus confirming these Support and Resistance Levels. So if you can identify these points, you can benefit immensely.

Hence the reasons for big bounces off Support and Resistance. To get a step ahead, many professionals try to preempt some of these events.

Trading Analysis provides different but effective trading strategies depending on ones psychological make up.

To learn more about Trading Analysis, GO TO [] for more detailed information.

Winston has extensive knowledge and proficiency in the Financial Markets. He started trading in the Commodities Market since the mid 1990’s and has since become very active in the Stock Market.

Technical Analysis For the Advanced Options Trader

Technical Analysis For the Advanced Options Trader

Technical analysis often plays a large part in the determination to enter or exit stock trades in the short and intermediate term. It can also play a part in determining entry and exit of long option trades (buying calls or puts). What about using technical analysis in determining entries and exits of more complex options strategies such as vertical spreads, calendar spreads, iron condors and diagonal spreads? In this article, I want to specifically address the use of technical analysis in advanced options trading.

The problem with technical analysis

Even the best market technicians can only tell you what is likely to happen. This isn’t the fault of technical analysis (TA for short) or in the practitioners of it. It is simply a fact that must be reckoned with. TA is much more like checking the direction of the wind than a predictor of which way it will blow tomorrow.

While TA may be able to tell you what is likely to occur or what is going on at the moment, it can’t tell you your probability of success in a trade. There has been some work to quantify the accuracy of different technical indicators, particularly in the area of chart patterns, but that still doesn’t help with the analysis of the trade itself.

One other danger of technical analysis is the temptation to pile on a bunch of indicators in the hope that it will somehow give us additional insight or edge in trading. I’m not saying the employment of stochastics, MACD, Bollinger bands and the like aren’t important but their use in the overall trading strategy must be understood.

Technical analysis must also be correlated to a timeframe to be effective. In other words, you must know the timeframe you are working in. Is it short term (days), very short term (intra-day), medium term (weeks) or long term (months). To be effective, you must understand the timeframes involved in the options trade and ensure that technical analysis is done for the same timeframes.

Don’t get me wrong, I’m not against using TA for advanced options trading. In fact I’m a firm believer and practitioner of it. However, it is important to realize the limitations as well the benefits and uses. In fact, let’s take a look at some of the benefits.

The benefits of technical analysis

Technical analysis can be used to time an entry or trigger an exit. I often use basic support and resistance levels to do just that. In fact, I believe the combination of TA to time an entry combined with probability analysis for choosing my position actually improves my overall success. Also, when I have a clear support or resistance level that can be used as an indicator that my initial analysis was wrong, I often exit a trade earlier keeping more of my money for another trade.

One other area of TA I find beneficial is in determining overall market outlook. Remembering that timeframe is important, I often use TA to determine what the medium term trend is. This can help me determine what kinds of trade strategies to best employ over the coming weeks.

I’m sure there are other very successful options traders who have found additional uses for TA. In fact, I’m sure there are as many ways to incorporate technical analysis as there are strategies to use them on. That’s what makes trading so interesting. In fact, networking with other successful traders can be an important factor in determining your own trading style.

Knowing how and when to use technical analysis

Ultimately, the determination of how and when to use technical analysis is up to the trader and the trading plan(s) they are using. Understanding the limitations as well as the benefits of technical analysis is a great start. From there, experiment with different approaches using some form of paper trading until a clear strategy emerges.

It’s best to start with basic support and resistance analysis. Keep it simple. Use only the indicators that you are comfortable with and that help in making basic trading decisions. Ultimately though, you as a trader must make that decision to enter or exit the trade based on your evaluation of all the factors.

Putting it all together

In concluding this article, I wanted to provide 4 key tips in using technical analysis for advanced options trading.

Determine what technical analysis tools will be used. It’s easy to be distracted by all the indicators that exist. Paper trade and experiment but start simple. Support and resistance should be your first and primary indicators. Everything else should simply be confirming indicators. Don’t have so many indicators that they drive you to indecision.
Determine timeframes you will use for your technical analysis. Make sure the TA tools used are consistent with the timeframe you are trading. Most advanced options strategies last weeks to months. Make sure the timeframe analyzed is the same.
Put your strategy for technical analysis in your trading plan. Once you decide how and when to use TA, make sure that it becomes part of your trading plan for each strategy employed by writing it in. Having a written trading plan you can look at frequently is a great help to being consistent with that strategy and consistently using TA according to your plan.
Stay flexible. Remember TA isn’t an exact science but more of an art. As you practice, you’ll get better. Remember also that the outlook at one point in time can change in a matter of days. Be prepared to change your outlook if the technical indicators warrant it. However, don’t let small changes drive you to flip-flop in your trades. Continue to take trades for sound reasons and exit for sound reasons.

There is a lot of great information on technical analysis out there. I’ve summarized some of the basic techniques on the TA page of my website at In addition covering how I use TA in my trading there, I’ve included references to some great sites. Be sure to check it out.

Remember to investigate, plan, experiment (with paper trading) and implement technical analysis into your options trading strategies. It can seem like a slow process of getting there but the confidence and consistency you achieve in your trading will be well worth it.

Data Mining and Financial Data Analysis

Data Mining and Financial Data Analysis


Most marketers understand the value of collecting financial data, but also realize the challenges of leveraging this knowledge to create intelligent, proactive pathways back to the customer. Data mining – technologies and techniques for recognizing and tracking patterns within data – helps businesses sift through layers of seemingly unrelated data for meaningful relationships, where they can anticipate, rather than simply react to, customer needs as well as financial need. In this accessible introduction, we provides a business and technological overview of data mining and outlines how, along with sound business processes and complementary technologies, data mining can reinforce and redefine for financial analysis.


1. The main objective of mining techniques is to discuss how customized data mining tools should be developed for financial data analysis.

2. Usage pattern, in terms of the purpose can be categories as per the need for financial analysis.

3. Develop a tool for financial analysis through data mining techniques.

Data mining:

Data mining is the procedure for extracting or mining knowledge for the large quantity of data or we can say data mining is “knowledge mining for data” or also we can say Knowledge Discovery in Database (KDD). Means data mining is : data collection , database creation, data management, data analysis and understanding.

There are some steps in the process of knowledge discovery in database, such as

1. Data cleaning. (To remove nose and inconsistent data)

2. Data integration. (Where multiple data source may be combined.)

3. Data selection. (Where data relevant to the analysis task are retrieved from the database.)

4. Data transformation. (Where data are transformed or consolidated into forms appropriate for mining by performing summary or aggregation operations, for instance)

5. Data mining. (An essential process where intelligent methods are applied in order to extract data patterns.)

6. Pattern evaluation. (To identify the truly interesting patterns representing knowledge based on some interesting measures.)

7. Knowledge presentation.(Where visualization and knowledge representation techniques are used to present the mined knowledge to the user.)

Data Warehouse:

A data warehouse is a repository of information collected from multiple sources, stored under a unified schema and which usually resides at a single site.


Most of the banks and financial institutions offer a wide verity of banking services such as checking, savings, business and individual customer transactions, credit and investment services like mutual funds etc. Some also offer insurance services and stock investment services.

There are different types of analysis available, but in this case we want to give one analysis known as “Evolution Analysis”.

Data evolution analysis is used for the object whose behavior changes over time. Although this may include characterization, discrimination, association, classification, or clustering of time related data, means we can say this evolution analysis is done through the time series data analysis, sequence or periodicity pattern matching and similarity based data analysis.

Data collect from banking and financial sectors are often relatively complete, reliable and high quality, which gives the facility for analysis and data mining. Here we discuss few cases such as,

Eg, 1. Suppose we have stock market data of the last few years available. And we would like to invest in shares of best companies. A data mining study of stock exchange data may identify stock evolution regularities for overall stocks and for the stocks of particular companies. Such regularities may help predict future trends in stock market prices, contributing our decision making regarding stock investments.

Eg, 2. One may like to view the debt and revenue change by month, by region and by other factors along with minimum, maximum, total, average, and other statistical information. Data ware houses, give the facility for comparative analysis and outlier analysis all are play important roles in financial data analysis and mining.

Eg, 3. Loan payment prediction and customer credit analysis are critical to the business of the bank. There are many factors can strongly influence loan payment performance and customer credit rating. Data mining may help identify important factors and eliminate irrelevant one.

Factors related to the risk of loan payments like term of the loan, debt ratio, payment to income ratio, credit history and many more. The banks than decide whose profile shows relatively low risks according to the critical factor analysis.

We can perform the task faster and create a more sophisticated presentation with financial analysis software. These products condense complex data analyses into easy-to-understand graphic presentations. And there’s a bonus: Such software can vault our practice to a more advanced business consulting level and help we attract new clients.

To help us find a program that best fits our needs-and our budget-we examined some of the leading packages that represent, by vendors’ estimates, more than 90% of the market. Although all the packages are marketed as financial analysis software, they don’t all perform every function needed for full-spectrum analyses. It should allow us to provide a unique service to clients.

The Products:

ACCPAC CFO (Comprehensive Financial Optimizer) is designed for small and medium-size enterprises and can help make business-planning decisions by modeling the impact of various options. This is accomplished by demonstrating the what-if outcomes of small changes. A roll forward feature prepares budgets or forecast reports in minutes. The program also generates a financial scorecard of key financial information and indicators.

Customized Financial Analysis by BizBench provides financial benchmarking to determine how a company compares to others in its industry by using the Risk Management Association (RMA) database. It also highlights key ratios that need improvement and year-to-year trend analysis. A unique function, Back Calculation, calculates the profit targets or the appropriate asset base to support existing sales and profitability. Its DuPont Model Analysis demonstrates how each ratio affects return on equity.

Financial Analysis CS reviews and compares a client’s financial position with business peers or industry standards. It also can compare multiple locations of a single business to determine which are most profitable. Users who subscribe to the RMA option can integrate with Financial Analysis CS, which then lets them provide aggregated financial indicators of peers or industry standards, showing clients how their businesses compare.

iLumen regularly collects a client’s financial information to provide ongoing analysis. It also provides benchmarking information, comparing the client’s financial performance with industry peers. The system is Web-based and can monitor a client’s performance on a monthly, quarterly and annual basis. The network can upload a trial balance file directly from any accounting software program and provide charts, graphs and ratios that demonstrate a company’s performance for the period. Analysis tools are viewed through customized dashboards.

PlanGuru by New Horizon Technologies can generate client-ready integrated balance sheets, income statements and cash-flow statements. The program includes tools for analyzing data, making projections, forecasting and budgeting. It also supports multiple resulting scenarios. The system can calculate up to 21 financial ratios as well as the breakeven point. PlanGuru uses a spreadsheet-style interface and wizards that guide users through data entry. It can import from Excel, QuickBooks, Peachtree and plain text files. It comes in professional and consultant editions. An add-on, called the Business Analyzer, calculates benchmarks.

ProfitCents by Sageworks is Web-based, so it requires no software or updates. It integrates with QuickBooks, CCH, Caseware, Creative Solutions and Best Software applications. It also provides a wide variety of businesses analyses for nonprofits and sole proprietorships. The company offers free consulting, training and customer support. It’s also available in Spanish.

ProfitSystem fx Profit Driver by CCH Tax and Accounting provides a wide range of financial diagnostics and analytics. It provides data in spreadsheet form and can calculate benchmarking against industry standards. The program can track up to 40 periods.

Finding an Accounting App to Suit Your Business

Finding an Accounting App to Suit Your Business

Cloud computing is the product of innovation in technology that has changed the working environment altogether. Gone are the days when one has to be physically present in the workplace. The application should have adapted to times and be providing this feature – otherwise, the advantages associated with it like collaboration with other co-workers, security and disaster recovery, among others cannot be reaped. This makes online accounting possible.

The app should be mobile friendly as well as operable in multiple operating systems. A business cannot be expected to be run in a single platform. Rather, with cloud computing, various devices can be used for administration purposes as well as for other purposes. Therefore, cross-platform compatibility is a must. The interface should be conducive for the operation of the application. This includes easy to use home page, a search bar and tabbed interface. In addition, customizable feature should be present so that the business can include its own theme in invoices.

Security of data generated on the course of business should be guaranteed by the application. Business should not be worried about the vulnerability of data – from natural calamities or cyber-crimes. Integration especially with banking system is a desirable feature because this way the transactions of business to the vendors and from the customers becomes quicker. Also, payment of the amount that has been calculated from the transaction can be made with a few clicks and the accuracy can be ascertained.

Acceptance of checks, credit cards, debit cards and PayPal as well as direct deposits from the customers will result in them being happy – the ultimate target of any business. This is another feature which is a must because every mode of payment feasible should be incorporated. Reports that are generated should be exportable in PDF format so that printing is made easy. The reports should also be able to be generated on demand of the menu and manual should be provided to the businesses so that normal problems can be solved by going through those menu and manual.

Continuous improvements and updates should be another feature so that latest threats are addressed as well as ensuring its compatibility matched with the latest available hardware. Pricing of the application should be charged on the basis of the features that have been used – the number of transactions, depending on the turnover of inventory, or the number of employees, payroll calculation purposes, as the maximum limit for example. This will make it affordable to small businesses.

Free trial assists in deciding whether the app meets the demand of the business. While some may need it for lotto inventory, other may need fuel inventory to be tracked. The user should be allowed to familiarize oneself before making sure whether or not to stick with it in the long-run.

Cash for Your Annuity Payments

Cash for Your Annuity Payments

Getting the cash to pay for your son’s college, or to pay for your new house is something you can’t simply ignore. While you can apply for a loan, often times the interest may not be very favorable for you and you end up paying more than the amount you borrowed. However, if you are a recipient of an annuity payment, selling a part or the whole of the payments may be enough to answer for your immediate financial needs. In fact, most annuity recipients sell annuity for this reason.

While it is true that you can find several annuity buyers that are interested in buying your annuity payments for lump sum of cash, not all will be willing to pay most cash for your annuities. So it is best that you carefully choose to whom you’ll sell your annuity. There a few steps you need to follow to sell annuity for most cash.

Do Research

The first step you need to do is to make at least a short research about your annuity payments. Does the agreement you signed allows you to sell annuity payments or transfer your rights to a third party? Does it require court order so you can sell your annuity? How much does your annuity cost? It is best that you also consult your lawyer, or your financial adviser when deciding whether it is favorable for you to sell your annuity or not.

Ask for Quotes

To help you find the best annuity payments buyer (the one who is willing to pay most cash for your payments) you need to have an idea how much will they pay for your annuity by asking for their quotes. You can either personally visit them at their office, or call their business line, or you can visit their online website. Either ways, you can secure the quotes you need to better decide on the matter.


Choosing the highest bid does not end the process. You also need to verify if they will be charging you with other fees in connection with the sale of your annuity. Some annuity buyers would usually offer huge amount of cash for it only to find out that they have to deduct from that amount the fees needed for the processing of the sale of your annuity. Compare the fees and the amount these annuity buyers offer you. Consulting your lawyer or financial adviser will be very helpful in this stage. Once you have cleared and compared everything only then you’ll finally sell annuity payments.

How Do Annuities Work

How Do Annuities Work

The term “annuity” basically refers to an arrangement that is made between two parties. One of these parties is generally an individual, who gives a sum of money, called the premium, in periodic payments or a lump sum, to the second party, which is often an insurance company. In return, the second party gives a steady stream of payment to the first party over a specified period of time that is stated in the arrangement.

Annuities consist of long term products and are a very straight forward approach to funding your future. However, before purchasing, it’s important for you to have a good understanding of what you’re buying.

There are two major kinds of annuity agreements. The first, called annuity certain, specifies the certain period for payment. For example, suppose you pay a certain amount of money to an insurance company for a twenty year annuity. You make an agreement whereby monthly payments are sent out along with a percentage growth, over the period of annuity. You will be a paid a specified amount of money, every month, till the arrangement comes to end.

The second type, called the life annuity, is most commonly employed by people who have retirement savings in mind. In this agreement, you pay a lump sum to the insurance company and they pay the money back to you at a specified amount every year for the rest of your life. Life annuities, when done in conjunction with a charity or a nonprofit organization, can offer extra tax benefits.

Among the many things you need to know about investing in an annuity is that it has mainly two types of balances that are running simultaneously. The first balance is your account value, also known as the contract value. This refers to the amount of money available to you at any given instance of time. It depends largely on the performance of the investments within the annuity that are also known as sub accounts.

The second one is the benefit base or the income base which is considered more as a hypothetical account. It is used to represent the amount of money that determines the annual guaranteed income one can draw from the annuity.

It is important to be aware of the differences between these two as sometimes you will come across variable annuities surrounding a guaranteed return that apply only to the income base and not to the actual account value. Income value is not the amount you can cash out. The only balance that you can withdraw when needed is your account value which may or may not be higher than your income base.

From time to time the insurance company will compare your account value with the income base. This, in most cases, is done on the anniversary date of the contract. If your account value turns out to be greater than your income base, then the insurance company will increase the benefit base such that it will be equal to the account value.

What Is A Secondary Market Annuity

What Is A Secondary Market Annuity

The term secondary market annuity or SMA in short refers to an in force, period certain payment stream. The term secondary market is used to differentiate these existing payment streams from primary market period certain annuities.

While there are payments in the marketplace that originate in lottery prizes and individually owned annuities. It’s important to clarify that most secondary market annuity transactions stem from structured settlement compensation. In example legal claims for personal injury or medical malpractice. It’s also important to note that these transactions have nothing to do with life settlements. Life settlements make bets on actuarial tables, but the secondary market annuities discussed here are period certain guaranteed receivables.

So, what are structured settlement annuities?

The majority of SMA’s in short are guaranteed payment streams backed by period certain annuities. These SMA’s are from major carriers that currently pay compensation for damages, injuries, or legal claims.

When an injured party elects to take their award as a structured settlement over time, U.S. tax code IRC 130 allows the plaintiff to receive their compensation free from income tax. By opting for a structured settlement over time rather than a lump sum, the plaintiff can receive both the award and the earnings of that award without tax liability.

Defendants typically use a qualified settlement fund or other vehicle to shift compensation for the injured party to a major carrier in a tax qualified manner. Defendants then generally purchase a life policy with period certain annuity to fund the specific payments due under the settlement. The qualified fund or an affiliated entity of the defendant is the annuity owner, and the plaintiff is the payee.

Structured settlements are a useful tool in the legal system that help provide for minors, help injured people support themselves if they are not able to work, and help reduce reliance on public support systems.

However, times change and often, payee’s under a settlement have a need for cash. As the payee’s are not the owners of the annuity, their payments are not convertible directly with the carriers into cash. Sellers of payments turn to factoring companies to purchase some or all of their future payments for cash today, and must accept a discount rate for those future payments.

Why the high yield?

When sellers sell at a discount, a secondary market annuity is created that offers the new recipient a higher-than-market rate of return. Buyers of secondary market annuities can receive yields 1 percent to 4 percent higher than comparable primary market, period certain annuities of similar credit quality.