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Hey, this is Jason with TradingReviewers.com, and today we're joined by Eric Pharis and David McKay of BlackBoxStocks (be sure to check out our in-depth BlackBoxStocks review). Eric is the co-founder and David is the director of marketing and business development for the company. And today we're going to be talking to them about the BlackBoxStocks platform and the thriving community behind this innovative trading tool. So, Eric and David, welcome.
Thanks for having us, Jason.
Hey guys, before we dive into things I wanted to take a few brief minutes to hear a bit about both of your backgrounds, how you got into trading, what type of trading you guys primarily focus on, your involvement with the platform. And, Eric, would you like to go first?
Yeah, sure. Actually, when I was in undergrad, I wanted to get into trading. So, I decided to go to graduate school in York, studied financial engineering and then took a job on Wall Street in 1999 as a prop trader. So, I was actually what's called a SOES bandit, if you ever heard of that term. And I got thrown right into the fire in the run up in the tech boom in 1999 and it was pretty wild. It was really fun.
I learned a lot about markets and how they move, how stocks move. And then basically, the firm I was at was sort of at the nexus for the ECN revolution. And so, I was around a lot of really technically savvy people, that knew technology and markets. And my background being engineering, I decided that it would be really interesting to start running our own kind of high frequency trading algorithms.
And so, I recruited our other co-founder of BlackBoxStocks, David Kyle, who had a job as a developer in 2004, and said, "Hey man, I think I can write some algorithms if you code them for me." Being a developer is a whole other world from algorithms. So, he said sure and we launched our first high-frequency trading algorithm in 2005. I thought we were a little late to the game, turns out we were actually still way ahead. And we had a really good run and we built out a lot of infostructure for handling market data and testing, back testing different algorithms and that sort of thing.
And around that time, 2010 I became friends with Gust through mutual friends here in Dallas. And he asked me about building more of a retail platform based on the technology that we developed in our high frequency trading days. And I thought it was a great idea, because we had this really great infostructure we had built out. And so, started just as an idea in a bar and we raised a little money at the beginning and built the beta program. We had some following right out of the gate. And then David came on just right then, right at the very, very beginning as well. So, he could probably tell you a little about his experience.
Yeah, so I joined shortly afterwards. And what brought me to Black Box, being friends with Gust, I've known him for quite a long time and Eric as well. So, my curiosity for trading, particularly started when I was growing up, watching my grandfather doing his investing and his trading, and I always wanted to learn and never really knew once I left my hometown, never really knew where to learn, how to approach it, and technology was finally around. My friends starting this company, so I dove right in and was one of the first beta testers of Black Box and picked it up I think pretty well.
This was back when it was an OTC site, but you know, it was still really interesting to me. I was very fascinated with it and it was a good way to learn. And I've been wrapped up with it ever since. So, shortly after doing the beta testing I approached them and put together a deck, became a director of marketing business development, and here we are five years later.
And for those that might be learning about BlackBoxStocks for the very first time, how would you describe the platform, guys? How would you describe it to somebody who has never heard anything about it and also what type of trader is it designed for? And what in your minds sets this platform apart from other similar software solutions in this space?
Well, I would say that we took the opposite approach from everything else out there, where there's a bunch of competitors that have unlimited to ability to set whatever scanners you want, filter down exactly what you want to find. Most of them are incredibly complicated to use, even if you know what you're looking for, and most people don't even know what they're looking for.
So, we started with the premise sort of like the iPhone where you can run it out of the box. Now, it's important to take the time to understand, we have a lot of education to help users understand what we're offering, but we try to do the heavy lifting for people. So, we pre-set everything and we filter everything out in the beginning to make it much easier for people to identify what's going to be useful in their trading style.
And we're definitely geared more for people who are day trading and swing trading, and then we have just a tremendous amount of proprietary information. We're not regurgitating what you would find on other sites. We're creating our own proprietary analytics, particularly with options, basically tracking the smart money. You know, we have servers processing millions of trades a day and digging out, finding where big money's moving.
Yeah, it's definitely a unique platform in that regard. As you mentioned, there are a lot of scanning applications on the market, but it can be extremely complicated and when you log in for the first time, there's quite a learning curve. That was one of the things that really stood out to me about the platform that you guys have developed is how user friendly it is. You know, the very first time you log in, everything is just done for you, it's just right there. You've got all the alerts pretty much pre-programmed in and everything's easy to get going right from the start.
I think that's one of the main selling points as you mentioned. Is there any possibility in the future of opening things up and allowing people to, perhaps more advanced traders who have more specific things that they're looking for, is there any possibility of opening that up in the future and allowing people to plug in their own custom scans? Or you want to keep it totally as it is now, everything is pre-programmed for the trader?
Yeah, I think that's the direction that we're moving into. It's aggressively, I think moving that way as more people become more aware and familiar with trading. So, when we started years ago, we were really focused on that specific of, you know, Bloomberg terminal for instance, you have to do a lot of custom configuration yourself. And the more familiar you are with trading the more experienced you are, that helps out immensely. So, somebody who's new poses, you know, a pretty big challenge.
So, the user friendliness and doing a lot of the work on the back-end was a big thing for us, so the simplicity. Now five years later, it seems like trading is becoming more and more of an everyday thing in a lot of people's lives. And I think that the more people are learning, so there's not as much of a learning curve, because people are finding out through awareness, things are growing.
Even like take options for instance. Options two years ago, there weren't as many options traders as there are now. This year it has just went parabolic and I think a lot that had to do with the whole crypto craze that occurred 2017-2018. That built a lot of awareness, grew a lot of peoples attention, particularly with the Gen Z, Millennial crowd. And we started doing more day trading options in the introduction of the options side of our platform.
And we were very fortunate to do that when we did, because the timing was great. And now options is the big thing, and I think because with the gains that people were hearing about during the whole crypto craze, we're now seeing that with our options trading but we're seeing it on a weekly basis, if not a daily basis. We have people, traders, that are making, you know, 100, 200, 300 percent. And I mean, almost everyday we have 100% gainer on the options side of the platform. We don't suggest that people just look for that, but back to answering your question, with the filters and things that we added on the platform recently, we are moving to a more customized setting type of system. We're a user driven platform. So, that's what the people are asking for.
So, a lot of it has to do with the timing and the progression of the industry, as it becomes more of a day to day thing for people and they're learning on their own. It seems like there's less of a learning curve for us to have to accommodate to. So, if people are coming in and they're requesting filters and they're requesting certain specifics that before they were just wanting to learn how to trade stocks. And then we've discussed doing some pro version where you can have a customizable configuration of the Black Box system itself, you know, because traders that have a trade station, with three to eight screens, they want to have things in a certain place where they like it, which I myself am one of those people.
So, we've discussed that and that could be something that we have in a later version. You know, to answer your question I think within versions to come and the release of our native mobile app, whether you're an options trader, stock trader, dark pool, or a combination thereof, you'll be able to use our filters in custom configurations to get the data and the indicators that you want to see as a trader.
Yeah, that's what I was curious about, if you had plans to do that in the future, how you would approach that if it would be integrated right into the platform with basically you know, one size fits all platform, or if you would roll out, as you mentioned, a pro version, something that's slightly different. A little bit more advanced and targeted towards a different person at a different price point perhaps. So, I was just curious also on how you would approach that, and you kind of touched on that a little bit.
What can you guys tell me about the current version of the platform? Obviously, a lot of things have changed since the platform was originally launched. How does it compare with the original in terms of design, overall functionality, features, etc.?
I'd say the biggest change is the options platform we added about two years ago. With the explosion of options trading, we're continuing adding new algorithms as well and fine tuning the algorithms we have that are identifying particular types of users buying large blocks and sweeps and how aggressively they're doing it. We're always trying to work and fine tune those, but that by far has been the biggest upgrade.
Then we also added dark pools recently too. Where we're really trying to zero in and where we're seeing those large block trades going off and helping users identify them. And we've added it to our charting now, so you can see historically where those dark pools have traded and potentially see support and resistance levels and stocks based on those, is kind of how we're using them right now.
I mean, we have a lot of things that are coming down the pipeline and what we're doing with the socialized trading and investing. So, fintech's an exciting space to be in, especially this year, it's cool to watch it blossom up and all the different companies in the space. We're really excited to be doing what we're doing and navigating our way through things. It's been an interesting ride so far.
How often are you guys adding new features to the platform?
Typically, it just kind of depends. I'd say once or twice a year is usually when we do a big update. And then every once in a while we'll put an additional filter on or a new alert, just depending on we think it's ready to launch, when it's ready to be put out on to our production site.
And these features that you guys are adding, are they basically the product of internal brainstorming, or customer feedback and special requests, or a combination?
It's a combination. We have ideas of things that we'd like to implement and then we take customer feedback, and when we get repeated interest in certain features, we work hard to get those integrated. Dark pool was a big one, people wanted to see that. But the volume profile that we developed was an internal devised feature and I think people really like, it's a really cool visualization tool to help people see these dark pool prints.
One of the goals is to provide more raw data for our users too. We have a lot of more high-end users requesting the actual raw data. So, we're going to be working to add that ability. It's also an additional, maybe having an API in the future is something that we might offer. It's actually a different license for the exchanges, so we don't have that license at the moment, but it's probably something we'll add more power users later in the year.
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As far as the development of BlackBoxStocks goes, what have been some of your main struggles? How have you guys kind of worked around those issues?
Well, we're lucky that our team of developers are very savvy about microstructure and market structure, so when we start doing updates or working on development projects on our site, our developers are really great at understanding how markets work. And so, they're not just like typical developers that you have to explain what you're doing, they get it. Now, part of the problem, I say we generally run into the main problem of trying to make things user friendly. That's always a challenge, right.
Because you have these developers, they understand, they're super smart, they're engineers and I'm an engineer, but then Gust, the CEO, he's a self proclaimed non-techy. And so, it's interesting we tend to argue a lot but usually we find a really good solution that's very user friendly in the middle. So, we have a pretty good team and we come to, after some arguing, we usually come up with some pretty good solutions. User friendly is actually one of the biggest challenges.
I mean, I would agree with Eric. Finding out what trading or feature is going to be like for hundred or thousands of people, can be an interesting journey. And anticipating people's response, I mean, we've gotten better at. It was a lot more interesting, these debates, in the beginning. But yeah, I'd say that building out the social component that we have with you know, a YouTube influencer or somebody that has their own small trading chat room, can join BlackBoxStocks and we have an affiliate program.
So, building out that functionality on the tech side of our platform and the integration of that social side has been an interesting piece for us to work on. And it's definitely referred to as maybe the crown jewel of what we do, because it's that interaction with the tools and the education, all working together that we find is a really good recipe for people to have an advantage in trading stocks and options, particularly if they're newer.
Building out to where a broadcaster, like I said, could come on, or somebody with a chat room, and be able to monetize their following that they've built out on social media, because they're into trading and then they're teaching their people who they already have a relationship with, and then everybody's learning together. But they're all learning together using the tools on our system, it tends to help people when they're discussing ideas and learning from one another, with the overall success rate. And that's the big problem I think, or another one of the problems that we provide a solution. That was a continuation of what we're doing. And you know, we're always striving to provide the best tools and features for our users based on demand and where we see the grown of fintech going and the industry and what we're doing.
It's very interesting. Each day is different. Each day of the market, each day at Black Box, and as we grow. We have members in over fifty countries now. So, it's really exciting to be able to converse and talk to different people from all over the world, all wanting to trade. So, it's really exciting.
And as far as the development of the application goes, is that all in house? I mean, you guys are in Dallas. Is that all done right in the office there from Dallas, or do you guys have programmers located all around the world that work on the project together?
All of our developers are local. Not necessarily in Dallas, we have some in Austin. But they're all local and we work really closely.
Austin is like the Silicon Valley of Texas. So, a lot of guys are located there.
Keep Austin weird...
That's right.
If you guys had to build the platform from scratch right now, is there anything that you would do differently?
Oh, gosh. Well, you know, that's a tough question. I mean, I think we would arrive at the same place, but it would be a lot faster, but part of the development process is consumer feedback. So, you just have to launch it, get the feedback, it's an integrative process. So, you know, you just can't do it that way.
Yeah, you have to make the mistakes to learn from them.
Exactly.
Otherwise you don't know. And one of the things I've been really personally impressed with is how well Black Box is supported. There's an entire community behind it and a lot of resources available to members. Can you tell us a little bit about the community aspect of the platform, who helps to run it, and what a new user can expect in terms of education and support when they sign up?
Sure. Our community is lead by our team of moderators that have been vetted out by Black Box. They're traders that have been trading for fifteen, twenty, twenty-five years, typically. And some of them have formally worked at online brokerages, institutional and retail. So, in our community they're leading the day to day. And a new user will be able to log on to our system, you know the first day, and come into the audio chat room and listen to the moderators and what they're looking at on the system, what they're discussing and why.
Generally during the first portion of you know, the open first hour, hour and a half of the day, people just listen and let the moderators help people out and explain what they're looking at and share ideas. It's like learning on the job basically. And then around lunch time, there's a little bit of discussion depending on whatever the lunch time lull, how slow it is, maybe it's not slow, here lately, here with Apple it's been pretty busy throughout the day.
Yeah, normally things slow down around lunch. And they'll talk about what's going on in the market today, what are we looking at, you know what's the thread talking about, what's going on with geopolitical events, you know, what's happening in tech. Things like that. So, every day, is a great learning experience and you've got people that have been trading for years that have seen a lot of things, being able to share what they're looking at that day and basically convey that with their experience, which is huge for somebody especially that's new, that's being able to learn.
So, you have that kind of mentorship, and it's there everyday. And then we also offer the educational program, which we have our educators, which some do both educating and moderators there. And the education calendar is accessible 24/7 and you can sign up for the webinars, they're all live. You can also watch the recorded version. So, we try to drive the education portion of our system as much as possible and reiterate that.
So, you can take classes as many times as you want, it's always available. We just want to make sure that you know everything that you need to know and do continue in education, that way you're consistently working on becoming a better trader and working on things so that you're more successful and more profitable.
For the average user, what would you say the learning curve is like when they first sign up? How long does it typically take a user to really get their feet wet and really get a handle on how this software can help their trading?
I'd say the average person, let's just take somebody that's fairly new. I'd say that most people it takes a minimum of two to three weeks to three months, depending on how much they're on the system, how much they're putting into it, doing their own due diligence, getting into the educational webinars, you known trading. We have a trading with Charlie five days week. That's during the first hour, hour and a half of trading, so you're trading in there live with moderators and he's going into detail with some of the other moderators, Maria, Theresa and they're explaining things in more detail that's separate from what's going on in the main chat room.
Depends on options. Most of our members are options traders, I'd say about eighty percent. I'd say usually within three months we see a significant portion of people that they get the hang of it. And I'd say realistically, this is no guarantee by any means, but realistically as a side hustle people can make a few hundred dollars to few thousand dollars with the system after that time frame, once they start picking it up. Everyone's different, but for the most part, from what I've seen over the past few years, that's how long it takes for somebody to get acclimated and trading well.
So, that's really a testament to the fact that it's so user friendly. Other platforms it's a much longer learning curve, you know, there's so many settings and ins and outs of the application that you have to learn before you can ever really do anything profitable with it. But that's one of the things is instantly noticeable the minute you log in, you know just the dashboard area, everything is very intuitive, very clean layout. It's not hard to navigate through. All of the educational resources are available right at your fingertips. It's just a really well-designed platform in my opinion.
Thank you.
And yeah, I think it's probably one of the applications that has the least amount of time required to actually learn it and make good of it. So, I think you guys have done a great job with that. We're almost out of time for today, guys. But there's one more thing that I wanted to ask you about. What can you tell us about the future plans of the platform? Is there anything at all that you can share with us regarding perhaps new features that might be in the pipeline?
Sure. Well, we're really excited to be integrating with TradeStation. Its in development now, beta testing actually. And our goal is for the ability of users to basically click and trade and take out the middle steps. So, I think that's going to be the next huge feature we're going to be launching in the next six, eight weeks. So, we're really excited about that.
So, will all of that be a hundred percent automated? The potential will be there that basically the system will trade for the user?
No, no. It will be, user's still have to click and trade, but they can see our proprietary alert, click and trade. It will be super fast. There won't be any cross-platform time required.
Awesome. That sounds really exciting. Well, that does it for our interview today with Eric and David from BlackBoxStocks. Guys, thanks so much for coming on, taking the time to tell us a little bit more about yourselves and also about BlackBoxStocks. We're really impressed with the platform and we're excited to see how things develop going forward.
So, that's it for today everyone. Until next time, happy trading.
