PsyQuation - Behavioural Software

PsyQuation is an Australian domiciled software company providing quantitative and behavioural analytics for the trader community, established in 2015 by Michael Berman, Ph.D. and Vladimir Krouglov, Ph.D. leading experts in trading analytics with more than 20yrs of collective experience and 5yrs of collaboration.

The PsyQuation team comprises 7 Ph.D. and 2 Masters degrees giving it tremendous depth from a cross-section of specialities.

​PsyQuation will provide you the trader with an alerts whenever you make mistakes of behavioural or risk nature, along with suggestions how to rectify the mistakes. You can take a look at this video link for an overview explanation.

We will be launching in May 2016, and would like to open this forum up for discussion.

Markets dont care PHDs and Degrees, enough said...but yeah good luck fro trying...all the best.

Here is a list of our alerts:

 

1. Overleverage
2. VaR
3. Disposition Effect
4. Mental Accounting
5. Trading Around the News
6. Commission Suicide
7. Changing size re: P or L
8. Changing frequency re: P or L
9. Trading Over Weekends
10. Differences in behaviour $ vs %
11. Martingale threshold alerts
12. Ignoring Alerts
13. Redefining Goals
14. Significant cash moves
15. Cash Deposit Pit
16. Style Drift
17. Overconfidence
18. Position sizing hygiene
19. Early Loss Bias
20. Loss Aversion
21. Expectancy Alert
22. Equity Gold Cross

The Anatomy of a PsyQuation Alert:

PsyQuation Back Story

The idea leading to PsyQuations formation came about in mid 2013. At the time Vlad and I were working at a fintech startup that we started in early 2012; the company focused on incubating emerging traders using a sophisticated algorithm to measure a traders skill coefficient.

In 2013 one of the worlds largest FX brokers contacted us and enquired about ways in which we could work together, the courtship lasted about 6 months but for reasons beyond our control the deal never happened; however, the message they kept emphasizing struck a chord. They described how retaining clients was their biggest challenge and they were hoping we could work together to develop a software system that truly made their traders more profitable. The message from this particular broker is an important one for the broader industry and for traders in particular. Like all industries there are rotten apples, but brokers who are in business for the long haul and value their brand really want their traders to do well, this was really encouraging as we identified a business model where everyones a winner. This resonated strongly with us, and we knew one day we wanted to be part of the solution.
Making traders more profitable.

Before going further we need to emphasize that we are not implying our software will make you profitable, we are saying we will help you make more profits, this is an important distinction. In order for a trader to be profitable the trader needs an edge. We are not selling edge, or alpha as the industry likes to call it, because if we had this elusive and fleeting alpha we would certainly not be selling it, rather we would be trading it for our own account.
By now you are probably asking, what is PsyQuation and what value will it offer me?

Philosophy
PsyQuation stands for Psychology and Equations. I have a Ph.D. in Economics focusing on Behavioural Finance and have been a professional trader for more than a decade, Vladimir has a Ph.D. in Mathematics and together we have spent the last 5+ years working on quantitative & behavioural solutions for the trading community.
All traders are overwhelmed by cognitive biases (psychology) and neurochemical impulses (neuroscience) at some stage in their trading lifecycle. This is not done consciously and is part of the way our brains are hard-wired to cope with stressful uncertainty.
Trading optimally requires advanced quantitative skills which a minority of traders possess, and even those who do possess such advanced mathematical skills, experience impaired cognitive functioning when exposed to the stressors of making or losing money in the marketplace.
The PsyQuation slogan of deeper knowledge takes a holistic look at the traders behavioural and quantitative patterns and provides the trader with greater insights into their trading mistakes with corrective robo-advice using sophisticated machine-learning artificial-intelligence.
With our academic and institutional background we have spent years researching and refining most of the tools the industry has on offer; and through our experience we have learned that many of these tools offer marginal if any added value, but can significantly contribute to the traders confusion. It is with this in mind that we have approached the design of our software user-interface with a less is more philosophy.

PsyQuation traders wont need to decipher dozens of metrics that are either redundant or offer no statistically significant advantage. We want you to trust us, remember we are the doctors , we will do the heavy-lifting, we will ensure that optimal bias free advice is at your service 24/7. By following our advice we are confident that you will make more money the rest is up to you.

Features
The most important feature that PsyQuation software provides you with is your own robotic coach. The system has been designed to learn from the broader environment and from the individual traders behaviour to alert the trader when mistakes are being made, along with suggested remedial action to improve profitability. Not all advice will be the same for every trader; rather we have designed a robo-coach that calibrates advice to each traders personal risk profile.
PsyQuation software profiles behaviour from a quantitative, psychological and biometric point of view pioneering new advances in the application of these fields of study.
We are the first to provide traders with intraday equity curve charting and statistical analysis from account inception, with our additional data points providing deeper knowledge.

For a trader to be successful they need a strong defence system. We have built an advanced intraday risk monitoring system that gives traders a probabilistic edge by triggering an early warning alert.

Value Add
To achieve our goal of building something meaningful and robust that will disrupt the industry we have handpicked a team of highly skilled individuals comprising 7 Ph.D. and 2 Masters degrees in diverse but relevant fields.
We also felt that PsyQuation should be FREE in its basic form so that users can judge for themselves if value is being added.
PsyQuation has teamed up with successful professional trader Kevin Saunders to run PsyQuation University. Kevin has a background in training and education and brings important trading experience to our education process.
In summary PsyQuation provides a unique educational and empowerment tool for the man in the street, it provides you with your own team of mathematicians, psychologists, coaches, economists, computer scientists, physicists, statisticians on tap 24/7 | Deeper Knowledge

To achieve our goal of building something meaningful and robust that will disrupt the industry we have handpicked a team of highly skilled individuals comprising 7 Ph.D. and 2 Masters degrees in diverse but relevant fields.

Would you mind explaining what you mean by "disrupting" the industry pls.

G

I have worked in this industry a long time, and unfortunately I have seen very little true trading skill. It appears most are "fooled by randomness" therefore PsyQuation would never suggest that it can provide any "edge" with regards trade signals. This is not a scheme or software that will make you money. What we do believe is that if you use our software which will be FREE by the way, you will make more money.

Our expertise is in informing the trader where they are going wrong. We will do this this by providing our traders with informative and confronting statistics. Our style of research is dynamic and our approach is hard hitting. We may even become the most hated app in the trading world, but one you cannot trade without.

If you can accept that it doesn't matter how experienced or knowledgeable a trader is, they are going to make mistakes. Our alert system is a comprehensive way of bringing these mistakes to the traders attention and providing them with an intuitive way of managing these mistakes to achieve their goal.

I hope you give us a try when we launch in May as I believe there is nothing quite like what we are offering in the market place, and I believe our frank sober well researched approach will be most disruptive.

I am trying my best to "read between the lines"

Your profile says that you have been trading for 12 years. You were a full time trader to be precise.
Does this mean that you stopped trading? Your profile also says that you now run PsyQuation which according to my understanding does not make you a trader any more?

It appears most are "fooled by randomness" therefore PsyQuation would never suggest that it can provide any "edge" with regards trade signals ........


I am just trying to figure out where you stand in terms of what your beliefs are as a trader or software (solution) provider.

I do not want to discredit you or put you in the spotlight.

Randomness have been discussed many times over in this forum and i agree , these markets are more random than anything else. Can randomness be beaten...? I think so , but first you have to acknowledge that it is random and build your edge around it.

I had asymmetrical returns as a trader, profitable over the whole. However, it is an incredibly difficult lifestyle and one that took its toll on my family and me as well. My wife absolutely hated it and with kids growing up (teenagers) and me reaching my 40's I decided to combine my passion for trading and go one step removed and incubate other traders which is what we did in RAPA now serving as the backbone of another incubator.

Let me be absolutely clear, I believe markets are largely random I believe however that there is probably some probabilistic edge around the edges .

With me there is nothing to read between the line it is all out in the open, you can follow my very limited trading on Sefirot Capital or you can follow my twitter account @mickson

While I still believe I am the greatest trader (aren't we all legends in our own minds) I have decided that the biggest contribution I can make to society is take my knowledge and that of my team and make a tool that makes a difference and actually helps people along the way.

Stay tuned for more about the business as we get closer to the launch.

Setting Bad Goals Can Hurt Performance

We got our first bit of press last week on the Finance Magnates site.

Yesterday my son competed in his school biathlon (swim+run); before the event he told me that he was going for a top 10 place.

I said to him dont be silly you havent done any training, you have an injury which has required weeks of physio; rather focus on completing the event with no additional expectations. Like all teenagers, who know everything he said, dad I can do it. My wife called in the afternoon to say David placed ......

To read the full post click here.

There is a popular trend towards video blogs. I thought it was time to join the party.
Here is my “first” attempt at it; I am sure I will get better but unfortunately there is nothing I can do about the mug on the screen .

PERSONA EFFECT
A week ago I setup a whatsapp group with 8+ of my childhood friends, with whom I share an unbreakable bond despite us living all over the world. What is unique is that we grew up in a small coastal city and essentially spent our entire 12 yrs of school together in one classroom forming deep unconscious understandings of each others psychic makeup. On the whatsapp group we have laughed so much that our respective partners and families think we have lost it. Each night after repeated failed "good night, this is the last comment" we eventually sign off way passed midnight and in some cases passed 3am; but as 45 yr old men there is something drawing us back compelling us to share our memories and our life experiences.
Tonight is the Jewish festival of Purim where it is customary to wear fancy dress (masks) this together with my whatsapp group got me thinking on a more profound level and I think the insights I will share below might have a beneficial effect on your trading.
As a student of Jungian psychology I need to lay a contextual framework that will provide the tools to "uncover" the insight.
The persona is a complicated system of relations between individual consciousness and society, fittingly enough a kind of mask, designed on the one hand to make a definite impression upon other, and, on the other, to conceal the true nature of the individual.
The Relations between the Ego and the Unconscious (1928).
Whoever looks into the mirror the water will see first of all his own face. Whoever goes to himself risks a confrontation with himself. The mirror does not flatter, it faithfully shows whatever looks into it; namely, the face we never show to the world because we cover it with the persona, the mask of the actor. But the mirror lies behind the mask and shows the true face.
Archetypes of the Collective Unconscious (1935).
The amazing thing about long lasting childhood friendships is that we get to see and know a person before the layers of persona are added to the persons psychological makeup. When in our whatsapp group the persona we have created to fit into the societal norm of our lives comes out during our banter, it is simply not tolerated. The zillionaire, accountant, doctor, salesman, economist, trader are not who we are, they are not welcome in our group discussion, we are Steve, Al, Kev, Titch, Mike, Grant .......
In psychological terms when we become too attached to the persona we have created we become psychologically damaged and experience moods and complexes that in many cases have detrimental impacts on our psychological well being and our daily lives. Jung describes our task in life as one of individuation where we uncover the layers and discover who we really are and in the process become more whole.
So what has this got to do with trading, and PsyQuation, I can hear you asking?
I believe it has everything to do with trading. I think traders obsess over the persona they create to the outer world. Be it

1. the computer coding genius,
2. the nerves of steel iceman trader,
3. the big balled trader who puts enormous positions on a trade,
4. the ultra disciplined methodical trader.

It is important to realise these are layers to our personality they are not who we are, these characteristics do not define who we are, rather psychological wholeness requires us to disintegrate these personas.
Engaging on a whatsapp group where friends who really know you and slap down any persona grandstanding is one method, another is the PsyQuation alert system that helps you peel away the layers that your biases would like you to think is who you are as a trader. Just like the Jungian individuation process helps you become the emotionally stable - real you, the same individuation process applies to traders and we believe PsyQuation has the ability to help you overcome the persona effect and become a more "whole" trader.

Marking to Market
March 29, 2016
One of the biggest mistakes I see newbie traders make is the different way they treat realised and unrealised profit and loss.
14yrs ago when I embarked on a professional career as a trader the treasurer of the bank I worked for drilled into my head the term mark-to-market. That lesson is vitally important if you want to avoid falling for a classic mental accounting bias. Accepting a loss is psychologically painful so we will do all that we can to avoid experiencing the pain, therefore the classic way for our minds to deal with this cognitive dissonance is to simply say I have not closed this trade so I havent made any losses yet. The problem is that by doing this we tend to add to the risk of our portfolio by ignoring our financial reality.
You really need to absorb the 2 points below:

1. A paper (unrealised) loss is a real loss.
2. A paper (unrealised) profit is a real profit.

Lets look at a simple example how ignoring reality can get you into trouble.
Trader X has $10,000 in his trading account. He opens a position on the EUR/USD the current mark-to-market (MTM) P&L of the position is $3,000 however Mr X doesnt believe that he has lost anything yet as he is planning to ride through the current unfortunate storm. He then places another trade;
X shorts the AUD/USD and is quickly into the money with $1,000 MTM profit, but the EUR/USD trade keeps hurting and now both trades are under water to the combined total of -$7,500 the brokers are calling for margin top-ups and X realises one more small move against him and the account will be worth zero. He now closes all his losses and accepts the fate of a much larger loss than X had ever envisaged taking.
If you want to succeed in trading you have to start marking to market, and never stop doing it!
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
NB: I think an important trick is to only show the PNL column not like the image below with realised and unrealised shown separately.

Parking Behaviour Link to Trading
Earlier today I made a mistake which I have repeated no fewer than 4 times already this year, not to mention the dozens of times over the years.
I live in Sydney where the cost of parking is ridiculously expensive, an indicative guide of the cost per hour in a metered parking bay is $4/per hour, the beaches price at a hefty $7/per hour. As a self confessed caffeine addict [Hello my name is Michael and I am addicted to coffee] I tend to pop into cafes throughout the day to buy a cuppa.
So here is my problem and I suspect there are many amongst you who face the same problem. When I drive up to a cafe to buy a coffee I think to myself I am only going to be 15 minutes +- what are the chances of me getting a fine, so I take a chance and run in without putting money in the meter. Straight away I can feel the extra adrenaline course through my veins as I roll the dice, for the non-locals, beware Australian parking rangers are everywhere.

Ok so lets take a look at the equation and see whether the approach is reasonable/rational.
Fine = A parking ticket is $106
Cost = $1 for 15 minutes
This means I need to get away with the “gamble” 106 times for it to pay for itself let alone make a profit .
I don’t know the exact statistic but I can say quite confidently that the probability of being fined is many times more than 1/106 = 0.9% of the time. So if the expectancy for avoiding putting money in the parking meter is negative why do I do it?
Here are few suggestions:

1. I want to outsmart the city council.
2. I want to outsmart the parking ranger.
3. I want to get something for free.
4. I want a little thrill of excitement.
5. I want to be naughty.
6. I am too lazy to put the money in the meter.
7. I don’t have any coins for the meter but want my coffee.

I think we can all come up with our own list of reasons why we do such financially silly things, the point I am making is that we all know deep down the behaviour is silly and expensive yet we continue to do it over and over again.
The example I have provided above is exactly the practise many traders adopt in their efforts to make a profit. The vast majority of traders are doomed from the outset. Why, because they are taking on way too much risk relative to the size of the profit.
There is a well known behavioural bias called the disposition effect, whereby traders take small profits and accept large losses. This could be financially profitable if the number of losses was small relative to the wins, however in the majority of cases there is negative expectancy, which is a fancy way of saying losses occur more frequently than you think and the probability of your trading is likely to cost you.
So if this behaviour is known to us why do we still do it and how can we avoid doing it in the future. A clue to the solution is to be married to my wife, there is no chance I will make a parking mistake when I go out with Ilana. The reason is she will be barking reminders in my ear from the moment the ignition is turned off.
Allow me to introduce the PsyQuation alert system. This is precisely what the job of PsyQuation’s alert system is to do, it is there to draw to your conscious mind that you are doing financially stupid things. With the flashing notification of an alert delivered to your computer screen, inbox or mobile phone it is our hope that you will be made aware of the behaviour in the moment so that you can address the issue and hopefully avoid paying any unnecessary fines.

Cognitive Dissonance We hear what we want to hear
April 19, 2016
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Cognitive dissonance is defined as the discomfort that arises when a person recognises that he or she makes choices and/or holds beliefs that are inconsistent with each other (Festinger 1957); and its effect is even more acute when the beliefs in question relate to ones concept of Self.
Will this new belief result in me being perceived as an average trader, or even worse a crap trader?
We have all seen this manifest in the struggle we as traders have accepting and realising a losing trade. The same struggle applies to developers of automated trading systems, who cannot pull the plug on the system they have put so much into.
Our inability to reconcile a deflation to our EGO is probably the single biggest impediment to profitable trading, and usually results in us taking bigger loses than we would have anticipated when entering the trade.
Its time to be brave and look a little deeper so that we can increase the knowledge of our Self.
Psyquation wants to partner you on that journey.

We are launching our beta version this week please be one of our beta testers and register here

A nice profile article on Leaprate about PsyQuation.

Less than 24hrs to go be one of the first and join our beta group of traders.

Here is a video review of PsyQuation on the day of its beta launch Friday 20 May.

LeapRate has learned that PsyQuation has launched live as of today with a number of retail forex brokers including Pepperstone, IC Markets, Global Prime and AvaTrade.
PsyQuation has developed a new way to improve trader performance and to prevent traders from blowing up their accounts using techniques and technology from the school of Behavioral Profiling. We detailed PsyQuations plans in a recent interview with PsyQuation CEO Michael Berman.
The PsyQuation tool is of course aimed not just at Retail Forex traders, but at the brokers who serve them. Traders who last longer, make money and trade more are worth a lot more to brokers than those who lose quickly and move on.
https://www.leaprate.com/wp-content/...PsyQuation.jpg
Michael Berman, PsyQuation
The following note was sent out today by PsyQuation CEO Michael Berman to those who had signed up while the company was still in launch mode:
We are delighted to say the moment of truth has arrived and we are open for business and ready to let our feedback loop alert system help your trading performance.
Something not all of you may be aware of our alerts not only notify you when you are making mistakes but there is also a positive reinforcement component to the alerts which trigger at certain check points to help notify you that you are tracking positively towards your goals.
We would like to say a big thank you to our broker partners who have supported and encouraged us along our path to launch, and would like to thank them for investing in the success of their clients.

Any feedback .....?