How Moneyball Changed My Whole Pitch

It’s unusual for a Hollywood film to alter your mindset, but that’s exactly what happened to me. A trip to the cinema led, in part, to the core concepts that underpin our new foreign exchange liquidity pool, LoopFX. I still remember walking out into the foyer with a completely transformed perspective on the way I thought.

The film was Moneyball which tells the true story of a baseball team who managed to build a world class team with a fraction of the budget of their rivals, spending a mere $261k per win, vs $1.4million per win of the New York Yankees.

It’s a story of data-based analysis overturning decades of tradition and gut instinct decision-making.

Moneyball’s main character is Billy Beane, General Manager of baseballs' famous underdogs, the Oakland Athletics. Billy bravely tries a fresh approach in the face of considerable opposition, discounting decades of team selection tradition.

The core of the plot deals with a mathematical approach to buying players. In the past, baseball scouts gave reports on potential recruits based on measures that bore little correlation with performance and were often highly subjective:

“He throws funny...” “Clean cut, good face...” “The guy’s got an attitude...”

Instead, Beane adopted an analytical approach based on a detailed statistical analysis of players on-field performance. His data showed his club’s limited budget were being misallocated on the basis of feelings and opinions.

He used metrics.

I was at university studying economics when I first saw the film, but the ideas stayed with me and began to find practical application when I started trading foreign exchange. Ideas hatched in the dark of the cinema years earlier enabled me to create my own scorecard, but instead of baseball players I was analysing my own trading performance. Moneyball reinforced my confidence to look at things differently.

Then it hit me.

Rather like the traditional baseball scouts, I was basing my decisions on a whole raft of factors that were sub optimal.

One of the most common financial services disclaimers states “Past performance is not an indicator of future returns”, yet here I was trying to use purely historical data to try guide who is the very best market participant I can trade with at that exact time. Rather like Billy Beane, I thought there had to be a better way.

I felt so strongly about this, that eventually I could not return to the old way of working. I wanted to do better and anything less would be dishonest. I wanted to help empower all the other market participants who shared the same challenges I faced so we can all achieve better outcomes for our clients.

The formation of LoopFX – a dark liquidity pool for large FX trades, that allows real time data to inform decisions about where trades can best be traded – came directly from Moneyball. I’m convinced LoopFX can have similar positive impacts for the FX market that Billy Beane had on baseball.

As I rolled out my ideas, canvassing opinions for the launch, I spoke to a number of experts in the field, among them a man I hardly knew at one of the market leading software specialists First Derivatives. We both spent far longer than our diaries had scheduled talking about the film Moneyball. His enthusiasm matched my own.

The next day I received a small square package.

It was a baseball bearing the First Derivatives logo signed by Billy Beane himself.

Astonished, I could only reflect on what an elegant way that was to mark the start of our working relationship and the birth of LoopFX.

The gift was an apt reminder that nothing will ever replace intuition and human contacts. While Moneyball presents a very absolute case for quantitative data, the Loop is built by practitioners for practitioners to augment and inform judgement, not replace it.

Plus, it seems very unlikely any data-gathering system, no matter how sophisticated, would have given me a signed Billy Beane baseball.