 Hi and welcome to Bright Minds from Tick Mill. I'm your host Patrick Munnally and in this series we're setting out to answer some of the most commonly asked questions around investment and trading through entertaining and insightful conversations with seasoned insiders. For our final episode in this season of Bright Minds, we thought we'd do something a little bit different. Throughout the recording of the last 11 episodes we've heard from so many fantastic guests from a range of different fields and looking back on all these great conversations we noticed some clear themes that came up again and again. In this season finale special we're going to look back and explore those themes and discuss a selection of interview highlights with a very special guest. The three recurring themes we identified are cultivating your mindset, identifying patterns and using tech as a tool. What's fascinating about these topics is that they came up consistently across different episodes regardless of our guest's area of specialism with technology and pattern recognition frequently coming up in discussions where we weren't expecting to hear about them. The cross-pollination of ideas has been one of our favorite things about this first season of Bright Minds and here today to look back on the season and discuss these important recurring topics is Ingmar Mattis. Ingmar is the co-founder of Tick Mill and the executive director of Tick Mill Group Limited. Before launching Tick Mill he served as the CEO of Foreign Exchange Broker Armada Markets and the head of brokerage of global investment firm Admiral Markets. Ingmar brings almost two decades of experience in managing financial services firms with a focus on operations, financial technology, securities trading and risk management. Ingmar thanks for joining us today so let's kick things off by discussing our first major theme of the season which is cultivating your mindset. Before we jump into a few clips Ingmar I'd love to hear about your experience with developing your own mindset. Hello Patrick first of all thank you very much for inviting me over I've been enjoying your shows a lot and I think you're doing a great deal in terms of educating the the trader community out there so my journey really has been has been quite long so I started trading back in 1997. I've gone through many many many roads during my journey so I've traded all the asset classes at some stage I was focused on technical analysis at some stage I was focused on fundamental analysis and it's it's been really really interesting road and of course I've seen all of the market crashes and and all of the booms the last 20 years or so. One of the guests who really informed us on that was Tony Blauer who appeared in episode two to talk about fear so let's hear from Tony. When I go in the fear loop what immediately starts to happen is and this is universal regardless of gender age experience doubt hesitation procrastination those three steps happen automatically and they can happen like in a nanosecond. Overcoming that fear is a really key development in the ability to consistently trade the markets. How did you manage fear in terms of your own trading Ingmar? It's a good question and I would say maybe when once you have a certain amount of fear in you then you tend to maybe take decisions that you otherwise wouldn't and if I look back 20 years the effect that fear had in me was was oftentimes quite dependent on the actual capital that I had available for myself and the actual position size that I took in each and every instance. When the level of fear becomes too big then you have already made a mistake so you have probably committed too much capital or your position size is pretty pretty big already and you should probably look back. That's an excellent point and something certainly I've experienced over the years as well. I guess a key part of understanding our mindset and how to make better decisions is about recognizing our biases. In episode five Paul Craven spoke to us about the field of behavioural finance and within that episode he outlined for us a couple of biases common in the financial industry. Let's hear from Paul. I think the most pernicious bias though is probably confirmation bias and again just to refresh people what that means. It means the idea being I've come back with my conclusions. I may have made a good case to buy something say a stock and the fact it's gone down five or ten percent it doesn't make me challenge your question myself. That's such a great point from Paul. For me when it's starting out as a trader the biggest problem I had was directional bias. I wanted to enforce my will upon the market either going up or down on the market which as we all know is a fatal flaw. In terms of your experiences of biases, what have they been like? I have been able to understand the strength of my confidence level and it's been the case that I might be confident today but I don't trade. I might be confident again tomorrow but I don't trade and only ten days later I understand that my confidence level is pretty much extreme and this is the time I need to actually place the trader so I'm delaying and delaying the decision making until I'm really really confident but even then I am mindful about the position size and the risk. Yeah and I guess the confidence and when to actually execute a trade position sizing and risk all funnel into one of the central challenges for any trader and that's sticking to a trading plan. As markets shift and circumstances change it can be tempting to abandon a carefully planned strategy to risk chasing bigger gains or trying to avoid those painful losses. Phoebe Chamere while discussing the gender investment gap with us in episode one spoke about research showing women outperforming men in the market over the long term simply due to a natural tendency to be more risk averse and patient. Let's hear from Phoebe. Research shows that women actually do perform better when they invest and I think it's down to a few factors. One of them is kind of patience. I think women set their sights on the long term goal which is what any good investor should do anyway and they kind of will buy a good solid sound investment that perhaps they've done their own fundamental research on or they've relied on a professional to do so and they hold that and through through thick and thin volatile times and that's how you can have a really good investment strategy. Yeah I guess one of my favorite comments from the the discussion we had with Phoebe was the idea I think Christine Lagarde made the point that if we'd had Lehman sisters instead of Lehman brothers the world might have looked quite a bit different through 2008. What are your thoughts on that Ingmar? To be honest I tend to agree and I was just thinking when we when we heard the clip that that how would I differentiate women in comparison to men and I would I would say that women definitely have better intuition and the other quality that women have is that their ability to make decisions in overall they are more humble in their decision making. So a typical man would place a trade being in full confidence and feeling like they would go to war and they would win the war while women probably would be more humble and would rather maybe ride a trend and fighting against the trend. Excellent point and as I mentioned earlier one of the most interesting things about having conversations with all these experts working in different fields has been noticing the points of contact between their areas of interest. Here Dr Andrew Minnaker is discussing the brain and mindsets in episode four that we did on neuroeconomics but also covers another key theme identifying patterns. Let's hear from Andrew. The field of neuroeconomics says that the brain is a prediction machine basically. So in that moment of I call it the heat of the moment just should I get into the trade? Should I stay in? Should I get out? At those moments the brain is trying to predict what's about to happen and as a result there's a whole host of biological functions occurring in the body and in the brain and I'll just finally say that emotion is both a body state and a brain state together at the same time. Yeah I mean that is a is a fantastic comment and I think going back to the idea of the evolution of trading for a long time the idea was that you were to trade without any emotion and to ignore your emotions and just execute your trade almost in a robotic fashion but whereas more progressive research now certainly suggests that better traders are those who accept and understand their emotions as opposed to avoiding them. Any thoughts on that Ingmar? I completely agree with you and when it comes to emotions of course what I found really fascinating at Tickmill and over the years when I've been managing risk myself when it comes to our exposures then whether a person is in Europe, Africa, Asia or somewhere in Latin America they generally have very identical emotions when they see news coming out or when they see specific chart pattern and when it comes to myself then the fact that I've passed through so many crises over the years whether the 2000 the 2008 and the corona crisis and so forth and it has made me personally when it comes to my emotions almost fully emotionless so I might win have a good trade I might lose have a really bad trade but I really don't see any big fluctuations of emotions in in myself. Yeah and that's certainly an important progression in any trader's career and that idea of recognizing subconscious pattern recognition whereby you spend so much time watching watching the markets watching charts or watching news flow that you subconsciously recognize patterns that are developing and so I guess that brings us on to our second big topic of identifying patterns. How could we not hear a clip from the infamous Martin Armstrong in episode three Martin outlined for us his economic confidence model which tracks patterns in global capital flows over long periods in order to get a clearer picture of what the future markets might hold. Let's hear from Martin. We took a list of financial panics that expanded 224 years and that they were international not just domestic and I just took the 26 events and divided into that ended up with 8.6 years and I just thought it was an average so I plotted it out and it picked even the 87 crash right to the day. Yeah I mean Martin is is a rigorous student of history to put it mildly and someone I followed for for many many years and his modeling is is really fantastic and and I guess that idea of using vast data sets to identify potential future patterns is something now that is really coming to the forefront in the markets. I guess you're seeing that more at Tick-Mill as well Ingmar. Indeed yes and and I think patterns more or less big big generator of patterns is really the underlying let's say monetary policy or or politics in general and the fact that human beings tend to react to different circumstances economic situations chart patterns almost the same way across across the globe. I've definitely been a fan of patterns there in my trading career. Also whilst it's important to make our investment and trading strategies more robust by identifying patterns in the market and using them as a basis for future predictions that outward view is only one perspective. Here's Andrew Minnaker again explaining the importance of looking inwards to identify patterns in our own behavior. Let's hear from Andrew again. There's not just you know patterns in the in the chart that we're looking for but it's patterns within ourselves really is what was I think what you were alluding to and that's really important part of performance improvement for a trader. It's not simply understanding and paying attention to patterns on the screen but keeping track of paying attention to and understanding our own personal patterns of thought and emotional experience. That's a great point from Andrew. I mean certainly when I started out one of the patterns I began to recognize in myself was the idea of revenge trading so I'd come up with a trading thesis take put the position on it would go against me I'd lose money and then I think right the market's wrong I'm right and so I you know to say it was trading with the strategies very loosely defined there but that revenge emotion is a pattern I recognize within my own behavior. What about you Ingmar did you any early stories of patterns that you recognize that helped improve your trading? I've definitely realized Patrick at some stage that when you go out with your friends on Friday evenings and then come back and the markets are still open then you definitely definitely shouldn't trade and when your account is incurred a big loss then you definitely need to sit tight and not do anything probably for a few days and in terms of psychology then what I've seen as well and what I alluded to in the past was that I've been drawing these kind of charts confidence charts in my mind when I trade you know so if I feel that today is maybe 10 percent what it was with my best trade for example then definitely that confidence that I seem to have today is not enough actually to place to place a trader. Interesting and it certainly valid point about the Friday night trading set up so we're I guess we're beginning to see a description of trading as a relationship between what's happening out there in the markets and the reaction to that activity in the mind of a trader here's Martin again to speak on that point. What I basically found was that all markets trade the same because the common denominator is human nature basically we panic the same way regardless of its wheat if it's corn if it's gold or it's a currency so when you're really looking at a chart you're looking at humans and how they're interacting with that instrument. So I guess that goes back to the point you were making earlier Ingmar that the nature of human beings is simply to repeat patterns over and over again regardless of I guess the circumstances it's just the natural human reaction that is almost like a default setting. Indeed yes and I would say that if all of the market participants would be just small guys like myself for example then probably you would be able to predict markets with a high level of accuracy but what really changes the dynamics in my mind is that there are these whales out there or let's say bigger players like so if you could analyze the behavior of a small of a crowd of let's say small investors you would be able to predict but at times you know you would have maybe the Bank of Japan or or some government coming in with their policy changes or some other news events and that completely changes the dynamics and because small investors generally are not big enough to affect the market then you always need to be aware of these bigger players who come in at you know two o'clock you know in the early morning or on Friday evening when you have a have a pint with a friend in the local pub. That idea of trying to analyze and process the actions of those bigger players and find patterns like you say I mean the Bank of Japan certainly are notorious for for taking action the unusual hours of the day so I guess that that brings us to our third and final big area for discussion and that's technology as a tool thanks to the massive leaps in technology we've seen over the past decades and the acceleration of mobile tech and most certainly AI in recent years new paths for investors to access markets and new ways to process data become more widely available. Hariton Christo joined us in episode six to give a rundown of the current ways in which AI is transforming the finance industry let's hear from Hariton. There are various types of data for example there are people looking how many people they have visited a particular store today how this could actually impact the price of an asset we have also seen very very recently phase recognition where the quant's trying to find patterns between the phase of someone in the banking sector where they announce the interest rate decision is going to affect the market. Yes I mean that's certainly one way in which AI has been used I mean I've heard of hedge funds using drones to track global shipping patterns and freight patterns and the extent of freight that's occurring globally so I guess more and more we're going to see that use of artificial intelligence to help to predict future outcomes are there any ways that you've seen personally that AI is is starting to impact trading decisions or investment decisions? I have yes and and I really like the the project that Hariton actually runs at Tickamel because I mean they look at really vast set of data you wouldn't even imagine that you know that some data sets are available there and when the tsunami happened in Japan for example when there was this big tsunami that took out the nuclear power plant and everything then it was later said somewhere in the press that the guys from Goldman's traded whether it was 10 or 20 seconds before the news hit the wires and and the story was that they were able to place detection mechanisms in the in the buoys circulating around Japan so they got the signal sooner than the than the rest of the market and and what what really matters is maybe just you know an age of maybe one or two seconds or maybe even smaller age and you are able to make millions so so maybe yes over time human beings become almost useless when it comes to making trading decisions yeah I guess not only does tech give us the opportunity to get ever more accurate predictions like that example there from from Goldman but I guess it also massively helps to lower the costs associated with trading and allows greater access to multiple markets and multiple financial instruments CEO of Tickamel UK Duncan Anderson joined us for episode eight talking depth about how technology has changed our industry let's hear from Duncan what we have now is programmers with the ability not just able to trade one particular market but they can trade multiple markets over different time horizons and this is just as one singular individual I guess from a provider perspective in the early 2000s there were roughly three or four main providers but the barriers to entry were huge I mean the cost of building cost of servicing was enormous so the cost there was significant yeah I mean that's a great point from Duncan I mean personally from my experience of trading now similar to Ewing more than nearly 20 years I've witnessed the the reduction in costs coming down significantly in terms of access to market and I guess you as a as a market provider have also had to adjust to the market conditions to remain competitive indeed and and in our case so we are somewhat special in that sense that majority of our clients are actually trading with various algorithms so the commission rate that we have is extremely sensitive to our client base and of course over time I think there's some sort of stabilization that one could expect because the commissions or the fees really cannot go below zero and and at some stage when maybe the weaker market participants are pushed out and commission structures maybe or the fees in general would would go higher again not only has tech made it easier for experience and back or hardened traders to explore new markets but the development of platforms that run on the tech in our pockets has opened up the possibility of trading to individuals and retail traders who previously wouldn't have thought to be so hands-on with investing their money here's Phoebe again to talk about the benefits of getting started on investment apps there are apps where you can invest your spare change and you kind of to a certain extent get to know how the investment markets work you get a feel for what it's like to lose money and to gain money through investments and you know that is just testing the waters that's dipping your little toe in that's certainly true I mean it's it's surprising to me how often when I'm out in public now you see people on their mobile with either the mt4 mt5 platform open and and executing trades and that has been a big proliferation of of trading into the retail community and I guess tick mill have been part of that process we have yes and and you're spot on in that sense that the developments in the technology space in that sense have been huge I remember back in the days when I started trading then in order to place an options trade you really need to pick up a phone and call a bank and I remember the bank would then send out you know 20 pages of options agreement and you had to sign it send it back and that was when I was in the university and you know at some stage because I use the facts in the university this administration building at some stage people started looking a little bit suspicious that okay why is this guy coming back all the time and you know getting these faxes and sending them back but today yeah the world is different that everybody has their app and you can really trade any instrument out there like whether it's orange juice or you know cryptos or you know palm oil or whatever so it's it's fascinating but at same time we have to be mindful also about the risks because many of these you know younger investors they they are not so concerned about the risk and we have to be mindful of it about this that's a really good point Ingmar because I guess that better access or the proliferation of access to technology that allows more people into the trading world doesn't necessarily mean that all those new traders will do well Duncan again outlined the importance of research and planning before you make investments or trades the fact that you can trade like a pro like a quant like an institutional player it actually then comes down to you so first you really got to understand exactly what you want to get out of this trading opportunity this business yeah and you've got to treat it like a business yeah you can't sort of bullshit yourself excuse my French but you you know you have to know what you are getting yourself into and you want to have to know what you're getting yourself into you've got to create a strategy you've got to then test it yeah I mean that's that's sage advice there from Duncan and especially his French use of it I guess the this is it really and certainly from my my experience that I only became successful at trading once I started to treat it as a business so I was taking trades that I predefined within I guess you call it a trading plan I call it a business plan and I think those are the real pitfalls for retail traders where they don't treat it as a business it's more of a almost a fruit machine that they that's where they they come unstuck and certainly I guess you have have seen that over the years yourself Ingmar I have yes and and with this new technology like I was saying before so the the concern that I have is that trading has almost become like an entertainment so people just place trades out of boredom or simply that they you know they don't have anything else to do the access to markets and the access to all of these instruments on one side is positive but on the other side it's really difficult to make decisions then and pick the right instruments so back in the days when I started you know you you really had access to maybe like 10 20 different shares in the local on the local stock exchange and then you pretty much knew everything about these companies but now so because the the opportunities are so huge you could trade anything and then most mostly people don't even understand what they're trading or why they're placing a trade so so that's that's definitely a risk and people should be you know thinking about this for sure excellent points again Ingmar and I guess with these incredible advances in fintech accelerating at an ever-growing pace it's tempting to imagine a future where humans with all our biases and emotions will be obsolete when it comes to managing capital but from our discussions with industry experts we've heard how the most likely future is one where AI and other tech works in harmony with human traders with humans guiding the technology and using it as a tool for better outcomes and that was something that came across from my discussion with Hariton let's hear from Hariton again on that point we see like the next step to be humans along with AI and machine learning to work together to find patterns and understand we don't have to forget that you know AI is not always like a black box the various way where you can understand a prediction that the model does and you will be able to go in more depth and understand okay why this decision was made was it correct was not correct I've learned over my career that there are certain market environments that I'm particularly good at trading and there are other environments that are not so good at trading and I've actually working with development teams have developed algorithmic models to trade through those periods where where I'd be less profitable is is that idea the symbiosis of humans and AI working together Ingmar something that you you you think is going to be a future development absolutely and if I look back into like my trading career then I started using so algorithms I think already 10 years ago so and it was a huge benefit because I remember I was maybe you know sitting on a beach somewhere and and at the same time my algorithm was trading the the pound dollar so it was a forex related to the EA that I had at the time but it would be interesting to see what would happen you know if the central bank decisions as an example or policy decisions themselves would also be made by AI driven machines because if that is not a case then there's always a level of uncertainty that one has so you might have the best computer you might have the best AI software but as long as there are people at the BOJ or or or the Fed that make decisions then there are always going to be surprises surprises that even the best AI is unable to foresee yeah and I guess for for the final word on the the topic with respect to to AI and humans working together here's Paul again from episode five with his vision for the future of humans and technology working together when I talk to people who play chess at a very very serious senior level they tell me the following things the machine will beat a human being the best machine will be the best human beings however the combination of a human being and a machine will beat the best machine so if that's true and if that carries over that simple argument isn't it may be too simple but I I retain my faith in the ability of of human beings to make good decisions for the benefit of in in this case investment or chess or whatever it may be Ingmar thanks so much for joining us today and to our audience thanks for joining us on this season of Bright Minds from Ticknell we hope you've enjoyed these conversations as much as we have and we hope that you've come away with lots of useful guidance and ideas on how to improve your own trading life Ingmar thanks again for joining us today thank you Patrick it was a pleasure attending the show