By: Paul Salfen
Let’s face it: most of us don’t have the particular set of skills to call ourselves a day trader. Playing the stock market is risky, and using the software that the professionals use can be confusing to the average person. So where do you start? Go take a class? Who has time for that? Buy a bunch of screens and try to learn the software? No, thanks. Well, now there’s a solution for those that not only want to dip their toes in the water, but still works for those that actually know what they’re doing. Enter Black Box Stocks. This web-based system is easy-to-use and employs predictive algorithm-based technology that was once reserved for hedge fund managers and folks on Wall Street. Now it’s available for anyone to jump in and try their luck – without too much risk for comfort.
The predictive algorithm points out high probability trading opportunities in a single-page layout that populates stock symbols that have worthy short-term gains.
To illustrate the usefulness of the product, CEO Gust Kepler explains, “A human would have to be watching 13,000 stocks at the same time to find the 50 or 60 that we find. Our system finds stocks that are meeting certain thresholds within fractions of a second.” For instance, if a stock has an unusually high trading volume, and the price of that stock is increasing on high volume, the user might get an alert and decide to jump in on the surge.
After all, the user is fully in control here. No one is placing money anywhere on anyone’s behalf and Black Box Stocks doesn’t give any sort of advice – and they’re not a broker-dealer, which is why they don’t consider sites like Trade Station or Robinhood to be competitors. “Just the facts,” as they say on TV. Kepler stresses, “We don’t facilitate the sale of stocks. We simply identify stocks with intraday gain potential and our users can trade through the brokerage platform they prefer. They could use Robinhood to trade after receiving an alert from our site.” Just like a black box itself, the public is now given information that used to be contained.
If anything, the team behind the site sees it as gamification of the business, which shouldn’t ruffle any feathers with day traders. Co-founder Eric Pharis says, “We’re not going to displace anybody, we’re just adding to it.” Kepler counters, “We might take some business away from other trading tools – we’re just easier to use and more efficient, and we shorten the learning curve. But I’m confident we’ll bring a whole new wave of traders to the market.” After all, day traders that are beta-testing our product love it because there’s always an “oddball” stock that we find that would not have been on their radar otherwise.”
Although if you talk to the group long enough, the word “disruptive” keeps coming up. So if it’s not displacing people, but adding to the industry, who or what is disrupted? Kepler says, “We’re disruptive as a day trading tool because I believe we will bring in a whole new mass of people to the game– just like Uber did for people who would have otherwise driven home drunk – a whole new group of traders because we’ve made playing the market so easy. We have a highly complicated back end doing intricate equations and measurements, but on the front end, it’s a simple pick and play method.” Unlike Uber, which is currently displacing cab drivers, though, Kepler likens it to what eBay is to garage sales. He shrugs and says, “a lot of people don’t want to run around to garage sales but they’ll log on to eBay.”
After raising $1 million in capital during its first round, the Dallas-based company has recently gone public. They did so to create a liquidity strategy for their early seed investors so they don’t have to wait for the company to be acquired by another tech company or other financial suitor. The plan is for Black Box Stocks to be live in the next 90 days after some new tools are perfected with beta users, like a social media feed that shows what people are saying about a specific stock in real time. When it is launched, users can sign up for $79.99 a month and receive access, which is currently considerably cheaper than competitors like MadScan and Wizetrade. There’s no software to download and no technical parameters that need to be set up.
Software developer David Kyle says, “This system is brought to you by experienced high frequency traders who have traded themselves for 10 years and we’re using our knowledge and exposing it to the public for their benefit.”
With 54 million self-directed traders out of 115 million in the US, and $2.8 trillion in trading assets, Kepler sees an upswing in the FinTech industry and assembled a group of impressive people that back this vision. That group consists of Rod Taylor and Brandon Smith of Austin based Cyfeon. The duo was part of a team that created Cybertrader, a platform that was later sold to industry behemoth Charles Schwab. CTO Keller Reid was the next addition to the team at Black Box Stocks. While still in his 20’s the Wharton pedigreed whiz kid managed and developed technology for major financial players including Charles Schwab, Jeffries and Penson. Along with Eric Pharis and David Kyle, Kepler, the “tech cowboy” CEO believes he has assembled an all-star team.
Even though the industry grew suspect of shortcuts with the book Flash Boys and the film Moneyball, Pharis says it’s really a set of if/then statements in the software, not something tricky. He says, “In Moneyball, they were using algorithms in more malicious or nefarious ways. We’re taking similar technology to help people have the same sort of access that is usually limited to people with tremendous resources or technology. And in Flash Boys, [author] Michael Lewis says the markets are rigged but I don’t think so. In fact, it’s never been more efficient and we’re part of that process.”
Kepler thinks simplicity is the key. He says, “Most people that build these systems are scientists, engineers, and technical traders. These people are highly intelligent but they make their systems so complex, it’s hard for a regular person that doesn’t have a degree from MIT to use them. We have the skill set make a complex system, but we have made ours very simple and easy to use.” He adds, “You don’t have to be a day trader with knowledge of trading criteria, market trends, market thresholds, or charting – you don’t have to have that. We find it and do it for you.” Looking at his screen, he smiles and says proudly, “I think a lot of people that were always interested in trading, but found it too complicated will be much more apt to give it a try because they can see our system picks big winners every day – before the gain.” He leans back in his chair, puts his cowboy boots up on the table and repeats, “Every day.”
Blackbox Stocks WEBSITE