TRADER INTERVIEW: Merritt Black from Apteros Trading

OK, so it is Wednesday, 17th of February. It's the latest masterclass, of which, for those who've never joined one of these sessions before, we get people from industry, from all different kind of areas in markets, different levels of kind of expertise and experience. And happy to have Merritt Black with us from the States. Hey, Merritt.

Hey, man. Happy to be here.

Cool. So I think with all of these conversations, the way I normally kick it off is I know there will be a few people who will be very familiar with you, having seen you when you were at SMB Capital. But perhaps you could just get us up to speed, your background, and what you're doing now with your new venture that you've just launched.

Sure. I grew up in a small town in Alabama. For those of you across the pond, that's like if you ever seen the movie Forrest Gump, that's where I'm from. I grew up, my parents had nothing to do with finance, nothing to do with investments, nothing like that. I grew up hunting and fishing and just spending times out in the woods and stuff like that. But really, you know, fell in love with markets, which I'm sure we'll talk about and whatnot. But I started at a really young age. You know, my teacher, when I was 11 years old, brought the newspaper into the class and introduced us to the stock market. And we wrote it up on the chalkboard. Some of you younger people may not know what a chalkboard is, but we wrote it up on the board and started following stocks. You know, we got to pick some and whatnot. And I thought, man, this is the greatest game on earth. This is like, it was my first introduction to something that was like, you know, really worldwide and global that the same people were following and keeping track of. And it was just so interesting as a kid to me. And again, it was kind of like a game. And so I, at that age, I started, you know, I took my, I made my parents drive me to the bookstore and started reading books on trading and investments. And I think I got very lucky that I selected some of the books that I did, just purely based on what the COVID looked like, obviously. But I didn't go down certain paths that I think were beneficial to me as a trader, perhaps as not an investor and whatnot. So fast forward that through college, I've constantly got my laptop in front of me in class and I'm paying more attention to, I'm in Cal-based physics or biology and I'm sitting there trading, right? And then I don't know if any of you saw the movie, "The Pursuit of Happiness" with Will Smith. I saw that movie and it just struck something within me. I changed my major the next day. I went and put a tie on, the only tie I had, and I walked across the street from my apartment and I walked into an RIA's office. I didn't know what an RIA was at the time. And I said, "Look, can I shadow you? Can you give me an internship? Can we do anything?" And the guy sat down with me like 3 times a week after he would finish his work for the day and just tutored me and taught me about his business and things like that. So, you know, my sister is an investment banker. So from there, kind of leveraged into a pretty posh internship with her. From there, I got into forex because I was on an FX desk during that internship. From there, I got into futures, fell in love with crude oil, you know, started trading other people's money, leveraged that into a gig at SMB as an equities trader, which I didn't do so well at, quite frankly. My last 4 months or so as an equities trader at SMB, I was break-even and I had lost some money before that. So I didn't do very well as an equities trader. And I was trying to essentially trying to fit a square peg in a wooden hole, I think, with that. And I talked to the partners there and I was like, look, futures, like that, that's where I've had success. It's more specialized than just flying all over the place chasing GameStop or whatever's hot, you know what I mean?

Yeah.

So for me and the methodologies that I've been developing and whatnot, it was a better fit. And that's something I think we might get into, who knows. But niche, I think, is something that's very, very important to everyone or should be important to everyone, I think, in terms of finding your place in all this and aligning with your own strengths and weaknesses as well and being honest about those. So anyways, several years at SMB, ended up heading up a futures desk for them. And now as well, as of last year, left, started my own desk, Apteros, and just building a huge community, people who speak the same language. And what do I mean by that? Like, I could say, hey, let's start— I'm the guru, okay? Let's start a trading chat room. Those suck, okay, for the most part. It's only, I think, when people who have a common goal, have a common timeframe, perhaps in ways, have a common framework for viewing markets, in our case, especially where they can say, hey, I'm seeing this, and it means something to the other person who's hearing that. And so we have a community that's based around the methodology that I teach, which doesn't mean that everyone's a cookie-cutter version, you know, trader of me. It just means that we speak the same language and we can develop our own sub-niche, if you will, within that space. So that's really what I'm doing now. We have training programs and we have a prop desk where I fund traders and whatnot, and we have a desk. So we're loving it, having a great time.

Yeah, yeah. I mean, game on to you for, for just doing your own thing now. And, you know, we, we wish you only the greatest success with it. I know that.

Thanks, man.

I know it's always been Yeah, you're a quality guy in terms of personally and your content, so I'm sure it will be a success. I have no doubt.

Thank you.

But getting into, I guess, you a little bit and your mindset, something you said right at the beginning of that explanation was when you were a kid, you kind of used the word, you know, as a game, and it was kind of just— it got you inquisitive, your mind going. So was that when you were a kid, going all the way back there, in terms of your core makeup, is it, is it that that drives a lot of it? Is it your competitiveness? Is it the fact that— I mean, in terms of looking at what trading is, is it finding a solution to a problem? Is it trying to identify something in that regard? So what, what's like the, the angle that, that kind of motivates even at that young age that really That's such a beautiful way of asking that question because, you know, I've been around the circuit.

I've done some webinars. I've done some panel discussions. I've done things. And people ask that, but never in such a, I think, poignant way as you just asked. So anyway, that's awesome. It's really, I think, for me at the time, as it is now, it's more so almost like someone who is mechanically inclined. So, you know, these like tinkerers, right? They want to take stuff apart. They want to dissect things. They want to understand the internal mechanisms and workings. I really think that sums up how I first got into markets and how on a daily basis as things evolve and as we adapt and markets change and technology changes and, you know, all these kind of stuff. For me, I think it's a a constant exploratory understanding process of really finding little nuggets within the randomness and learning little hidden gems about the way things work and how to use that, bring it into society and for the benefit monetarily and just gaining— I don't know why I'm struggling for this word here, but a sense of fulfillment from, from that whole process is, is what I think it's all about for me. It's not competitive. I am. Yeah, my, my, I was about to say I'm kind of competitive, but then I would ask my siblings and whatnot. I'm definitely competitive, but I really don't feel like that's my main driver. I really love working like I think about the world I've structured for myself here with the business I'm running and the people I'm surrounding myself with. Yeah, is there some healthy competitiveness in terms of let's try and really perform and oh, this person is doing really, really well, I want to be able to do that as well? Sure. But I'm much more of a team player than, you know, really wanting to be a standout or something.

Yeah. Definitely with that team player analogy. I've always been from, from my younger days when I used to play a lot of sport. There was always like a secret that I had, which I wasn't trying to reinvent the wheel. I was trying to look at other people, find a uniqueness that they had, a particular skill, and not try to imitate it, but perhaps see how it would fit with what I naturally had as a skill set and then find what worked for me. But it was kind of like doing a lot of observation of just what's going on. And then, yeah, like you said, breaking it down and looking at it.

Yep, for sure. One of my favorite phrases from Bela and the guys at SMB and whatnot is, first be unoriginal, right? I think that's very important. I was also in sport, right? I played a lot of tennis. I used to get Tennis Magazine and there would be like a centerfold in the middle sometimes where you, you know, You know what that is in a magazine, right? Yeah. I don't know if it's the same terms in London. So you'd pull out the centerfold and it would be all this at the time, high-tech slow motion photography of a frame by frame of someone like Mark Philippoussis or Pete Sampras or Pat Rafter, these people who had good serves, frame by frame of them serving a tennis ball. And I would take that to the tennis court with me. I would set up a tripod with a camcorder And I would record myself trying to mimic all those and go home and study film and whatnot. And I would do that as a kid. And, you know, my— get my parents to drop me off on a Saturday morning and I'd spend so many hours doing that, come home and study film. I'm still doing the same thing today. It's just in the world of financial markets. Right. And trading. It's the same work. It's the same. Let's look at what's working here. Let's, let's Study it. Let's see what's worked in the past, for example. Let's see what's not working. And let's go see how we can study that with what we're doing and what— I don't know, apply changes and tweaks and improve.

So that kind of philosophy of continuous improvement, I mean, what's— from when you started then, in terms of your, I guess, respect and attitude for markets, I mean, I think when you come in, it's— I've met very few people who have been able to just from getting to that point, I guess, of competence, of not letting that manifest into something that they've not quite yet got to the skill level of perhaps believing that they're at. I mean, in terms of the challenges that you've had early on, was it— how— what was that initial phase in your career in regard to trading? Did you take to it quite naturally, quite quickly, or did you have to really work at it, or what was the process for you individually?

Um, I, I've said this before, I always hate saying it, but I feel like it is a truth about me and kind of part of my makeup, so I say it anyways. I'm pretty good at most things I attempt. I just am. Like, you want to create a game where we flip a throw a coin into the corner of a room and see who can get closer. Yeah, I'm probably going to be pretty good at it. Like, you— I need to go to a country and start speaking the language. I like— I have several good traits about learning things and being able to quickly apply them. Trading was not one of those things. In fact, my whole life of being good at things was entirely against me in terms of how I'd been trained to be successful. Just press harder, just try harder. My goodness, you know, in many regards with trading, that's not gonna work. In terms of the work ethic outside of trading, it will work, right? That studying film and things like that, but absolutely not. In fact, I have one course that I have with Apteros and it starts out number 1, module 1, on what we call mental framework. And I teach this concept around, we all begin trading as an NHT, a natural human trader. And that's a very, very bad place to be. Naturally, don't feel bad about it. It's the way we're wired with society. It's the way egotistical, naturally gifted people like me are totally screwed. You know, successful attorneys, lawyers, whatever come in and they're screwed. We are naturally terrible as traders. Even if you don't have a big ego, there are so many things around. Just look at studies around people not being able to really comprehend probabilistic type expectancy of things and make good decisions around that. And then you add pressure and then complexes around being wrong and the risk of losing Money, all those things are just entirely stacked against who 99.9% of us naturally are. And so no, trading was not easy for me when I picked it up. And I've yet to meet someone who I genuinely feel that it was just easy to. You either get good training or you spend more time on the school of hard knocks to, to figure this stuff out.

So with kind of, uh, looking at the last 12 months has provided a bit of a unique situation, I guess, the global pandemic. Not only that, you've shifted from being— I know you've been back where you are now for a while, but going from New York, going from a trading floor to now, I can see you're at home.

Yep.

And you know, we spoke just before we came online, and you know, you've got a growing family and there's commitments now with the business. So, so how, how is that— how has it changed for you? How has it evolved, if you like, over the last 12 months? And how, how has it been— I guess breaking that question up— first of all, going from a trading floor environment to an online environment, have you seen any difference in performance for yourself and your team? I guess start with that one.

Okay, yeah, for me, I was kind of I was kind of in the same environment, even on the desk at SMB. I was in an office a lot of times, you know, when I was building out the futures desk that I ran at SMB was all remote already. I was ahead of the pandemic, baby. We were already gearing up and playing with you. Good stuff. So yeah, I mean, did I have all the other benefits of like grabbing a beer with equities traders and whatnot, but I was a bit isolated. I was a bit on my own there in terms of building out the futures desk. Bella and Steve are not experts in futures. We would have conversations around understanding a lot of the basic mechanics of those markets and things like that. So they're equities pros. They really are, not futures. So you know, I had some isolated stuff there. I was kind of running it, you know, from my office there, and it wasn't like I had a desk of other people saying, hey, did you see this? Hey, are you looking at this? We were already on Discord and Zoom and doing all those things, so it hasn't been much different for me.

And then the— just the general market environment of—

oh yeah, that's— I mean, that's been— there's not one answer to that for me. When it first hit in March, I kind of— it took me a second to get my feet underneath me. I feel like I didn't adapt to the shifts quick enough. I tried to kind of gunsling it a little bit and I needed to kind of tone it down and get back to my roots. When I did that, I mean, I won't— I would I have never told people publicly, like, a rate of return that I did in, like, April. It's crazy. OK, like, huge type numbers. And then I did that for months and months and people were like, well, you know, I wish things were crazy again. But really, the S&P was still having like 70, 80 handle range days. You know, I mean, it was just a ton. I've been quoted multiple times as saying a lot of those months there last year were like shooting fish in a barrel. The moves were so clean intraday, right? When I mean clean, like if you're trading momentum, you're looking for the pullback and it starts to turn. Well, if you get short there, it doesn't wick you out and then dick around for 5 minutes and then go down, you know, what, like you intended or whatever. It just turns and it just goes, right? That is easy trading environment if you, if, if you have the skill sets to, to do that. So that went on for several, several months, and then launched Apteros, and then started the desk. And now I've got all this transparency of people looking over my shoulder, seeing every execution that I'm making, because that's how I want the desk to be. Be. And, you know, I'm the big dog in the room, blah, blah, blah. Now this is my shop and whatnot. And quite frankly, call it a bit of a, you know, mental breakdown's a little too, a little too harsh, but like, I really let the pressure get to me late last year. And so I went into a drawdown and it took me about 2 months to come out of. Now, granted, I drastically reduced my size. I just again got back to basics. And, you know, coming into this year and whatnot, I'm doing, doing very, very well again. But so it's, look, even for someone like me with the experience that I have and the position I am in running my own desk and whatnot, you know, training traders, mentoring people, all these things, people tend to kind of be like, oh, well, he's like bulletproof, he's got it figured out. Yeah, CPT, blah, blah, blah. Guys, I'm human like you. Like, I have feelings and I mess up and I let my ego get in the way and I make mistakes and I have drawdowns just like every other trader. And it's— I just love to talk about that because I think people think that making the turn, becoming consistently profitable, it's like a light bulb thing goes off and you're just easy sailing from there. And it's not. Trading's tough and markets evolve and it's hard.

So do you think that self-awareness ability has got better as your career has gone on?

Not naturally, but by focused effort and attention towards it, yes, it has. I think it's— and we talk about that in what I teach in that mental framework. You know, self-awareness is absolutely critical. You have to be able to, I kind of draw this diagram to where you start up here with like an impulse, right? Just an idea. It could be a good idea, it could be a bad idea. It's a thought you have, it's an action you're thinking of taking, right? Get into a trade, exit a trade, scratch a trade, move a stop to break even, whatever. It's an idea. Typically, people just go straight to the action over here, right? Almost mindlessly out of habits. You know, Duhigg, you can read all these books around all those type of habits and cues and things like that. It's very good. You have to insert conscious thought. Right. And that takes effort, that takes practice, that takes sincere energy and attitude and whatnot to to get there. Well, I teach people to use loop timers, have something that dings at you, whatever periodicity you need, every 5 minutes, every 15 minutes, just a simple ding. Oh, was I— you know how when you're driving in a car and all of a sudden, you know, like a long road trip and all of a sudden you're like, was I even paying attention? But you've been driving perfect. And if someone would have pulled out in front of you, you would have slammed on the brakes, right? But you lose that conscious control because your— our bodies are amazing, our minds are amazing. We can do stuff out of habit, and people tend to, especially little— a little bit of experienced traders, they tend to just work out of habit and, and whatnot and kind of run on autopilot mode. Insert conscious thought. Consider, here's what I'm wanting to do, and then run that through a process. Run that through your methodology and your checklist, your process for determining, is that a good decision? Is that a decision that aligns me with what I'm trying to accomplish and my systems? Or is it not? And then make the appropriate action. But if there's no self-awareness there, you go straight from point A to point D with no breaks in between. So it's huge.

So with that, and as you've explained the period the kind of the up and down period of 2020. I know this is different for every trader, but it'd be, I think, unique to see what— how you handle it. Is— you are a human, as you say, and you have a partner and a family. How much— because this is interesting for the community— is how much of that do you share with other people? Because I've met traders over the years where they're quite explicit, they'd never talk to their partner about it because of maybe they don't want to share the stress, because it's talking about money and it's a different type of association that normal people have with it, because you're talking about numbers that people can't really compute in the normal sense. And so how do you kind of handle that in your—

so as traders— sorry, that's a, that's an amazing question. Um, as traders we get desensitized to these numbers, right? My wife is not desensitized to those numbers. We kind of have a deal based on some of these ups and downs and what I need, right, to not feel pressure from her or for her feel stress from me or things like that. We kind of have a deal where at the end of the month is really where we kind of say, Hey, you know, how was, how was your trading this month? Those kinds of things. And on a day-to-day basis, like, we might talk about it if I've really had a letdown day. If I feel bad about my trading day, it's because of me. It's not because I executed my process and I lost money that day. I could care less about those days. They're gonna happen. They always happen. They happen. Once or twice a week for me, whatever. OK, it's part of it. But when I have a bad letdown day and I'm a bit emotionally drained or hurt or whatever, we, you know, it might come up and she might sense it. She might ask about it, whatever. But in general, I, I tend to just kind of compartmentalize it. And that's that. And I don't bother her with, hey, I made this much money today. Let's go crazy. Hey, I lost this much money. You know, I try and keep more almost stability for both of us. And it's also less pressure for me if she's like, hey, tell me, you know, you know, that kind of thing. So especially working from home, she could come up to my office and be like, hey, what's the P&L at?

She's like, hey, Mary, check out my GameStop position.

Exactly. So that's, that's kind of our deal on it. We think that a monthly basis is a good periodicity, if you will, to say, hey, how's things going?

Yeah. And, you know, and I asked that question, you know, for the people listening, I'm not trying to convey that there's a formula or—

no, that's what works for us, and something may be very different for, for others.

There's— yeah, there's many intricacies to it as a relationship. It's always interesting to see how different people approach it because everyone's relationship management, you know, it's kind of like, you know, happy wife, happy life mentality, and that has implications on your mental and physical well-being, which in a a performance-related activity is going to have an impact. So no, I appreciate your, your openness. What is a constant challenge for you in your trading, something that you've always needed to work at? And was there something specific in your career that helped you make a big leap in regard to process, technique, psychology, whatever that might have been? I guess, was there?

I guess we are going to be here for 4 hours.

This will be the last one.

I still tend to, my natural tendency, I've gotten a lot better at it. I will make, you know, I will pull myself off the mound and make difficult decisions and things like that. That's a baseball analogy to stop trading or whatever. But my natural tendency is to, you know, fight or flight, to fight. Okay, so when things start not going well in a sense, I still struggle with wanting to be more active and control more and do more. And typically the right answer for me is to go the other way. It's to take a step back, take a breather, refresh, do less, get back to basics, things like that. So that's something that I, you know, for, you know, for example, like my most recent drawdown, I think was in a large way attributed to that. I did have the pressures of the new business and things like that and whatnot. But in general, you know, I was pressing and trying too hard. So that's one thing that has been ongoing for me and that I continually have to deal with. I guess I could dovetail that into one of the biggest leaps. One of the absolute biggest leaps, and this is not going to be the sexy part of trading or anything like that. But it's really journaling because we are kind of talking about the mental game here a good bit. And the mental game is important in a performance activity. So journaling is something that is— when I actually committed to doing it, I began to become more self-aware because I am observing myself from a neutral perspective. I'm jotting down my thoughts. I'm reviewing that at the end of the day and saying, oh, I was literally thinking this at this timestamp. In the day. I was literally wanting to do this at this point on the chart. That's interesting, right? You start to learn about yourself. Otherwise, believe it or not, whether you want to get some younger people here, you will— this sounds harsh— you will lie to yourself. Okay, what do I mean by that? We as natural human traders want to preserve self. We want to feel better about ourselves, right? And so it's very difficult to truly look inwardly objectively. It's a very difficult endeavor to do. And so if you're telling me, let's use a football, American or soccer, whatever you wanna use, it doesn't matter, okay? You have a game, or a match. And you think, you think there's some guys filming it for the team? Yes, they're filming it, right? So that they can all meet up later, maybe based on position or whatever. And they meet with the coaches and they watch film. Journaling is your film. Otherwise, imagine if what those professional football players they all got together afterwards and they were like, hey, you remember the play where, you know, Ronaldo had it here and then, you know, he did this dribble thing and passed it or whatever. And, you know, you should have been here, there, you know, like it was 90 minutes, right, in the game. So it was a long time. And it's easy to lose track of what I was thinking here or whatever. And as traders, the entire game that's going on is here. The whole session that you're trading, the only thing that's really going on— yes, you have charts in front of you, you have a news feed, whatever, but it's only the processing of that. That's the only thing that's going on. So the only film, the only objective account of what happened and when is if you take the time to notate that. And so journaling will prevent you from just thinking back in the day and be like, oh, I knew I should have gotten long there. Did you really? Or was that some fleeting thought? You also thought you should have gotten long 30 other times throughout the day and you didn't act on those, but those didn't work. So you're not going to point that one out. But you knew that you should have gotten long from the low of day, didn't you? Don't lie to yourself, no matter how that might happen. Be objective and accountable to what you can actually see at the hard right edge. Note what opportunities are present, what opportunities you might be stalking, what mistakes you just made. Why you made certain decisions. Do all of those things and have that game film, if you will, to be able to review.

You're making me feel quite pumped up now, like I need to go out and run around the block or something and film myself doing it at the same time. But that was a fantastic answer and, uh, and some great, um, advice, I guess, about anyone coming in new to markets, about you know, continuous development. I think it's something to take away from this discussion is the fact that, you know, you're very honest. Well, if you can hear my daughter in the background, she's fine, she's with her mother if you hear any shouting. But, you know, the idea that you've never— I always say this to the guys I talk to— is that you're never, you're never going to have complete understanding or control. You just can control it for a very finite period of time when you can, you can master it.

Yes, it's a muscle you can flex and flex a little longer. And absolutely. But what's also really important is to make sure that the beliefs you have about what you're trying to do, what trading is, the amount of how, how right can you be on a, on a consistent basis, all these kind of things If you don't align those beliefs with what you're trying to do, well, now you're setting up this dissonance and whatnot, and you feel you're, you're trying to psych yourself out and tell yourself to be more disciplined and do this and do that. You shouldn't have done this and all these things, but really you're out of line with reality. And that happens to people in relationships, that happens everywhere. So it's very important to also do that in, in your trading. You got— if you don't have a methodology with edge you're— it doesn't matter what your psychology is. It doesn't matter.

Yeah. And I think that's a good way to end it. So, Merritt, always a pleasure.

Yeah, man, always.

Yeah. And thank you for, um, for giving out some time. And I wish you all the best with the little one coming in the summer.

Thanks, man. Thank you.

And that is actually the baby and the business. So, um, but yeah, I'm sure we'll touch base before, but, uh, I really appreciate you taking the time out.

Happy to, man. Good to talk to you.