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 [Music]
