Living in the decade after the great recession, people and organizations are still very careful about how they invest. While we have been developing algorithm after algorithm to attain the most accurate reading of the market, we still don’t put enough emphasis on human and crowd behavior. This is where Tradagon excels. Tradagon, the creators of Behavior Calculus, have developed a new way of analyzing data that puts the right amount of focus on human psychology. The company with 40 years of combined training is giving you financial professionals what they need to succeed in the market.
LA TechWatch chatted with CEO and cofounder Nikhil Dhingra about the startup.
Tell us about your product or service.
Tradagon has created Behavioral Calculus™, a bleeding edge technology for the actionable analysis of financial markets. BCalc™ is an algorithm-driven system that combines calculus, behavioral psychology, and artificial general intelligence to predict movements in stock prices.
What inspired you to start the company?
In the 90s my father — now CTO — started trading futures and took a $3k account to $640k in 2 months of trading soybeans. This drove us to research what exactly was driving these sorts of market moves. After years of testing and iterating, our efforts have culminated into the Behavioral Calculus technology, which we believe captures the essence of price action.
What really excites me is the extensibility of our technology. We have run all kinds of data through the models — such as CPI, unemployment, and housing data — and have achieved the same level of predictive power.
We think the potential for BCalc goes beyond just Wall Street and can eventually apply across domains, like in consumer behavior.
How is it different?
The technology is different really for 4 reasons. First, is that it is market agnostic; BCalc can deliver not just a higher alpha, but a high absolute return, regardless of market direction. Second is that it is truly innovation-driven; BCalc is neither fundamental nor pure technical analysis, but rather a new kind of behavioral time-series analysis that involves a multidisciplinary approach and is AI-driven. It goes beyond Fourier, which is one of the deepest insights ever made. Third is that it is a unifying model; with its high-resolution deconstruction of price action, BCalc uncovers universal market truths that subsume most existing technical analysis concepts, rendering much of the discipline obsolete. And fourth and finally is that extensibility angle; BCalc also can be effectively applied to other behavioral time series data to get the same level of predictive power.
What market you are targeting and how big is it?
Right now we are primarily targeting financial institutions that have some trading activity (which most do), including hedge funds. We are also targeting the retail investor. Our TAM is massive given that we are targeting institutional and retail investors across multiple asset classes.
What’s your business model?
We are looking to partner strategically with the right firm(s) to deploy BCalc internally. So this is primarily a B2B play.
Second, our product team is working hard to package up some of the core BCalc tech into consumer-oriented products and services, such as indicator packages and an API to consume some of our data.
How does ‘Behavioral Calculus’ take into differing types of people?
At Tradagon our worldview is that while fundamentals may govern prices in the long-term, short-term price action is largely influenced by crowd behavior. BCalc hones in on the feedback loops that trigger crowd behavior, tapping into the essence of short-term price action.
What are the milestones you plan to achieve in the next six months?
Our 6 month plan includes building and fostering a strategic relationship with the right financial institution to pilot our technology. We also will likely start fundraising again.
What advice can you offer companies in Los Angeles that do not have a fresh injection of capital in the bank?
First use what resources you have at your disposal to create and articulate a strong vision, leverage your networks and all of the great tools out there before defaulting to the VC route.
Where do you see the company going now over the near term?
We will grow our institutional and retail investor customer base and tackle some of the biggest product features on our roadmap.