FNG Exclusive… The copy trading world is getting a little more crowded.

FNG has learned that Michael Berman, the longtime CEO of Australia based trading strategies provider PsyQuation, has launched a new licensed copy trading venture called Ditto, at website ditto.trade.

Ditto is offering what it calls a smarter way to copy trade in the multi asset sphere, and is launching as a broker, piggybacking off the licenses in Australia and Vanuatu of Gleneagle Securities which is also an investor in the business. (All client accounts are technically opened with Gleneagle, which also executes client trades and holds client funds). Mr. Berman’s co-founders include some of his former PsyQuation colleagues, including Ukraine based CIO Vladimir Krouglov and COO Vladislav Moskovskiy.

Ditto states that it will not let just anyone join the platform as a “Pro”. For investors to copy Pros they will need to meet strict criteria to demonstrate their trading ability provides investors with a high probability of future success and that someone from the Ditto Investment Committee has interviewed the trader. While this does not guarantee success it certainly provides an important extra layer of protection for investors, which most other platforms do not perform to its standards.

As far as Pros go, Ditto said that they need a track record of 2 years and a Sharpe Ratio of 1+, which already excludes 99% of all traders. To fill the gap the company has designed an incubator “The Hub” program that aims to accelerate a trader’s ability to manage more money and earn performance fees. The secret to this program is having “skin in the game” if you are prepared to back yourself and work within the risk parameters the company set, then it will back you. Ditto sees “The Hub” as the minor leagues, and through mentoring and development it hopes to create a talent funnel into the major leagues of Pro ranks.

In addition to copy trading, Ditto’s proprietary platform offers trade analytics (PsyQuation’s old specialty) as well as a proprietary trading MT5 trading tool that takes more than 20 years of trading experience and delivers it for free to its active trading community.

The company said that the entire managed account industry is notorious for promoting traders who have recently performed well, playing on the psychological recency bias where people extrapolate recent performance into the future. Ditto says that it will try to avoid this bias.

Perhaps even more important than choosing which Pro to invest in, according to Ditto, is when to stop copying and how much to copy. Ditto provides what it believes to be an optimal solution through Ditto Smart Portfolio. Nobel Laurette Harry Markowitz wrote that the closest thing to a free lunch in finance is diversification. Ditto therefore invests in all its Pros using the latest methods in quantitative finance to allocate optimally.

Ditto allows an investment as small as $200 in a Pro or a Pro Smart Portfolio. Typically small accounts do not copy the Pro with the same risk for the smaller account due to the typical minimal lot size 0.01 (micro lot), this means small copy accounts are usually much riskier than the account they are copying. Ditto is able to overcome this hurdle by decimalising accounts to more than 8 digits to achieve relative size parity.

Ditto said that it offers trading in FX pairs, Commodities & Metals, World Stock Indices plus more than 1,000 US and 300 Australian Stocks. It also has what it calls a larger offering of Crypto than most brokers as well as 24/7 trading for this market.

Michael Berman took to social media today and posted the following note:

I am excited to announce a new venture that I have been working on and will soon be going live with. After more than 20+yrs trading and always building products on top of someone else’s broker we have finally become a product lead broker.

There are no shortages of brokers in the market. You can read our backstory [link] over here.

We believe we are bringing something different to the Copy Trading space and as a product lead broker you will enjoy more product for traders built by traders.

We are looking for talented traders so please visit [us] if you think you will qualify for an allocation.

You are speaking to the decision makers no layers of management to deal with. Please reach out and lets start talking about ways we may be able to do business together.

Finally for those who have read some of my musings over the last few years I am writing a daily and weekly newsletter. I would love to have you join my global macro newsletter “Pathways” as I try and figure out what is going on in the global markets.

Looking forward to hearing from you.