Get MORE CAPITAL To Trade Forex! - Michael Berman | Trader Interview
Our idea was very simple if, you can identify where, people make mistakes. And. You can help eliminate those mistakes but by, default, you'll be more profitable you. If, you're going to lose money you still going to be as manic you can just lose less so. What. I don't believe in is I don't believe there's a Holy Grail. Welcome. Back everyone is the entity and the offices are vacci trader in, Sydney. With Michael Berman how's it going Michael nice. To meet you it's very good very good thank you for welcoming me here it's a beautiful view we have on the whole. Sydney which I really love this view is always the best about these offices, a top, floor that's awesome so, Michael tell me a bit about yourself what to do just real dragons people know who you are sure. It's. You know I've been trading for more. Than 15, years I, sort of trained in a hedge fund well firstly I started an investment, bank as a prop trader and, and. Then, from, there I progressed, and set, up a fund and was running a fund and. That. Was back in South Africa, and I moved, J 11 years ago to Australia, and, I. Once. Again started credits and proprietary, capital, for some. High net worth individuals. And along. The way in 2012. My. Portland I decided, to. Set up an emerging. Manager platform. Where we one of the company, was called rapper stood. For risk and profit analyzer and the idea was that we. Would incubate. Take, the experience, that we had built up over the years of trading ourselves, and incubate. Other traders and rapper. Took. On another. Form it was eventually merged. And bought out by another by. An American, firm and, my. Partner, Vlad and myself were. Left to, do our own thing and in. 2016. We can help with separation, and I. Can talk a little bit about I'm, sure yeah. That. Doesn't address him by the way which it's. On today yeah yes sir so, we. We are we, are traders. First, and foremost not just. Or. Salesman. And the toughest, love is trading, and. I. Know. How hard it is and, I. Know what it's like to, eat what you kill effectively. Which is trading you you. You know you're only going to are you gonna eat well if you make profits. From. I think. We bring a lot of that, into, what we do in South Asia now so, I want to go back in time a little bit and what. Was that first experience, for your trading did you start on your own you start with fun, he said you weigh four prefer me how did that happen exactly that's, a good it's an interesting question so it actually goes back a long way and I. Started. Trading, with my, bar mitzva and he said as a Jewish boy. Become. A man at 13, and typically. Have a big party and receive. Money. And. So. With, that money I started, my mother, what. My father's a businessman, and he. Wasn't so interested in stock market, but, my mother was and and. I remember brought my forehead age 13, up what my first show, stock was a manganese. Mine. And, kind. Of from there I was always trading, on and off doing, doing. A little bit of this and a bit of that but certainly. No no. Particular. Fiat. Style, it was it was reading. The newspaper I was one of those curious. People, I studied the newspaper from cover to cover and thought. I knew something about the markets, nice. And how did that evolve to you being in a profit. So. Yeah. So how, it happened, was my. Career post. University, was in commercial, real estate I was, an asset manager, and and a developer, and. And. I was really, enjoying a great career, in in the space and and. But. We were part of a public company and then, I started I started, wondering, how, will we do as a public company in a market downturn because, at the end a property's. Cyclical, its interest rate dependent. And interest, rates go up and they go down. They. Do that any longer cycles, but I was, trying to figure out a way how we could make money in any market, condition, and that's, when I became aware of. Shorting. And all that kind of stuff so I made. A pitch to the. Executive. Board at this investment bank I was working it and said. Look I've got these ideas and all this transept I said go do some research and, put. A board paper together which I did the black business plan and. I. Never. Looked back basically. And they, said okay we'll set you up and give. You some, capital with, risk. Metrics and suddenly I was in the trading floor with gas trading S&P. Futures and, options and all this kind of stuff and you're very little I. Just, knew my thing, like ah I'm. Quite a intuitive.
Type Of person and. Some. People argue that that's. Like an, excuse for not having a system but um. Yeah. I figured. So, I called my style of what unity, theory which was simply, our traded fundamentals, or traded technicals, I and. I traded Kwan's and I put a behavioral, overlay, on top of that so it. Sounds like a mouthful, but it. Kind of worked for me and my trading returns, are really good and. Got. Me you know got me going I've. Got, a bit. Of a background in average team behavioral, finance. I'm. One of those kind of guys who likes to, read. A lot and. You. Know if you and, today in today's world, with the internet it's, quite incredible because. You've got you've. Got information. At, your fingertips you can you. Can follow on Twitter and whatever social media you can hear it from, the horse's mouth and, I'm, a great fan of podcasts. I'm. Listening to quite a few at the moment so you can you know you can hear all the way up from Jeff. Bezos talking, about Amazon you can you can hear what's going on in people's lives and. I think, so yeah it's. A little my background yeah right I think the other side to this the informations, the fact that you can be overwhelmed pretty fast by because it's just two minutes too many, things out there yeah, so, which, is interesting because that that, actually was, the. Whole, philosophy behind. Secretion. And if I can. Maybe just use. That as a slot segue. Internet provider, launchpad in to describe insulation. When. We when we started, saturation, in in. 2016. I, mean we, launched it in June 2016. And in fact him just. The. Names equation, stands for psychology, and equation, so my partner, vladimir. Krutov who, was is, a mathematician, so he handles the question in secreta, on the psychology side, and he's the equation, side of, the, partnership, but. And. We've been working together for nine and a half years so there's a lot of. We've. Been collaborating and we understand, each other well, so we I think we're quite a good, team, in. Terms of how we run the business and, what we bring to it but but you mentioned. The word information. Overload, and that, was precisely the point when we launched it. Dashboard. Was even more cut back than it is right now we said we basically said, less. Is more. Only. Focus, whatever, we're going to show you is important, stuff the reason is just, noise. And. Yeah. We've. Evolved, some whites and we we. Not as purist, as we were in the beginning, because. People genuinely. Needed certain, but, some of information, even we did and then. They would go to another, platform. For, that information looting, and let's, keep it in-house and take. Away this need to jump around into all these different applications rather. Give it serve, it up but most importantly, focus on. On the, most important, stuff yes because. We. Are all buffeted, by all this data, that's coming, through. Most. Of its not important. Sure so easily share sometime was like all these tasks and things I look at but. It can be very easy too much too much time that they don't really need to have so. I want you if you pull like tell, them about what it's a question cuz I've had an idea more recently with been kind. Of show me around everything, yeah that what it's about and kind of what I can expect with this so we, when, we had, this black blank canvas, in 2006. It was the end of 2015. Beginning. Of 2016. We had this blank canvas what, do we want to do we've, come from a. Trading. Background, we've come from an incubation, platform. And. We've never like specifically. Built software for. The retail trader and what do we want to achieve when. We set out toward. Salvation our, goal was simply to help, traders make more profits, and I. Say help traders make more profits not, this, is no Holy Grail we will never see, an application as, some sort, of money-making. Platform. Software. Idea. Was very simple if you can identify where, people make mistakes. And. You can help eliminate those mistakes but by, default you'll be more profitable you, if, you're going to lose money you're still going to be as many you can just lose less so. What. I don't believe in is I don't believe there's a Holy Grail there's, no there's. No one Saul there's no system, that's going to make money continuously. And, and. You've. Got to understand, that I mean this, sounds like I'm talking against, trading. Better one, of the things I like to try, and emphasize to. Traders. Newbies, even. To people who've been around the block is do, you realize that it's. How. Tough this game is it's a zero-sum game to, be frank, because, somebody's.
Winning Somebody's, losing when you trade in derivatives. There. And then, you factor in transaction. Costs, the, net the, net expectancy. For someone who trades forex. Or futures. Is, that they're going to lose money so. You've. Got to somehow find, yourself, in the, winning. Camp and. It's. Difficult so anyone who tells me they've got you. Know they they. Can with, high. Degrees, of confidence. Say. They're going to make money. Well. They've got a massive edge, this is a very very competitive. Industry, and you, up against, the biggest brains the, biggest bangs you. Know all. People. Who got access to information flow, that you don't know all that so the odds are heavily. Stacked, against you've got to see if I make money just, got to realize that, that, your, edge, is, around is is. On the margin like you you will only have a slight edge and it's. Up to you to cultivate that edge yeah and put it into profit, and the thing is if you don't improve then, you kind of fall behind and it can't become better correct. So i guess i've given you a long answer but in short the, reason we started this equation was to help traders avoid. Their mistakes but, that that. Become more profitable and then what, happened was it was a kind of it, just, evolved, as we, grew, as a business, that we had previously incubated. Traders were building all these analytics, and people, said to us well point, you create. Some incubation. Platform, and again, and all that and before we knew it we, had investors. Who wanted to allocate, the capital, to traders and, we. We now I'd. Say the best way to describe this equation, is twofold we, software, for. Analytics. We analytics. For traders. But we will send incubation, platform, and very soon we'll be I know we have been saying it for some time but we've been trying to get, all the regulatory issues out of the way and and, make. It a great, offering, where we'll be a, puppy. Trading, platform, or let's say where people can invest in other traders. Who've. Come through our system, and I think one of the the main, differentiators. Between psycho. Asian and anyone. Else is we. Back everything around us, so we've got this thing called the South Asian school and before in, our previous company, we, advocated. Close to sixty million dollars, and it, was based on the wrapper school so I think some. Of your. Viewers. Will appreciate this, kind of thing because I've been there on the other side where you've got to go through all jump, through all these hoops you. Go meet with people. Who are allocated, as a capital, and then do, they're like you don't then do they believe your story don't they did you go to the right University, you. Know are you, whatever-whatever. Did you work at Goldman, or Merrill. Or who's um, how, few people have actually done that so we, said let's, build something that's a pure meritocracy its, merit-based we. Actually don't care if you went to university or not will engage where, you worked before and. To, a large degree we don't really care how much money you manage it because we. Only interested, in one thing is. Do you have skill oh, and. In, our we call it skill another name for it is age can, we decipher. Through our algorithms. Whether, you got edge and, how. You manage it now what's your risk management like, and if, you are somebody that shows, that you've got merits, and you got a score above a certain threshold will. Allocate money, to you and, there's. No interviews, and. Frankly. Your, dress code is irrelevant as. You can see exactly, in. The most, best-dressed and I didn't shave this morning sir you'll.
Forgive Me if. I don't look professional, but yeah but I think, in all that doesn't matter yeah, yeah, traitors yeah correct, so we're, not interested in that kind of stuff so, yeah. That's our differentiator, and we put a lot of value into. Developing. This algorithm, that, measures. These different things so you know we're not a team just two people we're not just flared and myself, who. Both got PhDs but, we've got a team now of 23, people and, when a science team. We've. Got a database of connected. Accounts, now with over a hundred and fifty thousand. Empty. For retail, accounts or, most, of retail or herbalism some. Institutional. Within. There but the point being is, that we've, got access to information we've, got access to smarts, and we think we've, built a pretty. Damn, good algorithm. And measuring the. Probability. Of you achieving success, in the future, and, it's not and, it's no guarantees, yeah but that's just not some thing to be able to do to be able to calculate. A score it's amazing some numbers. Of course yeah, and predict, that that's that's amazing, I think that that's a big thing so tell, me if I'm wrong, or if, I'm missing a point but the weight force that you pull they connect their accounts you 74, through its, equation yeah then they will get a score they have to have it of course a track record or a six to 12-month oh so. Then they get it scored no so so. You correct you nemt. Fault broker can connect us a creation, we've. Got a strategic, partnership, with XE, traders so we have a few, extra bits. And pieces that in, terms of update speed and, access. To our premium. Tools free, etc. But. Anyone. Can connect, an account and you. Need it our, system needs 30 trades before. It will score you so, you, could get scored on the first day if. You do more than 30 trades, and. And, then. There's a filter Pro and a filter process so, if, you want to get into our incubator you. Need a score. Of 75. Or more and a track record of six months although. If you've got a lower. Score but a tracker could have won you so if you've got to score 65 or more and you've, got a one year track record you can get in and it. Doesn't matter how big your counters, assume that's a simple process we. Incubate you with $10,000. Standard, so and. And. Then, there's a progression process, from from, Inc you, call it the incubator phase and from. There you, will progress, to an accelerator, phase and, so. You'll be two months in the incubator, two. Months in the accelerator, and if. You progress, the various, steps that you need to progress will, just maintain your school it's with that and you'll. Make it into what we call the pro phase, and we. By the way we do pump up our allocations, to, you along the way and and. Then, if. You're in the pro phase we, will then take you to our, we, want to take. You to our entire audience. Where you people can copy you and we open you up to the broader public now, that that's the leg that we haven't implemented, as yet due, to did in the right regulatory framework, but, we've got, 15. Plus pros and. What. We think is is. Going to be really helpful because, copy. Training, or social, trade has got a bad rap yeah, and rightfully so firstly, a lot, of the platform, to promote people, with the highest return so you've got a thousand percent return and. You'll. Get. The top of the list and everyone will invest, in you and they'll lose all their money because and, not. To say that you can't it's. Unlikely to maintain, normally. If you've made. A thousand percent you've been. Pretty risky along the way so yeah, we. Don't from for, my desecration. Schools got a risk-adjusted. Component. To it and not. To say we won't allocate, to people with really high, returns but that's our probably what, we promote and, and. Yeah I, mean we will, provide, invent. Like people who want to copy people, with, traders who we think have got the best probability. Of success going, forward so, it's kind of like Moneyball, yeah. We've, been allocated. I think. We've. Allocated to, more than 45. 50 people in the year that I think you badges been running we've had I mean, 12 people blow up already, but our program. Is still positive we'll be profitable. And. And. The idea is to spread it across. Multiple. Traders, because you. Know, the. Guy with a higher score this, little probability is going to go out so you don't put all your money with, the top guy you want to spread it around, diversification.
For Those of you haven't studied. Finance. I. Said. I'm. Not mistaken I hope I'm not messing this up now but, Aaron. Michael it's the Nobel, Prize winner, you, know founded, Modern Portfolio, theory. Is, he said the group the greatest. The. Greatest acid, in well. The, greatest described discovery, is, is, diversification. That's, the one thing that really, adds value, it. Also I like, it into academia can also have a diversified. Take. Away the edge from there but. Yeah. We, believe. Our platform, by full train traders. And kind. Of giving a stem. Will. Help other investors, who want to get. Involved have, some very decent to copy yeah. This also that's that's very good and the thing I could sigh, question it's like two things first of all you're with the broker which means that it's, the famous if just one reliable and the bars of entry are not that big of a platform you, have seen places with folding in egg $50,000. In the account it because there's valid, which. Calf doesn't make sense or places we have to pay you, to be able to be they, considered as valid also yeah. I mean, correct. Yeah. We know, we're not about that but so. I mean there's quite a lot happening, on this equation side because we've coming. Up for our three third. Year anniversary, so. We we've, got some exciting new tools coming through but if I can just describe. Some. What you know we launched as an alert system with, alerts within anywhere you would making mistakes and we still got those and, there's built-in alerts, and and you should take note of them in it when, it tells you when, it alerts you as much. As you don't want to hear, it it's. Based. On hard, facts and. That is science we've got you, know as I said we'll have a hundred thousand, accounts where we've been able to see okay in no circumstances. It, like it's likely. You're gonna lose, money it's, going to lead to losing money so, people, who are who, observe, and take note of our alerts. Do. Better and we get stats to prove that that, people. Who've been, if we take a blood, sample of people who don't use I question and people to use saturation, people, use in Psych where you will do a lot better and, but. We've got a whole bunch and used to their alerts, coming in more and descriptive. Statistic. Based alert so telling, you interesting, tidbits, about your, trading relative. To like a broader universe, because often, you want to know like I'm. Doing this is a good or bad well we. Might not say it's good or bad we might say what, do demonstrating. And. Is. Is. Different. To the. Majority. Of people who are profitable so just to give you an example like, a concrete example there's. A thing called the disposition, affect the disposition effect, is something where it, describes where people cut, they won as early, and if, they losers ran now, every. Academic will. Tell you disposition affects bad and. Major. Academic. Careers have been launched on this notion that this position effect is bad I can't tell you how much literature, there is on the disposition effect the interesting thing is for, the last three years we've been researching the disposition, effect and we can't tell if it's good or bad so it. Just shows you and, you. Can torture the dock of the data to tell you anything at the end of the day and, so. Maybe, it's not a one-size-fits-all. And. So. Maybe not not for everyone disposition, effect is bad so what we want to do is say to you etienne this. Is how you demonstrate the, disposition, effect and for you it's profitable it's not. Profitable and we can demonstrate and, this. Is a broader, group of people who have disposition, effective this is how, hard, behave so instead, of telling you good or bad we, can just provide you with information, that you would have, you, know your own and, you can do that as you wish because some people will be adamant.
That My, strategy. Has. Got edge, and, all this concept even though, I put this position affect most of those people by the way will be telling you that a martingale, traders, who are fooled, into this. Mistaken. Belief that they've got edge that, somebody. With no background in, trading, and understanding, of the markets thinks that they can just, because, you can create a micro lot and therefore. You can you, know keep doubling, up as the markets go against, you you. Will guaranteed. Go bankrupt in. The morning girl strategy, and, what. To say that, if you've got some smarts, on top of that you, can trade, with the morning gal but it's very risky and and and. Dangerous, so. We've. Also just recently launched, a bunch of tools one of them for instance is a thing called OFS, our order, flow Sentiment, Index and. Indicator. Not index I am what. That's all about is many different. Brokers, or. Let's. Say sites. We'll. We'll show you what the buy and sell is of a large group of traders. On, let's. Take an instrument the, euro dollar they'll say with 55% buyers. 45%. Sellers. Hence, there's an upward bias or was, a strong. Bias towards. The upside on euro, dollar. No. One honor has made money trading. Those but that particular. Indicator. Because who. Is behind it so you, were ten, fifteen, fifty. Thousand, a hundred thousand. People, behind, that but, you've got nine and standing, who they are what's equations, then is we've given you the ability to segment that. Order flow so because, everyone, on our platform, has an equity, curve from, the inception so, we are measuring everyone's. Returns, and a, high level of detail, so we, you can on our on our, own facade, tool you can choose, are you or anyone know you, only want to know what a people who are profitable, doing more people with a citation score about. 50, and say, you can segment your, audience, and. Say okay, this is the wisdom of the smart crowd I want, to, follow. The people who are smart or, smart. In trading, well yeah, and. That type of thing so we're trying to give everything. We're trying to do is trying. To give people like, a, an. Edge, that is not, currently available to the retail trader so we, were institutional. Traders back in the day and we've. Also now got the benefit of a data science team and a whole research capability. We've got a big platform with data and. We're. Very into, open. Sourcing, and sharing, our model. Is is really to, to. Get as much talent on the platform, as possible, and give. You as many tools that can help you grow. And then. Find. Capital. To allocate to, those top traders so so. We. Just want to give the best tools available and, to utilize our, experience, and expertise. I. Mean. We're not altruistic, in the sense we're not a charity we. Make, money along the way but but. Yeah. That's um that's our goal, it's awesome, so it's a different, platform than, what people have seen in most places I feel we're, gonna find out about citation, so. If, you just go to our website sack where psy, qat. I am calm, I typically. Write a weekly, thought, piece I'm. Quite, provocative often. In my marathi, nah i'm. Not one to run with the hood so. Yeah. Contrarian. By natures. But. I like to put. In stuff there's stuff that traders. Can think about and take away and and. Yeah, we've got a whole bunch of we're, trying to keep communication. And we, try to push everything through the site and. While. We haven't been the greatest at. Helping. People navigate all, the information. And the tools on, our site we, we've. Been focused, on delivery, and giving you tools, and kind of letting, you play with them yes. As we growing up and becoming a little bit more mature not be no longer teenage, kids as, I said we coming up our third anniversary. We. Put, it in walkthrough, tours and we're going to be a little bit more, focused. On educating, real, newbies. Along. The way. Yeah. It's we've, been like hammering, been. Going gain and focusing. And building you and kind of just left. Some stuff in our wake where we didn't. Polish it and make it as user. Friendly as, I guess, some, people would like, but, here we looked at we hopefully gonna, you. Know, fix. That up so, suggest, you get a little, frayed out if you wanna go, see the performance, with different people even. Take the test yourself, Michael. Thank you I appreciate thank, you and I will, catch you guys pretty soon.