In Episode 17 of the Optimus Futures Podcast, our host Matt Zimberg interviews Moritz Czubatinski from Edgewonk. Matt and Moritz dive into a number of trading topics and focus on the EdgeWonk Trading Analysis Software. EdgeWonk assists traders in their daily decision making by providing actionable and completely personalized tips on how to adjust their trading approach. Watch the interview to see how day traders need to rely on objective data in order to improve their own trading analysis.
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Welcome to the Optimus Futures Podcast. A place to learn from an industry insider with over 20 years of experience in commodity futures and options. Gain insight to the newest technology, platforms risk management, trading philosophy and advice about the current state of the futures and options markets. For futures trading platforms, deep discount trading commissions, overnight margins and instructional videos. Feel free to visit our website at Optimusfutures.com.
Please remember that this matter should be viewed as a solicitation to trade trading futures and options involve substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. Optimus Futures LLC is not affiliated with, nor does it endorse any trading system, methodologies, newsletter or similar service. We urge you to conduct your own due diligence.
Now here’s your host. Founder and CEO of Optimus Futures, Matt Zimberg.
Matt Zimberg: [00:01:11]
Hi guys. This is Matt Z from the Optimus studios. I have a really good friend with me here today. His name is Moritz I’ve known him now for a number of years and we met through a mutual friend of ours and he created something very very unique called Edge Wonk. Edge Wonk is a tool that analyzes your trades, puts them in an objective manner and you can clearly see what are you doing right. What you’re doing wrong with the attempts to and when you look at it you should attempt to improve your trading with it. So the idea here is to move from a gut based feeling to something that you can see clearly there’s a lot of traders out there when they start trading. They always go back and forth between paper trading, real trading, trading models, one day trade Elliott Wave, next day Fibonacci, next day you know they buy something else. So the idea here is basically to have something objective that you look at. So without further ado Moritz from Edge Wonk. Moritz, thank you for being here today. Really appreciate the time that you took to be here with us and by the way Moritz right now is in Frankfurt, right?
Moritz Czubatinski: [00:02:24]
Yes. Thank you for having me. It’s a pleasure.
Matt Zimberg: [00:02:28]
Thank you for being with us. So before we get into the Edge Wonk characteristics and the software that you built for yourself as a trader and now you share it with others as well. Tell us a little bit what asset class that you start with and why?
Moritz Czubatinski: [00:02:45]
That wasn’t by choice actually. I started with forex and actually I was a poker player before and I was in a group of poker players where we exchanged our strategies and ideas and so on. And one of them he had the idea one day to look for something which is more like leverageable than poker. So he went on Google and he found trading and you found forex trading first. So it could also have been stocks or futures. He just got into that and I followed him. So yeah, wasn’t an informed choice. It was just the first thing that popped up on Google.
Matt Zimberg: [00:03:30]
I understand and you know in in Europe obviously forex is a lot more popular than it is here in the United States. I definitely understand your choice. Tell me so. That’s interesting. So you come from the poker players professional poker right. And now you’re transitioning into trading. So what was your primary method of trading when you started out?
Moritz Czubatinski: [00:03:50]
That was day trading which also originated from my poker days because I was just playing like four or five thousand hands in a day on online poker and I just needed the action like I couldn’t wait for days or hours for trades and also for a trade to finish. So because in poker a hand is done in a matter of minutes. And I just couldn’t handle the being in the market for many hours. So I started out with day trading on the one minute and five minute charts very very short term.
Matt Zimberg: [00:04:28]
Excellent. Okay. Well at the end of the day you got to trade something that fits your nature right. Some people are better for long term some people just you know they need to trade short term. But I guess you found your niche in that. So now you’re going from professional poker. That I understand you did for a living. Now you’re going into day trading. So when did you know you’re ready to trade professionally full time as a trader. When did that transition occur?
Moritz Czubatinski: [00:04:56]
That was when I had a positive expectancy first of course on my strategy and when I was making roughly two times my monthly income on average. So I wasn’t I didn’t have a huge track record that only took me around two years to become profitable in trading. By my definition like being profitable as everyone has to define that for himself. But by my definition I was ready to go and I had some savings for six to twelve months based on my lifestyle. So I felt I should just give it a shot and it worked out. So it was controlled risk I took. Yeah.
Matt Zimberg: [00:05:44]
Excellent. Did you feel any changes in psychology when you went full time trading? Was there a transition there or was it smooth for you? Because I’m sure a lot of reviewers they want to be full time traders. Can you elaborate maybe a little bit on that your psychological transition? From being, okay, nobody’s gonna give me a paycheck anymore I’m going to be full time right now.
Moritz Czubatinski: [00:06:12]
It was huge. I instantly had a lot of FOMO, fear of missing out. And yeah I took the first rate and I can remember it was a perfect trade and it didn’t go my way. I said Okay it’s a perfect trade and it came back. So I entered again another loss and I entered again another loss. So my first three trades as a professional trader were losses. And then I said Okay okay I have to do this totally differently. So the first three months of my professional trading career I actually back tested I went back to the drawing table and I back tested my strategy over many many years. And then I went back to trading with the new confidence and then it slowly slowly became better and better then yeah, I could replicate basically my performance from when I still had a paycheck.
Matt Zimberg: [00:07:08]
Thanks for sharing that. It’s something that I’m curious about. How do you apply risk management in your trading so you know you have good trades you have bad trades. How does the whole risk management plays out? Let’s say after a period of a month.
Moritz Czubatinski: [00:07:22] So for risk management per trade I have always been doing it that I simply risk 1 percent of my equity on any given trade. That’s how I’ve been doing it for many years. And then I figured out that I have actually an objective way to figure out which trades are awesome and which trades are just mediocre. So I started to switch up my bed size. My trade size still speaking a lot in poker terms and then just one percent of my equity on standard trades zero point five percent on mediocre trades or discretionary trades. I sometimes I take them where just having a feeling and then 2 to 3 percent on the Triple 8 trades and that has improved my performance a lot while still maintaining volatility of my portfolio almost the same. Actually now.
Matt Zimberg: [00:8:21]
I see I see. So I know that poker players they look a lot at analytics. When did you decide to look at the analytics of your own trading? How did you, how did it come about you know creating the sort of parameters for yourself to analyze your own trading objectively?
Moritz Czubatinski: [00:08:40]
Yeah it was straight from the beginning because in poker I always had a statistical tool to track all everything I did basically. So I knew that I need something to track my performance from the beginning. I’m huge on journaling anyway. I do sports or my calorie intake in my sleep I track basically everything so it was just natural to me that if I want to learn I need a objective feedback loop and that’s when I started tracking from the beginning. But the problem is of course I didn’t have a strategy. So. First you need an objective strategy to track because if you only track every trade without any background then you’re comparing apples to bananas which doesn’t make any sense right. And yeah. And then just that’s also what helped me to stay stick with my strategy because I knew. Every time I deviate to a new strategy I have to completely restart my whole statistics and data base. And I basically reset my progress to zero. So that’s what’s helped me a lot with system hopping as a new trader which I did in the beginning and then I just stopped it.
Matt Zimberg: [00:10:05]
I see I see. So you come from. Okay so now you’ve decided I’m going to create do the analytics, I’m going to measure myself. So coming from the non trading world into trading what now you’re looking at obviously the parameters that people measure in their performance right. You go on the Internet you know and you see how to measure performance things like that. What in your opinion was missing for you out there that that some of our traders did do track what was missing for you? In terms of parameters that would give you more of an objective picture of what you were doing.
Moritz Czubatinski: [00:10:43]
Yeah it was almost everything like whenever I read in a book about trading journal I asked a trader what they are tracking in that journal almost every one of them only had like a data entry exit the win or loss and not much else. And then I felt like OK I can just look at my broker statement they get the same information and making money or losing money but I don’t know why. And then I started looking much deeper into what makes up my strategy. First of course and my strategy is very dependent on news and market environment. So I simply started tracking the marketing environment on which news I was trading. And then also for example my own personal state of mind because I am a systematic discretionary trader. So the discretion part is maybe only 10 to 20 percent of my strategy but it makes up maybe 80 percent of my performance because if it wasn’t like that I could just code my strategy and be done with it. So I was looking into how do I feel that day. How did I sleep. Maybe I had some trouble at home some drama you never know the spouse were there but what she’s gonna do next. So you look at your credit card statement it’s like oh damn it I’m already five K in the hole in the black and in the red this month. So I started tracking all that psychology as well. And I found some very interesting correlations. Then later I wanted to to improve my performance. So how do I do that. Well I have to see whether my take profit and stop loss placement does make sense or whether I could hold rates longer or I should place my stops tighter and so on. So I just looked at my trading strategy and the environment and thought about how I could improve my performance potentially step by step. And that’s when I track more and more and more data. And of course some of the data points I attract. They turn out to be completely useless. That’s just how it is. But maybe the other half the other 50 percent turn out to be and they gave me insights which I would never have imagined.
Matt Zimberg: [00:13:10]
Wow that’s interesting. So now. Okay so I see that really tracking. It’s not just part of your training you’re just part of your lifestyle for everything. Yes. Right. So now you build your own parameters to measure your performance. Can you talk a little bit about now that you’re tracking your trading now that you’re looking at your analytics. How did did your training improve did it give you a new light on your training where there were like aha moments you’re like well you know maybe my trades are not good at this time or maybe not good on this instrument or others. What what happened after you started looking at your analytics? What were the surprises and and where and where did it improve? How did you improve from there?
Moritz Czubatinski: [00:14:04]
For me the biggest impact was trade management. In the beginning because I always thought that I had an objective way to manage my trades. But when I went back over my old trades and I looked at them and if I had just played the set and forget. So I set my target I set my stop loss and I would just let them play out actually my performance would have been potentially that double than what I had over 100 trades. So that was a huge eye opener for me and I’m still not trading set and forget these days. But I have adapted my trade management a lot. Following these results because that was just costing me a lot of money that I was filling with my trades all the time. And now what also was another huge aha moment when I looked at my position sizing as I said before. I was simply looking. So I in my journal I have a b c trades and I simply calculated what what I have made if I had bet this and this and this on a and b and c trades and then I figured out the optimal position sizing for my strategy and another thing I really love is my custom statistic which I use to track the quality of the trade. And my gut feeling. So I have trade quality one to five gut feeling one to five then how is my performance if the quality of the trade is five so best and my gut feeling is five also best. Those are usually the moneymakers I have maybe 10 trades in a year that have both qualities. Then if I have a really good technical quality of the trade but my gut feeling is like a one. Usually I break even on those traits for various reasons one is probably because my gut feeling tells me something which I. Objectively cannot know my brain picked up something like instinct. Which I haven’t figured out yet. And two of course because I don’t trust the trade as it is running. So if my gut feeling is not perfect on the trade it’s going to be much harder to manage it once I am in the trade. So that’s also how you can improve your gut feeling over time because you know you can trust it or you can’t.
Matt Zimberg: [00:16:33]
That’s an interesting point so I want to focus on the gut feeling for a minute. So do you believe that your gut, your gut feeling improved because of the analytics? My main question is this Do you believe that a trader can develop a gut feeling over years in trading a market without using an objective performance tool that would track history? Is there such thing as intuition alone that made work?
Moritz Czubatinski: [00:17:04]
I think you could develop it over time but it would take a lot more time one to develop it and to trust your gut feeling if you didn’t track objectively what your gut is telling you. Like for me I know if I have this weird feeling about a trade or I just don’t somehow I don’t like it. I can look at my data and I know if I don’t like a trade there’s something up in it. And if of course you can develop that gut feeling without objective way to to assess to your gut feeling. But it will take so much longer that it will be so much harder. So just make life easy for yourself.
Matt Zimberg: [00:17:48]
What do analytics reveal that intuition does not? If you had to compare what where is the advantage of the analytics over the intuition? And why I want to tell you personally me. I really believe that we have to look objectively at what we do. I personally don’t trust my intuition on anything. I look I like I always say numbers and facts right and the where big data plays a role today that people don’t want to just say we feel or we think they like to use analytics. So tell me a little bit where the analytics, you know fill your space in terms in terms of decision making?
Moritz Czubatinski: [00:18:30]
Yeah. So I mean numbers are of course the the money maker. If the numbers are not right you are not going to make money. And usually our intuition is not good when it comes to percentages, probabilities. And there are some experiments which have been conducted about that. You can read up on that. It’s our intuition is horrible when it comes to games of chance and trading is a game of chance. So our feedback loop is broken. So. Imagine you are a footballer. You know every time you do this this is going to happen like almost every time. But in trading you do this in 10 different outcomes. So you need to have an objective way to assess your what you are doing works over the long run and over the long run can be a very long time. It can be. It can be years. Sometimes you need a huge sample size for some things to play out. So if you want to assess big numbers you definitely need the data about your intuition. It is still quite helpful to be honest like even if my data tells me as I said before this trade is a perfect trade. My intuition tells me something’s fishy about this. I have to I have to assess I go with a lower risk on that because yeah our brain has a pattern recognition machine and it definitely has some things in the subconscious that we cannot access. Intentionally. But it’s just so no one knows how the brain works right.
Matt Zimberg: [00:20:17]
Right. I always tell people you know I laugh when I you know when people tell me I’m always in control of myself right. They didn’t realize how much the subconscious makes you know decisions and things. I mean the determination is subconscious on things they buy things they say even their political opinions. Right. So it’s it’s interesting. So let’s let’s focus right now on EdgeWonk and this is what I want you know to share with our traders as well. So now all those tools that you developed now you have a challenge of moving into a software environment. Now you think OK I’m not going to use Excel spreadsheets. I want something professional that shows me right away at the end of the day shows me know the graph shows me the decision to tell me a little bit about how you moved all the performance or the performance criteria to EdgeWonk?. And what does EdgeWonk show you today in a clear matter that you didn’t have when you started out?
Moritz Czubatinski: [00:21:20]
All right so EdgeWonk was basically the product of my trading journal and my business partners journal. We just put them together and we created something new out of it. And that was EdgeWonk. And in the beginning it was in fact an Excel sheet. And then we moved on to another professional software EdgeWonk 2.0 and what it does is basically you can input your performance and it shows you everything that you need to know in a concise manner. And also it’s it’s very slim in a manner because there’s tons of things to track. You can track everything you want. But is it helpful. Not really. So in EdgeWonk we made sure that all the statistics we have are 100 percent useful to your development as a trader. We call it trader development suite actually, it’s not just a journal. And you also have a psychological journal you can write notes where we trade you can add screenshots and then maybe before your trading session look at all the screenshots of all your triple-A traits. So you’ll get your brain fired up into the right mode before entering the market. That’s what I like to do. I like to look at my best past trade so I know exactly what to look for. And EdgeWonk does all this for you. Plus you can also customize it and adopt it to your strategy. So it’s very it’s a very versatile tool for every day and swing trade out there. For investors. It’s probably not very helpful. We are focused more on day and swing traders definitely. If you’re holding anywhere from one minute to three months EdgeWonk is a tool for you.
Matt Zimberg: [00:23:12]
When I saw EdgeWonk for the first time I was so impressed I thought this is exactly what every single trader needs. And this is where you have to put the data. It shows you the graphs it shows you all the things that you do right, wrong in a very objective manner. So and I started looking at all the parameters I thought it was and quite honestly I’m happy that you know I’m not subject to a lot of brokers would say but I’m happy you came from you know being a professional poker player because you have poker you have those numbers and odds. The statistical probability and it takes and also there’s the. But in poker you have the advantage of intuition because you have you’re playing against a small group. Here you’re playing against millions of traders you know millions of you know billions of dollars. So you definitely need an objective tool that tells you you know what you did right and what you did wrong and also improve even if you’re a good trader. You know I’m sure that even good traders can take a look and improve it from there as well. So it’s not just it’s just not just a tool for somebody who was feeling or somebody was going through challenges but somebody who was you know was. So successful in the game. So I want to continue talking about EdgeWonk. As time progresses what you do now that you’re selling the software to the traders out there and helping them out what kind of feedback are you getting from people ? Was there any kind of feedback that helped you add additional features?
Moritz Czubatinski: [00:24:52]
We get a lot of feedback from customers and of course some of the feedback becomes like we can’t implement because it’s very individual very to that individual strategy but most of the feedback is very awesome. Like ninety nine percent and what we are doing right now is that we try to add more and more brokers so you can important that traits automatically more trading softwares automatically into your journal because like for me I’m old school. I enter all my trades manually because I think the learning effect is much better if you do that. That’s just that’s just how I think. But if you import just all your trades into a journal I mean for EdgeWonk to really make sense you still have to review every single trade and add your custom statistics and so on. But still I like to enter them manually. So but I understand there are a lot of day traders that have maybe 50 60 trades in a day. OK but then we have to import solution is that’s that we are also going to move into the web in the future. Just so we..
Matt Zimberg: [00:26:05]
A web interface.
Moritz Czubatinski: [00:26:07]
Exactly is where people can upload their trades into the cloud and then they don’t have to fear about us like we are making backups of the database all the time of course. But if databases on our service it’s much more convenient for the users and we will have to share your trades or share your database as well. If you have a mentor he can log into your database look at your trades give you direct feedback for example. And we are just going to make each one much more socially interactive so to speak.
Matt Zimberg: [00:26:45]
You mean the trader traders could consult with one another about the analytics.
Moritz Czubatinski: [00:26:49]
Yeah exactly. Post their statistics as well. Their previous trade eight years or so. They could also post filters for example line in each one. You can filter for anything you want. So they could post hey I’m making money every Monday and every Tuesday I’m losing it. So there’s something up there and then other traders could chime in on the discussion and so on. It’s gonna be very interesting for us to build this community because we have a lot of users already and now we want to take the next step to really build them into the community which can help each other.
Matt Zimberg: [00:27:24]
Oh I see. I know whatever you guys do. You and Ralph are very methodical. I love working with you guys. So everything you do is organized. You take your time you know it’s like if you’re building the next Mercedes or BMW. So I will go back for a minute do something that you said and and I find it very very interesting. You said that you enter your trades manually. Again. Can you repeat what are the advantages that it gives you as a trader when you as opposed to exporting an Excel spreadsheet and I understand what everybody can do it. Some people not only turned 50 60 times a day some of them trade hundreds of thousands of trades. So that would be hard but the ones who let’s say please the 10 to 20 trades 30 trades could at the end of the day do it. What advantages do you get from placing it manually?
Moritz Czubatinski: [00:28:22]
It’s just that you are basically reliving every trade as you enter it. That’s that’s my main focus. So I have to go back to my trading software it’s like OK I took this trade. So where did I enter and then where did I put my stop loss my take profit? And I have to look at how it moved and I’m just basically reliving every trade again when I’m entering it into EdgeWonk. And that just gives me a huge advantage in experience. I just because when you are in the trade it’s very hard to objectively learn or gain experience because money is on the line our brains are going haywire. And after the trade it’s like OK. Now there’s the time to review and that entering process. For me it’s already 50 percent of the review after I entered the trade. I already know exactly what I did wrong what I did right and how the trade went and what I’m going to change in the future and it’s just to me it’s a it’s a very it’s a selling habit. It’s like meditation to me. I am looking forward to it every day to enter my trades. And it also gives me this this conclusion at the end of the day that OK now trading is done and that everything I’ve done my my work and I can relax until the next session open.
Matt Zimberg: [00:29:46]
I see. So do statistics change on EdgeWonk as you enter the data? So let’s say you have 30 trades you enter the first five. You run data you can enter the next 10 run data and so forth right. So you could you could also see how would you think that would help? Or do you just take all the trades manually you know put them in and then you run the statistics or do you run statistics as you enter a certain number of trades as well?
Moritz Czubatinski: [00:30:16]
Yeah. For me I look at the windows of 50 trades because like in statistics they say 20 trades as a viable sample size 20 to 25. For me it’s like 50 trades. I can say that that is giving me a clear indication of where I am heading. So usually I take my whole database it’s like right now or on two thousand trades and then I compare the whole sample the 2000 trades to the last 50 trades and then I compare how did I perform. Did I outperform or underperform. I can gain insights on short term trends in my trading for example. And by the way we are also going to add indicators to our equity charts like moving averages or volunteer bands which is a feature I have been looking for for a long time. So you can know where your short term performance is going. And yeah that’s how I do it. I know a lot of traders they review every 10 trades every 20. For me it’s 50 is the golden number. And if I implement that change on my strategy I will only implement one change and do 50 trades. Look at the impact change something else.
Matt Zimberg: [00:31:37]
That’s a really good point with moving averages on the equity I think it’s an excellent addition because I actually work with a commodity trading advisor that manages money for people and that’s a big thing for him is that he has a swing trading program in the day trading program. But that’s one of the things that he measure so hopefully the tool will be will be picked up by professionals as well. I don’t think I have any other questions. I wondered if there’s anything final we want to share with our viewers. Please go ahead.
Moritz Czubatinski: [00:32:15]
I have mentored a lot of people in trading and the main reason for all of them to become proficient in this in this industry or not is expectations. It was always expectations for all of them. As soon as you adapt your expectations and you are not expecting to make a thousand percent every day every year every decade you’re going to have a much easier life and you’re going to have a profitable career. If if you if you follow your everyday routine and so on it is very to have a good life in trading. Just adjust your expectations.
Matt Zimberg: [00:33:01]
I agree with you. I think that people come in with. A lot of people that I talked to come in with a lot of unrealistic expectations and forex trading and futures trading. And unfortunately unfortunately you know it’s almost like a direct correlation between expectations and the life of the account. Right. And there life of a trader if they come in with insane. I always tell them look at the industry statistics look at commodity trading advisors look at professional money managers what do they return. Not not with your Instagram account told you right. But what professionals are making. And then maybe you’ll you know you’ll have a realistic XP I mean and maybe then you’ll be able to not be in a rush Be methodical use tools like EdgeWonk prepare yourself you know and like you said that too it’s still took you two years which I believe by the way it’s a short it’s a short time to become a full time trader you know. But I think because you had your you know I know for sure your mathematically inclined even to take a look at statistics and data and everything else. So I’m sure that helped you as well and not everybody else says so it might take them three years or four years but hey it’s just like a degree in university nobody becomes a doctor in six months.
Nobody should be a trader in one month. Yes. I am. Moritz I appreciate your time very very much. I wanted to tell you I’m very proud of your generation. You guys are young but you are coming up with innovative tools something that didn’t exist when I was around your age you know we I remember the first time I clicked the Globex in the E-Mini S&P and I traded and all of a sudden I’ve got to fill and for me it was like a miracle. Imagine being on the phone with a floor broker waiting for execution you know all of a sudden you click and it’s there with something you guys take for granted. So it’s true. And hopefully in the next interview we’ll do I. I will have. Cool pods like yours not Studio 54 that I use here. So anyway I wanted to thank you for your time. I appreciate the effort. To our viewers we are going to. We’re going to share the EdgeWonk links with you. And again we recommend this tool for you trading. I know that you guys hooked up. Right now we’re in the U.S. where licensed with IG markets for forex. And it worked the platform works with that. It works with Sierra. It works with Gain Trader and a bunch of other platforms that you know we definitely can give you information about more ads. Thank you. Enjoy your day. You know that I’m from sunny Boca to Frankfurt, have a good one. Take care. Bye.
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Please remember that this matter should be viewed as a solicitation to trade trading futures and options involve substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. Optimus Futures LLC is not affiliated with nor does it endorse any trading system methodologies newsletter or similar service. We urge you to conduct your own due diligence.