PsyQuation launches capital allocation program for traders


Behavioral profiling based trading tool provider PsyQuation has announced that it is partnering with allocators with more than $1 million of trading capital to allocate, with more to come in future weeks.

After being connected to PsyQuation, the traders’ performance will be evaluated and they will get capital to trade. There are no set limits to the size of an allocation; every trader will be assessed on their own merits. This may result in some traders only receiving $10,000 while others will receive $1,000,000.

PsyQuation co-founder Michael Berman explains in a guest blog post:

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Michael Berman, PsyQuation
Michael Berman, PsyQuation

Today PsyQuation is launching a capital allocation programme for traders.

We are thrilled to say that we have partnered with allocators with more than $1m of trading capital to allocate, with lots more to come in future weeks. We encourage you to get connected to PsyQuation so we can start evaluating your performance and get you capital to trade. There are no set limits to the size of an allocation; every trader will be assessed on their own merits. This may result in some traders only receiving $10,000 while others $1,000,000. The only way to find out is to plug into the PsyQuation ecosystem. Please visit the Allocations page on our website and complete the form so we can be in contact with you and we will work out a way for you to get connected if you are not with one of our current brokers and migrate your historic trading performance if need be.

Trader Allocations Backstory

Capital allocation is something the PsyQuation team has a vast amount of knowledge and expertise in. PsyQuation co-founder Vlad and I were amongst the first players in the online incubation space for traders with the launch of RAPA Cap Intro in 2012. During that period we allocated over $50 million of trading capital to more than 30 traders from all over the world and built a community of close to 3,000 traders. Our previous experience focused on analyzing traders’ returns from a top down approach, meaning we were only interested in the daily time series of returns, we never looked at the underlying trades. We were the ultimate meritocracy. We didn’t care if you went to Harvard or had a High School Diploma. We didn’t care if you worked for Goldman Sachs or worked from your garage. All we cared about was whether as a trader you had “skill” which meant that you had an “edge” and a high probability of repeating past success. Our current team has since been enhanced by David Hobart who has 22yrs of institutional trading experience including having run a multi strategy hedge fund business for a publicly listed Australian asset management company. To further bolster our team we have on our advisory board Mikkel Thorup, an award winning FX hedge fund manager who runs a multi strategy hedge fund business in Europe.

Our past experience and the team we have put together does not in itself make the PsyQuation Trader Allocation business unique. Over the past 18 months we have been singularly focused on building a risk and behavioural analytic platform that has taught us how to profile the trading characteristics that cause traders to make and lose money. Furthermore our system is not static, it learns from its environment to bring more insightful and better calibrated insights to the investment decision table. The is not a holy grail but rather a money management overlay that helps identify and filter areas where traders are making mistakes that are costing them and their client’s money along with suggestions how to avoid these mistakes and encouragement to reinforce good trading practise.

The secret sauce to the PsyQuation Trader Allocation business is that we have now developed a proprietary multi-dimensional filter for trading talent. By getting a trader to connect to the PsyQuation ecosystem we are able to analyse a trader’s performance from a top down and bottom up perspective. Effectively slicing and dicing a trader’s returns like a 3 dimensional MRI scan giving us much more visibility to identify strengths and weaknesses. From a trader’s perspective it is really easy and there is no cost to connect to the PsyQuation ecosystem. With the click of a connection button all the necessary trades are automatically pulled from the broker to PsyQuation and this continues every few minutes, thus giving the allocator and trader near real time information to take effective action.

When Vlad and I started our PsyQuation journey we always knew that capital allocation would be a natural progression to our software analytics business, we just didn’t think it would happen so soon. A few months ago a multi strategy hedge fund manager approached us asking if we could assist with providing some analytics and a dashboard to monitor their traders’ performance across a number of different complex trading accounts. We straight away obliged and set out to build a reporting system that could take multiple accounts and create an aggregated account for their real time management. Then another allocator approached us and suddenly we realised we were perfectly placed to launch this as part of our business. So this is how it will work:

PsyQuation itself is not the capital provider we are a software platform that has built a unique filter to identify talent for allocators. We provide allocators access to our entire talent pool that spans across a large number of our broker partners, with many more brokers soon to be added to the platform along with more asset classes thus increasing the size and diversity of our talent pool. We will then provide our allocators with a filtered selection of the traders we have sourced across our platform. These traders on our short list will be contacted by us for a qualitative evaluation to see if they are suitable candidates for managing money. This is not the standard due diligence interview that makes allocating to emerging traders near impossible. This is an interview to see if the trader is made from the “right stuff”.

Once our traders have undergone a qualitative and quantitative analysis and made it onto our trader allocation short list, allocators will then be able to enter into an allocation arrangement with the trader of their choice. What makes our service unique is that our allocators will gain the full benefit of our advanced proprietary trader filter and get to choose from a selection of our favourite asset allocation models offered on our platform all seamlessly integrated to provide ongoing near real time reporting.

For capital allocators you get all this for free:

* Access to a large pool of trading talent and a world class trading talent filter.
* A highly experienced team of allocators applying a qualitative screen overlay.
* Top allocation model with cutting edge advances in asset allocation theory.
* Near real time reporting system that monitors risk and behavioural mistakes.

For traders you get all this for free:

* Access to world class trading analytics
* A robo trading coach and near real time risk manager.
* Access to trading capital.
* Access to mentorship and highly skilled quantitative analysts.

As you are getting this all for free you are probably wondering where is the catch, as nothing in life is for free. PsyQuation makes its money by earning a small transaction fee from the broker who connects your brokerage account to PsyQuation. The broker does not markup, widen the spread or add any additional commission for connecting your account to PsyQuation, the rebate comes straight out of the brokers’ margin. So your broker is investing in you by connecting to PsyQuation. They want you to succeed and believe the PsyQuation software will help you achieve your trading goals. This really is a partnership where all parties win. You the trader benefit by being more profitable with the potential to trade more money, the broker wins as they receive more client allocation deposits and over the long term as you become more successful as a trader your lifetime value as a client grows and PsyQuation benefits along the same lines as the broker, and finally the capital allocator wins because they are accessing great talent, with wonderful reporting and allocation tools and it isn’t costing them anything.

Looking forward to more profitable trading together.

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