June 1, 2025 • 44 mins
Remember when trading meant calling your broker and waiting an hour just to find out if your order was filled? That world is gone.
JJ Kinahan, CEO of IG North America (parent company of Tasty Trade), shares how the playing field has fundamentally changed for retail traders. With 21 years of experience trading on the Chicago Board Options Exchange and leadership roles at major brokerages, JJ offers rare insight into this transformation.
Today's retail traders wield professional-grade tools, instant executions, and information flows that rival institutional capabilities. The most dramatic shift? Options trading is no longer exclusive to professionals. As JJ explains, "Options are giant probabilities" that can be used strategically when traders understand the risks involved.
The conversation explores a fascinating retail trading psychology: during market uncertainty (like the recent "tariff tantrum"), traders initially flock to broad ETFs like SPDR and QQQ, gradually returning to individual stocks as confidence rebuilds—starting predictably with Microsoft and Meta. This behavioral pattern offers valuable signals about market sentiment that even professionals watch closely.
For new traders, JJ's advice is refreshingly straightforward: start with one contract, know your personal risk tolerance, and understand why you're entering each trade. "The easiest thing in the world is to risk more money. The hardest thing is to risk a lot, lose it, and then get into a bad cycle where you feel you have to make it back."
Looking ahead, the trading landscape continues evolving toward 24/7 access, with Tasty Trade launching 24-5 equity trading by June. This shift reflects growing global interest in US markets and the expectation that investors should be able to react to news in real-time, regardless of time zone.
Ready to level up your trading knowledge? Explore how defining your risk parameters might be the most important skill you can develop as a trader.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
I mean it's amazing to me that there's still all
this.
I don't use the term dry powderbecause I think that's cliche,
but there's a lot of moneythat's still seemingly just like
ready to deploy.
Speaker 2 (00:10):
Well, I think what you know one of the things also
is 401ks have been a great thing.
For that.
I think many younger peoplehave been drilled into their
head.
Put some money aside At least Ihope they have drilled into
their head.
Put some money aside at least Ihope they have.
You know, I get amazed everytime I go anywhere at how much.
(00:32):
To your point, if you go to anice area of a city or something
like, how does this many peoplehave this much money?
But it is really amazing thatpeople continue to have money to
trade.
Now, one of the things we willalso see is many people have
retirement money here and theyput aside a different amount to
trade.
Now, one of the things we willalso see is many people have
retirement money here and theyput aside a different amount to
trade the market with.
So, to your point, I think italso depends and this is
(00:53):
something I would advise peopleto do is what's your purpose on
your trade?
Speaker 1 (01:07):
My name is Michael Guy, a publisher of the Lead Lag
Report.
Joining me here is JJ Keenahan,tasty Trade.
I'm pretty sure I've heard ofthat company.
You guys are making the rounds,but, jj, introduce yourself.
Who are you?
What's your background?
What have you done throughoutyour career?
Speaker 2 (01:22):
Sure, Thanks for having me, Michael JJ Keenahan.
I'm the CEO of IG North America, which is the parent company of
Tasty Trade, which is ourbrokerage firm, Tasty Live,
which is our content side of ourbusiness, Tasty FX, our FX
business, and Tasty Crypto, ourcrypto side of our business.
So you know, we encourageanybody to come in and use our
(01:44):
platforms.
It's a retail brokerage firmand we are the same people who
started Thinkorswim, which endedup being sold to TD Ameritrade
and ultimately, is now part ofCharles Schwab.
My background personally is Itraded on the floor of the
Chicago Board Options Exchangefor 21 years.
I left there to go toThinkorswim.
(02:04):
We got taken over by TDAmeritrade.
I stayed there for the next 16years and then I came over here
as CEO three years ago.
Speaker 1 (02:11):
Okay, so a lot of real background in the industry,
and there's obviously been abig proliferation of different
brokerage firms focused on theretail trader.
I am personally always blownaway at how retail just seems to
control the market.
It's not the market ofpre-COVID anymore and you see
(02:32):
that at major lows retail doescome in, and whether they're the
reason that it's the low or notit's unclear.
But I'm curious to get yourthoughts on why is it that
retail has become so powerful?
Speaker 2 (02:42):
Well, I think a lot of it goes back quite a few
years, and you think about whenI was on the trading floor.
This is up till 2006,.
We had a huge advantage.
The platforms were not verygood for retail.
The information was absolutelyawful.
People had to call in andliterally wait for their fills.
(03:04):
They might not get filled foran hour.
Now you fast forward to whereplatforms are.
The fills are instantaneous.
The information is actuallyprobably better than many, even
professionals, get, becausethey're not looking at news or
et cetera.
You know, and the biggestdifference is you do what you
want when you want and think ofall.
(03:24):
You know we broadcast 14 hoursa day on our Tasty Live side.
We're just giving people ideasand education, and the biggest
thing for the self-directedinvestor is to really get an
idea.
What should I do now?
What's happening now?
Why is this happening?
You know, similar to a lot ofwhat you do, michael, all day,
(03:44):
which is fantastic.
You're just trying to help makepeople better, give people
really good information, andthat's truly been our mission.
And we foundomenal platforms,great education, much of it free
, and you know many of ourcompetitors also do very nice
(04:11):
education and the fact thatpeople had time then, and the
greatest thing, in my opinion,that happened during crypto
happened during COVID, I'm sorryis that even if people didn't
continue to trade et cetera andhopefully they did, and we know
that's my goal is to geteveryone to trade here every day
but even if people didn't, itwas the first time in many
(04:31):
people's lives that theyactually got educated about how
the market works, even if itonly helped them make better
decisions and how they allocatein their 401k.
But what we have seen is alarge part of retail continue on
, start to get more educated andwhat they've also done is not
only, you know, the ability forthem to trade partial stocks,
(04:52):
along with the ability forpeople who got more
knowledgeable about how theoptions market works, has really
helped the retail trader justparticipate in a much different
way, in a much greater way thananyone ever even dreamed of
before that time.
Speaker 1 (05:08):
Okay, so that shows a few directions to go on that.
And let's hit on that optionspoint, because that's where I
think it gets to be reallyparticularly interesting.
It seems to me and obviouslyyou're much closer to this than
I am that retail really has goneinto the options market.
You know, full on right.
Retail really has gone into theoptions market.
You know full on right.
I mean it's and you can arguethis is similar, related to sort
(05:30):
of this cultural shift towardswanting to bet more and parlays
and things like that in terms ofyou know, some of these
gambling type of apps that yousee out there.
But I thought options weresupposed to be sort of the
domain of the sophisticated.
Talk me through that, becauseare we at a point where retail
really understands how optionswork or is there still a lot of
misunderstanding about the risksinvolved?
Speaker 2 (05:50):
Well, I think that there's more of a media if I'd
say it that way narrative thatoptions are super risky and they
can be if you want them to be.
However, I think what mostpeople have learned to do is
there a speculative element tothem?
Absolutely.
There are people who are goingto do that because, you have to
remember, all options really areour giant probabilities.
(06:12):
What is the probability that wewill be at a certain strike on
the expiration date?
So options are probabilities.
However, what we have seen asignificant change of,
particularly in the last coupleof years, is people starting to
use more spreads.
Why do I love to see people dothat?
Because the biggest mistake youcan make in trading options, in
(06:33):
my opinion, is not definingyour risk.
So if you go in and you trade aspread, you know right away
what you can make, what you canlose and how long that is going
to take to its longest end, ofcourse, because there are
expirations to options.
So when you start to definethat type of thing upfront, it
makes it so much better.
(06:54):
The perfect example, michael andI mean how many times have you
heard in your life don't beemotional about trading.
But I think you and I both knowit's money.
People get emotional with money.
One of the nice things aboutthe options market again,
because there are expirationsand you can define your risk is
you lay out the worst casescenario before you make the
(07:15):
trade.
You're still going to be angryif things go against you, but at
least you say OK, I know thisis the worst that can happen, so
I can make better decisions.
The reason people make baddecisions when they get
emotional is they never thoughtabout worst case scenario and we
really try and educate people.
What most professional tradersdo, what we did when we were on
(07:38):
the floor Start with the badcase and then say does the good
case pay me enough to take thebad case risk?
Speaker 1 (07:51):
Part of not being emotional is having the right
unemotional tools right to playwith, and you often hear that
line that retail has so muchmore access to tools than ever
before.
Stuff that was much for aninstitutional side is now easily
accessible, whether it's algosor things like that.
But let's drill down when youhear that line that
institutional tools areavailable to retail.
What are those tools?
What are people referring to?
Speaker 2 (08:09):
Certainly, you know people can use APIs to write up
their own type of chartingsoftware et cetera.
We obviously provide tons ofcharts et cetera, and I think if
you think about just the toolsthat are available on our
platform, you have what is theprobability that an option will
expire at any single time.
You know very much related toDelta, but the difference is
(08:32):
probabilities.
Take into account volatility ina different way also, but we'll
also have what is the?
What is the probability it'lltouch a certain level at any
point in expiration.
So, obviously, full chartprobabilities that help people,
analyzation tools.
So you can say well, if I makethis trade, let me analyze what
will happen, not only to thatindividual trade excuse me, sir
(08:55):
but what happens to the rest ofthe position that I may have on.
Those are some of the reallygood things.
Now let's take a that any firmcan provide, and we certainly do
provide all of that.
But take a step back and lookwhat the industry is providing.
What the industry is nowproviding are expirations on the
ETFs and indices that are daily.
(09:17):
The best part about options isthat you can really, you know,
as part of defining your risk,you define timeframes also.
So the fact that you can nowdefine timeframes pretty
accurately.
Overall, you lay over the fact,all the risk tools that are
available to you, you lay overall the probability tools that
are available to you firm, ourfirm, you know giving you ideas
(09:40):
and education all day long, soyou understand the risk and how
to use these tools in the bestpossible way.
It really is mind blowing tothink how far and the last thing
being no commissions to tradeequities you know.
It's mind blowing to thinkwhere all of this has come in
the last 20 years.
Are we at some?
Speaker 1 (10:00):
kind of saturation point in terms of the things
that are available to retail.
Meaning, have we, have we takencare of all the low hanging
fruit and mostly high hangingfruit there?
Speaker 2 (10:11):
I think we'll continue to develop new tools
overall.
You know, one of the thingsthat we're starting to see more
and more is people starting totake an interest in futures and
particularly futures options.
And the reason they've taken aninterest in futures options is
because the framework isbasically the same If you trade
(10:32):
an option on a SPDR, if youtrade an option on an SPX.
What's the difference on an S&P500 futures option?
In all three cases, youprobably don't want to deal with
the underlying, so it makes ita lot easier when you go on with
the fact that I would prefernot to have to trade the future,
I'm going to unwind my positionbefore expiration days, et
(10:54):
cetera.
So when you start to have thatmindset going in, then they look
very much like each other andyou go with what fits you best
at that time.
Of course, I'm not saying toanybody that you should just go
out and trade futures optionsimmediately.
Please get educated.
If you're going to trade anoption at all and you know, if
you want a paper trade, go dothat.
(11:16):
But I will warn people aboutpaper trading.
The one thing about it is I'mone of the greatest paper
traders in the world.
I can lose $50,000 papertrading and I won't flinch.
I'm down $20 in regular tradingand I hate everyone I ever met.
So there really is a bigdifference there in terms of
that feeling you get when thingsgo against you.
But back to where I was goingabout what's going on in the
(11:38):
industry.
The futures market has gottenso much more interest from
retail and it's probably wherethe securities market was
eight-ish years ago.
But more and more people, asthey get educated, realize that
products become more and morefungible, the more you start to
understand them, and what itcomes down to then is you as an
(11:59):
individual saying what fits mebest in this particular
situation.
The exception to the rule inthis case would be some of the
commodity options, because theywork backwards from everything
else.
So I won't go there, but I dowant to make sure that I say
that Again being educated on howthey work, being educated on
the differences in theunderlying, helps you make a
(12:20):
better, more informed decision.
Speaker 1 (12:22):
There is this impression out there that retail
just just YOLOs, you know, theyjust go all in and risk
management be damned.
And I think you can argue thatthere's some evidence of that,
because a lot of the folks tendto go into levered ETFs and kind
of more speculative type ofgear products.
Is that fair to say thatthere's just this sort of wave
(12:48):
of aggressive positioning?
Speaker 2 (13:11):
I would dare anyone to show me any profession, any
skill, anything that goes onwhere a certain element are
doing it wrong or doing it in away that probably doesn't make
sense to people who understandit.
You're not very good at it whenyou start.
So if you're going to make abad and just like any new skill
you learn, you're just not goodwhen you start, and so people
when they start, if they want togo into things they don't
understand, are probably notgoing to have good success.
(13:32):
So there is an element that'sgoing to happen there.
There are people you know whereyou started who do like to
speculate, and that's fine ifyou understand what can happen
to you if you do it.
I think the traditional pathfor many people quite honestly
has been they do come in, theybuy a call in a stock they think
is going to go up.
(13:52):
The stock maybe goes up alittle, but not enough for what
they paid for their call, andthey're like one of two paths
tends to happen mostly fromthere.
They're like oh, they screwedme.
Or they're like but there hasto be something to this and they
spend a little bit more timeand get a little bit more
educated For anybody who'slistening to this podcast and
(14:14):
you're new and you're trying toget started, the biggest piece
of advice I can possibly give toyou is please, please, please,
start as small as possible.
If you're trading an option,start with one contract.
Learn with small amounts ofmoney.
It's trading an option.
Start with one contract.
Learn with small amounts ofmoney.
It's the greatest favor you cando for yourself.
Again, you talk to peopleinvesting all the time, michael,
(14:36):
and, as you know, one of thebiggest mistakes they make is
they lose too much money whenthey are starting out.
And if you just start withlittle amounts, you'll learn a
lot because, again, you're notgood yet.
It's just like if you startedto play golf.
You realize when you startyou're going to hit maybe a good
shot occasionally, but you'renot good yet and you're trying
(14:58):
to get good, so don't put somuch pressure on yourself
overall.
And again, I just think the onecontract to start is really the
best thing anybody can do forthemselves and have that mantra
for a little while.
Now you might want to engagewith more you know with the
market a little bit more often,maybe weekly, or, you know
(15:19):
biweekly or monthly, just to getused to it Because, again, like
I'll use golf as an analogywhen you're swinging you want to
do it a little more often andget comfortable doing it.
But doing these small amountswill help you get more
comfortable when you feelcomfortable.
The easiest thing in the worldis to risk more money.
The hardest thing in the worldis to risk a lot of money, lose
(15:41):
it and then you get into thisbad cycle where you feel like
you have to make it back right.
Speaker 1 (15:45):
Let's talk about that word risk.
I study finance at NYU.
One of my majors risk isvolatility.
Risk is about risk of ruin.
How should retail think aboutmanaging risk?
And how does one even do that,given all of these tools that
now retail, the ability ofretail to access?
Speaker 2 (16:07):
Well, I'm going to combine what you asked me on the
last question with this one alittle bit.
I think one of the things thatretail traders become really,
really good at is managing theirmoney, and what I mean by that
is the years I traded on thefloor.
I never thought do I haveenough money to make this trade,
I just made the trades.
What happens for retail is theyhave a set amount of money.
Maybe somebody has $40,000 intheir account.
(16:27):
Well, they have to think tothemselves should I risk $1,000?
Should I risk $2,000 on thistrade?
So they really start to becomegood at managing individually
every single trade as well astheir overall portfolio, and I
think that that's a really smartway to look at it.
Am I just going to?
You know risk to one, two,three percent per trade, and I
(16:51):
think that that's you start tobecome smarter in that way in
doing so.
So I think the other thing thatpeople have to develop going
back to me talking about the onecontract is what's your
personal risk?
An individual Michael may beable to say, ok, I can trade you
know $100,000 worth of risk andit's not going to bother me.
In the least I may say you knowwhat I trade more than $20,000
(17:12):
worth of risk.
I feel really uncomfortable,and so I think people have to
get themselves to a point.
Maybe for some people it's $200worth of risk.
Whatever it may be, we're allat different points in our lives
, but you're also at differentpoints in your risk tolerance.
So just because somebody elseis risking a lot of money
doesn't mean you should do it,and you know you have people
(17:34):
like yourself who are out herereally trying to educate people
the right way.
Unfortunately, there are toomany people who will just say,
oh, I risked all this, made allthis.
They don't show you all thelosers on the way, and so with
that, I think one of the bestthings that people start to
learn who are going to surviveat all is what's my personal
risk tolerance, and that youshould never apologize for it.
(17:56):
You should feel good about it.
Maybe if you're starting outand it is $200, have three or
four successful trades, then sayyou know what?
I'm going to go to $300 now.
Step up the ladder slowly butsurely.
If you're younger, particularly, time adds up.
You know I always joke.
You just want to hit single,single, single single, and all
(18:17):
of a sudden you've got a prettynice stack for yourself.
You don't have to hit home runs.
Time takes care of a lot ofthat in terms of just building
smaller amounts on every singletrade.
Speaker 1 (18:28):
I'm sure you've seen that meme.
I've used that myself before.
Buy the dip, buy the dip.
Already bought the dip, I haveno more cash to buy the dip.
Every single one of these dipsretail comes in.
Where is retail getting thiscash from?
I mean, it's amazing to me thatthere's still all this.
I don't use the term dry powderbecause I think that's cliche,
but it's amazing to me thatthere's still all this.
I don't use the term dry powderbecause I think that's cliche.
(18:48):
Right, but there's a lot ofmoney that's still seemingly
just like ready to deploy.
Speaker 2 (18:51):
Well, I think you know one of the things also is
401ks have been a great thingfor that.
I think many younger peoplehave been drilled into their
head.
Put some money aside At least Ihope they have drilled into
their head.
Put some money aside, at leastI hope they have.
You know, I get amazed everytime I go anywhere at how much,
(19:14):
to your point, if you go to anice area of a city or something
like, how does this many peoplehave this much money?
But it is really amazing thatpeople continue to have money to
trade.
Now, one of the things we willalso see is many people have
retirement money here and theyput aside a different amount to
trade.
Now, one of the things we willalso see is many people have
retirement money here and theyput aside a different amount to
trade the market with.
So, to your point, I think italso depends and this is
(19:35):
something I would advise peopleto do is what's your purpose on
your trade, and what I mean bythat is is this trade supposed
to be a one or two day trade,that is, your trading money, or
is this where you're saying,okay, buy the dip, a stock that
I really like, and I'll useMicrosoft as an example, not a
recommendation only becauseMicrosoft.
(19:56):
Every time we've seen a dip buyover the last five or six years
, microsoft's been one of thefirst or second stocks retail
traders start to buy.
It really is amazing.
We study the behavior of ourclients and every time that's
the stock people seem to havethe most confidence in in times
of trouble and are putting theirmoney there.
(20:17):
They have incredible cash flows, as we know, so it makes sense
to a lot of people that that's astock people turn to.
So I always look for whenpeople start to start buying
Microsoft.
But what I mean by that is am Ibuying Microsoft in this
situation because I think, ok, Iwant to hold it for a long
period of time?
Or am I buying it and sayingyou know what?
I think we're going to rallyover the next three, four or
(20:39):
five days and I'm going to tryand sell it higher.
Really, knowing why you'regetting into a trade before you
make the trade is a great idea.
I've made the mistake manytimes.
I'm going to guess you have acouple also, michael, where you
went from being a trader I'mgoing to sell this in a day or
two to being an investor.
Oh, this will come back at somepoint and that's the worst
(21:01):
possible thing you can do.
You're going to be wrongoccasionally.
Know where again, know whereyour risk is and know where
you're getting out.
The worst thing to possibly dois say this time's different,
and I always joke.
The only thing that's going tobe different is it's the most
money you're ever going to lose.
Speaker 1 (21:16):
Yeah, I just had a little joke that an investor is
just a trader who's in a red.
I think that's the real way tosay it.
Right, that point aboutMicrosoft's interesting, so it
takes me back a little bit tosort of the Peter Lynch know
what you own kind of thing.
So that becomes what people arefamiliar with, right, because
most people are probably on aMicrosoft-enabled OS operating
(21:36):
system.
What other stocks do you findretail tend to sort of just keep
on gravitating back towards.
Speaker 2 (21:56):
Well, the Spider ETF is always largely traded, a
normal QQQ ETF.
When it comes to the individualnames, the, you know, the
everyday names that are tradedare exactly what you would
expect Apple, NVIDIA, Microsoft.
You know, AMD is kind ofinteresting that it's one that's
in there a lot Meta.
Then you have weeks like thiswhere you have some interesting
earnings.
So Home Depot has been a stockthat our clients the last couple
of days have traded quite a bit, and Target, because they both
(22:18):
had news.
So I would say to your pointearlier, if I look at the if you
will, mostly Mag7 stockscompared to the what I'll call
new stocks, In the new stockspeople are trading a bit more
speculatively that the earningsmoves will move up a certain
amount, down a certain amount,whatever it may be, as compared
(22:41):
to some of those MAG7 stockswhere people are saying, longer
term, I'd like to own this stock.
So again, I don't mind when Isee that because people oh,
don't you hate the speculative,people do it.
No, they know why they're inthe trade and that really is the
bigger difference.
They have an opinion.
There's nothing wrong withhaving an opinion and setting
(23:02):
this is the time frame I havefor that opinion.
I actually think that's abetter person interacting with
the market than someone who justhas an opinion and says I'm
going to let it go forever,Because that normally is not
something people can weather thestorm on, because every time
there is a downturn like, oh myGod, I have to get out.
Speaker 1 (23:18):
How do, at least on the TastyTrade side, how do some
of the retail clients, viewers,find new ideas?
You alluded to education quitea bit and sort of idea
generation, but talk me throughhow that actually looks on a
platform.
What's the journey like?
Speaker 2 (23:33):
Sure.
So you know I'll start with ourTasty Live side, which is
providing content all day long.
So, starting last Friday, youknow the hosts on many of the
shows like OK, we have HomeDepot coming up next week, home
Depot pre-earnings was expectingabout a 5% move one way or the
other based on their earnings.
(23:53):
So that's pretty highvolatility for Home Depot.
So right away now you have aokay, a 5% move on a stock like
that.
You're talking about almost $16one way or the other.
So do you think that the stockwill be more than $16 or less
than $16?
You can start to play it thatway, because that's what the
(24:14):
options market was pricing in.
And one thing I would encouragepeople, even those of you who
never trade an option, onlytrade equities one of the really
good things options do is theysay what a one standard
deviation move is expected bythe market.
All market participants comingin give an expected move, and so
(24:36):
with that, it's a reallyinteresting way to start trading
stocks too, because you can say, okay, if I'm going to buy a
stock for six months and I'mgoing to put in my stop order
down $3, but the stock in thattimeframe is expecting a $10
move.
Mathematically you're going toconstantly lose money.
So again, looking what theexpected move is is going to
(24:59):
help on that case.
But back to the Home Depotexample.
If you're going to buy thestock and you know it's that big
a move, well again, if you buythe stock expecting it to go up,
you put in a stop order down $7.
Mathematically you're puttingyourself in a very difficult
place.
So these are the type of things.
And, by the way, when HomeDepot earnings came out, the
(25:21):
stock moved $9.50 almostimmediately to the upside, ended
up moving back down about $4.50.
So net on the day it had abouta $14 move top to bottom.
So again, the options markettends to start pricing this
stuff in a few days before interms of what will be the
expected move on a stock overall.
(25:42):
We just let people know theseare the type of things you
should be looking for.
If you find a trade idea inthere, great, here's one.
If you think it's going to beoutside that move, here's one.
If you think it's going to beinside that move.
So just giving people ideas tothink about.
Of inner, outside moves, here'sone.
If you think it's only going togo up a couple of dollars.
That's the type of thing we tryto do.
Then we use our platform forthat, to show people how we are
(26:06):
looking at these expected movesand which options we're looking
at for those types of things.
So it really is just about okaywhat's the best way to show the
tools on your platform?
And, more importantly, what'sthe best way to give people
ideas?
Even if they're not going touse what we said, we get them
thinking.
I think one of the mostdifficult things for a retail
(26:27):
trader, if you think about it,is you know they've done their
prep work things.
For a retail trader, if youthink about it, is they've done
their prep work whatever theyhave their cup of coffee.
The bell goes off at 9.30 amEastern and they're like, oh,
what should I do?
I wonder what everybody else isdoing.
So we're trying to give themthat connection as to what many
other people are doing.
Scott Sheridan from ourbrokerage side comes on every
(26:49):
day at 10.15 Eastern and said,ok, in the first 45 minutes here
are the top 10 symbols thatwe're seeing being traded today.
Again, we're just trying togive people constant ideas as to
what else is going on in theworld, just to make them think.
One of the great things aboutthe market overall, as you know,
is it's just about you know.
It's a fight against yourselfas well as against the rest of
(27:13):
the world, and really justgetting ideas, really starting
to think, just helps you hone inon what you want to do, what
you don't want to do, probablymore importantly, and what you
do want to do.
What are ways to do it a veryefficient way.
Speaker 1 (27:28):
Talk me through some of the activity you saw during
the let's call it the tarifftantrum.
Yeah, the kind of volatility,because I think that's
instructive in terms of sort ofseeing how investor behavior or
trader behavior is.
Speaker 2 (27:40):
So I think there's a couple of really important
lessons for people in that.
So, as you know, theannouncement came out after the
close that day and for those ofyou who don't follow S&P 500
futures on our platform, thesymbol is forward slash ES.
Even if you're never going totrade a future in your life, I
would encourage you to startfollowing them because they tend
(28:03):
to lead the market, be it up ordown.
That's where the money goesreally really quickly because
you can get 500 stocks instantly.
The markets are incredibly deepand liquid.
Right after it got announced,it rocketed up.
It rocketed up.
The futures were up about 32points.
Then, as we started going,country by country came flying
(28:28):
back down the other way and, asyou probably remember, after the
close the futures were downwell over 100 points.
It was a gigantic move.
We don't normally see that kindof move after the market close.
An important lesson, a couple ofimportant lessons.
The first important lesson isagain knowing what your risk
(28:48):
tolerance was, knowing what yourrisk tolerance was If you had
S&P 500 positions on.
Hopefully, people trimmed thoseup, if you will, a little bit,
didn't have any loose ends andwere very comfortable with the
risk they were going to take.
Going into that.
The other thing about it forthose who do trade options, it
was a great testament as to whyyou should close out your
(29:09):
options positions, becausethere's something called
exercise and assignment whichhappens after the close.
So what that meant was that,with this big move, people who
thought their options wereworthless all of a sudden,
overnight, those options becameworth a whole lot of money on
the put side if you had soldthem.
So again, closing out yourpositions is a really, really
(29:33):
smart thing to do.
It means discipline, and thosewho are successful long-term are
disciplined.
And it's easy to say bedisciplined.
As we all know, it's hard to bedisciplined.
I always joke if I wasdisciplined on everything I do,
I could walk past Oreo cookieswithout eating three of them.
But you have to decide whereyou're going to be disciplined
(29:54):
in life.
It's tough to be disciplined ineverything.
And if you're going to engagewith the market, I would truly
encourage you to be disciplinedon the amount of risk you're
willing to take, to understandit and to close positions when
they go your way.
You know, as you've, I'm sure,used on the show Michael and
heard a thousand times, you knowbulls and bears make money and
pigs get slaughtered.
(30:15):
You don't have to get the lastpenny out of every single trade
or every single investment youmake.
You don't have to be the low,you don't have to be the high.
There's plenty of room inbetween to make a lot of money,
and I encourage people to closeout their positions when they
can.
So what was then?
The behavior we saw the nextday was a crazy.
The next three days were crazytrading days Lots of opportunity
(30:39):
, lots of back and forth.
The market, though, overall,was having a tougher time.
After that, to the point I madeearlier, one of the things we
noticed is we started to seepeople coming in and buying
Microsoft.
Along with Microsoft, theystarted to buy Meta.
Those were the first two stocksthat, overall, from a retail
(31:00):
perspective, started to get alot of play Along with the other
thing that we saw in times oftrouble, like we saw what you
will often see clients.
What you often see retail do andI've seen it my whole career is
they tend to buy things likethe Spyder and the QQQ.
Why do they do that in times oftrouble?
Because they're afraid to takerisk on an individual stock.
(31:22):
They want an index-relatedproduct, so they'll come in
there representing the S&P 500and the NASDAQ.
When I start to see lesstrading on those two products
and more trading in individualnames, that means to me people
are starting to get moreconfidence, and that's what we
saw after day three.
People starting to buy moreindividual names started with
(31:44):
Microsoft.
Meta went to Apple, actuallywent to Boeing.
In that situation I started togo out a little bit more to some
of the traditional Dow stocksas well as the Mag7 related
stocks.
Pretty soon, on a normal day,we're going to see 35-ish
percent of our trading beingSPDR and QQQs.
(32:07):
During times of trouble, we'regoing to see that maybe be 60%
of our trading.
But we noticed it was goingfrom above 55 level down to
about a 40 level at the end ofthat day.
So we're like, okay, retail hasconfidence in this market again
.
And as we kept going up, wekept seeing that spread back out
(32:28):
as people came back intoindividual names and it starts
with a narrow amount and justkeeps spreading out as folks are
like hold on, this stock hasn'tgone up as much as maybe some
of the major ones and I have anopportunity there.
So it really is interesting tosee that the ones that tend to
go, the ones that went up lastin this situation and I don't
think you'd be surprised by thatare the retailers, because in
(32:52):
many ways they're the mostaffected by tariffs.
But you can see just in the lasttwo days, with Home Depot
earnings yesterday, with Lowe'searnings today, the differences
on how people are thinking abouttariffs and how people are
actually, even in two retailsthat fight against each other
all day long Lowe's saying theyhad good sales, my Home Depot a
(33:13):
little disappointing.
What does that actually tell me?
That tells me that maybe thehigh interest rates people are a
little more afraid to movehomes.
Lowe's is traditionally thoughtof the more high priced
alternative, so perhaps peopleare putting more money into
their current living situationsrather than changing homes
(33:34):
because of the higher interestrates.
So it's a really interestingparadox going on right now and
just starts making me thinkabout okay, what does this mean
for the housing market and forhousing stocks going forward?
Sorry, I know I went off on alittle tantrum there at the end.
Speaker 1 (33:47):
No, no, that's great and I think it's instructive to
hear that perspective.
Speaking about perspective, assomebody who's been a business
leader for as long as you have,across all these different
entities, I'm curious to hearyour thoughts on what it takes
to build a successful franchise,especially in a saturated
industry where you might have toget creative on the UI and UX
side and the marketing side.
Talk me through any lessonsyou've learned over the years.
Speaker 2 (34:12):
Well, I think the biggest lesson is always work
with good people.
I've been very fortunate.
The people I've worked with mywhole career I've known for a
while before I started workingwith them, and so when you start
that as your core of yourbusiness, that helps
significantly.
Then the next thing is when youhire and we're fortunate you
take away some of the people whostarted this business, et
(34:34):
cetera.
Our average age is about 32, 33years old.
We have so many phenomenalyoung people and one of the
things that actually aggravatesme is when I hear people my age
saying oh, the youngergeneration doesn't want to work,
blah, blah, blah.
I'm like well, then you're justhiring the wrong people.
I think that's a myth.
(34:55):
People want to work.
What you have to do is helppeople feel part of something
bigger than themselves.
Everybody wants to be part ofsomething bigger than they are.
How can you help them have thatfeeling that this is great and
you want them to be part of it?
And the other part of it ishold people to a consistent
standard and say this is ourstandard.
(35:17):
Are you meeting it?
And if not, unfortunately somepeople won't and you have to
part ways, but most people wantto if you are consistent about
what the standard is and if youhelp them get to the standard.
Everyone struggles in theirlives and I mean I'm sure you
and I can name you know 25, 30people who thank God they were
(35:38):
in my lives, my life at acertain point and help me get to
the next level.
And I think one of the things Ifeel thankful for is that as I
get older, I get to help a lotof younger people.
But to your point about UX, UIthe business has changed so much
.
There have been so many newcompetitors who weren't even in
the business five years agonecessarily, or weren't major
(36:00):
players, who are now more thanmajor players.
You have to.
You know our business is onlyseven years old.
You have to constantly thinkabout what's next.
What are the next product setsmy client wants?
The biggest thing we all haveto prioritize, I think, at any
business, is what's my tech teamgoing to work on next?
(36:20):
Because you're always trying toprioritize.
You only have so many dollarsand so many people.
What's the best tech?
Priority for the next thingthat you need and how fast can
you deliver it?
Priority for the next thingthat you need and how fast can
you deliver it?
Speed and accuracy.
And what I mean by accuracy isyou also want to make sure that
your platform is never down.
We're in a 24-hour market now.
We trade crypto 24-7.
(36:42):
You have to be up 24-7.
You know overnight trading.
We've had futures overnight foralmost since our inception, so
that makes sense.
We're about to add 24 hourequity trading.
So everything you do, you haveto think about the fact that we
always have to be up, but youstill have to do maintenance and
things like that.
How do you plan those windows?
Overall, it's only becoming moreand more complex and I think
(37:05):
that, because crypto proved thatthere can be 24 seven trading,
I would it would not surprise mewithin five years if we are
talking about 24-7 trading onevery product.
Well, I won't say every product, but certainly equities.
You're seeing more of the ATSis getting involved there and
we're going to have, I know, acouple of new ones released
(37:26):
within the year.
So there's going to be morecompetition in terms of where
those orders go.
And if you think about it, youknow we talk about, you know the
American markets being the best, et cetera.
Many foreign people want toinvest.
Well, why wouldn't we givethose people the opportunity to
invest when they're actuallyawake.
As we see demand coming in fromAsia, as we see demand coming
(37:52):
in from Australia, we're goingto continue, I think, to see the
markets that we trade be openedup more and more so those
people can trade during thehours that they are awake and
they are more functioning.
And the biggest thing we'll see, hopefully, then, is liquidity
going there, because at the endof the day, that's what retail
truly needs.
I always tell folks I think youwant to be the smallest fish in
the biggest pond.
You want to be in, you want tobe out.
(38:14):
Nobody even knew you were there.
The reason is, if everybodyelse is there trading, the
markets are going to be reallytight and you can get in and out
at any time, and for a retailtrader, that is the actual, you
know true blood going throughthe veins is liquidity.
Speaker 1 (38:30):
I'm actually glad you mentioned the 24-7 trading
movement because I think that'smaybe a good place we can wrap
the conversation up around here.
But do you think that's goingto change anything?
And then, from the TastyTradeside, is there anything that's
being done to sort of prep forthat?
Does anything change on yourend?
Speaker 2 (38:48):
Well, you know, as I said, we're about to roll out
24-5 equity trading by the endof June.
So all the preparation thatgoes into it making sure your
systems are ready to go, and notonly that, but making sure your
support is ready to go too andthen you have to think about
okay, when dividends are paid,how you handle all that.
(39:08):
I know this is a crazy thing,but what time does the day
actually end in terms of what'sthought of as the next day trade
?
What's thought of the previousday trade?
So there is a lot of thoughtand planning that actually goes
into this overall.
So we're really excited.
Our clients are really excitedto have this access and so that
they can trade.
(39:30):
Let's face it how much news hascome out overnight or after the
close over the last six monthsto a year?
It's just becoming more andmore and more.
We want our clients to be ableto react in real time if they so
choose, and I think it's onlynatural.
So that is 100 percent.
100%.
(39:51):
Something we've been workingvery diligently on.
As I said, we already do thatfor futures.
So it wasn't a complete changefor us, maybe adding a little
bit more support, et cetera,just so the team doesn't ever
get overwhelmed and our clientsalways have a good experience is
obviously number one.
Speaker 1 (40:05):
Make the pitch for using TastyTrade over any other
platform and talk about sort ofhow people can sign up and
access the service.
Speaker 2 (40:13):
Well, I appreciate that.
So tastytradecom and if youwant to, you know, take a quick
look at our content tastylivecom.
So those are the two primaryareas to get ahold of us or to
apply for an account attastytradecom.
Our platform is built by peoplewho traded options and futures
(40:33):
for a living, and so we built inthe platform we wanted to trade
off of, and we've done this ourwhole careers.
So I think that our pricing isincredible.
Our customer support I would putup next to anybody, because
you'll be talking to somebodywho did this for a living.
They understand the risk.
(40:59):
We constantly talk about risk.
We give amazing risk tools,because what you'll find is, if
you think of risk first, you'llbe doing this for a long, long
time.
We have a long list of veryloyal clients, and I think that
is because we're very, ourplatform is very good and our
service is absolutely top notchin the industry, because we
realize that you, as the client,pay our salaries every single
day, and so, with that, we'revery conscious of making sure
(41:22):
you're happy, because if you'renot, there's too much
competition in this space andyou will leave.
We never, ever, ever want thatto happen.
Speaker 1 (41:30):
Appreciate the conversation, jj.
Hopefully those that listen tothis and watch this enjoyed it
as well.
Learn more and check outTastyTree, and hopefully I'll
see you all next episode of NeatLag Live.
Thank you, jj.
Speaker 2 (41:42):
Thanks, Michael.
I mean it's amazing to me that there's still all
this.
I don't use the term dry powderbecause I think that's cliche,
but there's a lot of moneythat's still seemingly just like
ready to deploy.
Speaker 2 (00:10):
Well, I think what you know one of the things also
is 401ks have been a great thing.
For that.
I think many younger peoplehave been drilled into their
head.
Put some money aside At least Ihope they have drilled into
their head.
Put some money aside at least Ihope they have.
You know, I get amazed everytime I go anywhere at how much.
(00:32):
To your point, if you go to anice area of a city or something
like, how does this many peoplehave this much money?
But it is really amazing thatpeople continue to have money to
trade.
Now, one of the things we willalso see is many people have
retirement money here and theyput aside a different amount to
trade.
Now, one of the things we willalso see is many people have
retirement money here and theyput aside a different amount to
trade the market with.
So, to your point, I think italso depends and this is
(00:53):
something I would advise peopleto do is what's your purpose on
your trade?
Speaker 1 (01:07):
My name is Michael Guy, a publisher of the Lead Lag
Report.
Joining me here is JJ Keenahan,tasty Trade.
I'm pretty sure I've heard ofthat company.
You guys are making the rounds,but, jj, introduce yourself.
Who are you?
What's your background?
What have you done throughoutyour career?
Speaker 2 (01:22):
Sure, Thanks for having me, Michael JJ Keenahan.
I'm the CEO of IG North America, which is the parent company of
Tasty Trade, which is ourbrokerage firm, Tasty Live,
which is our content side of ourbusiness, Tasty FX, our FX
business, and Tasty Crypto, ourcrypto side of our business.
So you know, we encourageanybody to come in and use our
(01:44):
platforms.
It's a retail brokerage firmand we are the same people who
started Thinkorswim, which endedup being sold to TD Ameritrade
and ultimately, is now part ofCharles Schwab.
My background personally is Itraded on the floor of the
Chicago Board Options Exchangefor 21 years.
I left there to go toThinkorswim.
(02:04):
We got taken over by TDAmeritrade.
I stayed there for the next 16years and then I came over here
as CEO three years ago.
Speaker 1 (02:11):
Okay, so a lot of real background in the industry,
and there's obviously been abig proliferation of different
brokerage firms focused on theretail trader.
I am personally always blownaway at how retail just seems to
control the market.
It's not the market ofpre-COVID anymore and you see
(02:32):
that at major lows retail doescome in, and whether they're the
reason that it's the low or notit's unclear.
But I'm curious to get yourthoughts on why is it that
retail has become so powerful?
Speaker 2 (02:42):
Well, I think a lot of it goes back quite a few
years, and you think about whenI was on the trading floor.
This is up till 2006,.
We had a huge advantage.
The platforms were not verygood for retail.
The information was absolutelyawful.
People had to call in andliterally wait for their fills.
(03:04):
They might not get filled foran hour.
Now you fast forward to whereplatforms are.
The fills are instantaneous.
The information is actuallyprobably better than many, even
professionals, get, becausethey're not looking at news or
et cetera.
You know, and the biggestdifference is you do what you
want when you want and think ofall.
(03:24):
You know we broadcast 14 hoursa day on our Tasty Live side.
We're just giving people ideasand education, and the biggest
thing for the self-directedinvestor is to really get an
idea.
What should I do now?
What's happening now?
Why is this happening?
You know, similar to a lot ofwhat you do, michael, all day,
(03:44):
which is fantastic.
You're just trying to help makepeople better, give people
really good information, andthat's truly been our mission.
And we foundomenal platforms,great education, much of it free
, and you know many of ourcompetitors also do very nice
(04:11):
education and the fact thatpeople had time then, and the
greatest thing, in my opinion,that happened during crypto
happened during COVID, I'm sorryis that even if people didn't
continue to trade et cetera andhopefully they did, and we know
that's my goal is to geteveryone to trade here every day
but even if people didn't, itwas the first time in many
(04:31):
people's lives that theyactually got educated about how
the market works, even if itonly helped them make better
decisions and how they allocatein their 401k.
But what we have seen is alarge part of retail continue on
, start to get more educated andwhat they've also done is not
only, you know, the ability forthem to trade partial stocks,
(04:52):
along with the ability forpeople who got more
knowledgeable about how theoptions market works, has really
helped the retail trader justparticipate in a much different
way, in a much greater way thananyone ever even dreamed of
before that time.
Speaker 1 (05:08):
Okay, so that shows a few directions to go on that.
And let's hit on that optionspoint, because that's where I
think it gets to be reallyparticularly interesting.
It seems to me and obviouslyyou're much closer to this than
I am that retail really has goneinto the options market.
You know, full on right.
Retail really has gone into theoptions market.
You know full on right.
I mean it's and you can arguethis is similar, related to sort
(05:30):
of this cultural shift towardswanting to bet more and parlays
and things like that in terms ofyou know, some of these
gambling type of apps that yousee out there.
But I thought options weresupposed to be sort of the
domain of the sophisticated.
Talk me through that, becauseare we at a point where retail
really understands how optionswork or is there still a lot of
misunderstanding about the risksinvolved?
Speaker 2 (05:50):
Well, I think that there's more of a media if I'd
say it that way narrative thatoptions are super risky and they
can be if you want them to be.
However, I think what mostpeople have learned to do is
there a speculative element tothem?
Absolutely.
There are people who are goingto do that because, you have to
remember, all options really areour giant probabilities.
(06:12):
What is the probability that wewill be at a certain strike on
the expiration date?
So options are probabilities.
However, what we have seen asignificant change of,
particularly in the last coupleof years, is people starting to
use more spreads.
Why do I love to see people dothat?
Because the biggest mistake youcan make in trading options, in
(06:33):
my opinion, is not definingyour risk.
So if you go in and you trade aspread, you know right away
what you can make, what you canlose and how long that is going
to take to its longest end, ofcourse, because there are
expirations to options.
So when you start to definethat type of thing upfront, it
makes it so much better.
(06:54):
The perfect example, michael andI mean how many times have you
heard in your life don't beemotional about trading.
But I think you and I both knowit's money.
People get emotional with money.
One of the nice things aboutthe options market again,
because there are expirationsand you can define your risk is
you lay out the worst casescenario before you make the
(07:15):
trade.
You're still going to be angryif things go against you, but at
least you say OK, I know thisis the worst that can happen, so
I can make better decisions.
The reason people make baddecisions when they get
emotional is they never thoughtabout worst case scenario and we
really try and educate people.
What most professional tradersdo, what we did when we were on
(07:38):
the floor Start with the badcase and then say does the good
case pay me enough to take thebad case risk?
Speaker 1 (07:51):
Part of not being emotional is having the right
unemotional tools right to playwith, and you often hear that
line that retail has so muchmore access to tools than ever
before.
Stuff that was much for aninstitutional side is now easily
accessible, whether it's algosor things like that.
But let's drill down when youhear that line that
institutional tools areavailable to retail.
What are those tools?
What are people referring to?
Speaker 2 (08:09):
Certainly, you know people can use APIs to write up
their own type of chartingsoftware et cetera.
We obviously provide tons ofcharts et cetera, and I think if
you think about just the toolsthat are available on our
platform, you have what is theprobability that an option will
expire at any single time.
You know very much related toDelta, but the difference is
(08:32):
probabilities.
Take into account volatility ina different way also, but we'll
also have what is the?
What is the probability it'lltouch a certain level at any
point in expiration.
So, obviously, full chartprobabilities that help people,
analyzation tools.
So you can say well, if I makethis trade, let me analyze what
will happen, not only to thatindividual trade excuse me, sir
(08:55):
but what happens to the rest ofthe position that I may have on.
Those are some of the reallygood things.
Now let's take a that any firmcan provide, and we certainly do
provide all of that.
But take a step back and lookwhat the industry is providing.
What the industry is nowproviding are expirations on the
ETFs and indices that are daily.
(09:17):
The best part about options isthat you can really, you know,
as part of defining your risk,you define timeframes also.
So the fact that you can nowdefine timeframes pretty
accurately.
Overall, you lay over the fact,all the risk tools that are
available to you, you lay overall the probability tools that
are available to you firm, ourfirm, you know giving you ideas
(09:40):
and education all day long, soyou understand the risk and how
to use these tools in the bestpossible way.
It really is mind blowing tothink how far and the last thing
being no commissions to tradeequities you know.
It's mind blowing to thinkwhere all of this has come in
the last 20 years.
Are we at some?
Speaker 1 (10:00):
kind of saturation point in terms of the things
that are available to retail.
Meaning, have we, have we takencare of all the low hanging
fruit and mostly high hangingfruit there?
Speaker 2 (10:11):
I think we'll continue to develop new tools
overall.
You know, one of the thingsthat we're starting to see more
and more is people starting totake an interest in futures and
particularly futures options.
And the reason they've taken aninterest in futures options is
because the framework isbasically the same If you trade
(10:32):
an option on a SPDR, if youtrade an option on an SPX.
What's the difference on an S&P500 futures option?
In all three cases, youprobably don't want to deal with
the underlying, so it makes ita lot easier when you go on with
the fact that I would prefernot to have to trade the future,
I'm going to unwind my positionbefore expiration days, et
(10:54):
cetera.
So when you start to have thatmindset going in, then they look
very much like each other andyou go with what fits you best
at that time.
Of course, I'm not saying toanybody that you should just go
out and trade futures optionsimmediately.
Please get educated.
If you're going to trade anoption at all and you know, if
you want a paper trade, go dothat.
(11:16):
But I will warn people aboutpaper trading.
The one thing about it is I'mone of the greatest paper
traders in the world.
I can lose $50,000 papertrading and I won't flinch.
I'm down $20 in regular tradingand I hate everyone I ever met.
So there really is a bigdifference there in terms of
that feeling you get when thingsgo against you.
But back to where I was goingabout what's going on in the
(11:38):
industry.
The futures market has gottenso much more interest from
retail and it's probably wherethe securities market was
eight-ish years ago.
But more and more people, asthey get educated, realize that
products become more and morefungible, the more you start to
understand them, and what itcomes down to then is you as an
(11:59):
individual saying what fits mebest in this particular
situation.
The exception to the rule inthis case would be some of the
commodity options, because theywork backwards from everything
else.
So I won't go there, but I dowant to make sure that I say
that Again being educated on howthey work, being educated on
the differences in theunderlying, helps you make a
(12:20):
better, more informed decision.
Speaker 1 (12:22):
There is this impression out there that retail
just just YOLOs, you know, theyjust go all in and risk
management be damned.
And I think you can argue thatthere's some evidence of that,
because a lot of the folks tendto go into levered ETFs and kind
of more speculative type ofgear products.
Is that fair to say thatthere's just this sort of wave
(12:48):
of aggressive positioning?
Speaker 2 (13:11):
I would dare anyone to show me any profession, any
skill, anything that goes onwhere a certain element are
doing it wrong or doing it in away that probably doesn't make
sense to people who understandit.
You're not very good at it whenyou start.
So if you're going to make abad and just like any new skill
you learn, you're just not goodwhen you start, and so people
when they start, if they want togo into things they don't
understand, are probably notgoing to have good success.
(13:32):
So there is an element that'sgoing to happen there.
There are people you know whereyou started who do like to
speculate, and that's fine ifyou understand what can happen
to you if you do it.
I think the traditional pathfor many people quite honestly
has been they do come in, theybuy a call in a stock they think
is going to go up.
(13:52):
The stock maybe goes up alittle, but not enough for what
they paid for their call, andthey're like one of two paths
tends to happen mostly fromthere.
They're like oh, they screwedme.
Or they're like but there hasto be something to this and they
spend a little bit more timeand get a little bit more
educated For anybody who'slistening to this podcast and
(14:14):
you're new and you're trying toget started, the biggest piece
of advice I can possibly give toyou is please, please, please,
start as small as possible.
If you're trading an option,start with one contract.
Learn with small amounts ofmoney.
It's trading an option.
Start with one contract.
Learn with small amounts ofmoney.
It's the greatest favor you cando for yourself.
Again, you talk to peopleinvesting all the time, michael,
(14:36):
and, as you know, one of thebiggest mistakes they make is
they lose too much money whenthey are starting out.
And if you just start withlittle amounts, you'll learn a
lot because, again, you're notgood yet.
It's just like if you startedto play golf.
You realize when you startyou're going to hit maybe a good
shot occasionally, but you'renot good yet and you're trying
(14:58):
to get good, so don't put somuch pressure on yourself
overall.
And again, I just think the onecontract to start is really the
best thing anybody can do forthemselves and have that mantra
for a little while.
Now you might want to engagewith more you know with the
market a little bit more often,maybe weekly, or, you know
(15:19):
biweekly or monthly, just to getused to it Because, again, like
I'll use golf as an analogywhen you're swinging you want to
do it a little more often andget comfortable doing it.
But doing these small amountswill help you get more
comfortable when you feelcomfortable.
The easiest thing in the worldis to risk more money.
The hardest thing in the worldis to risk a lot of money, lose
(15:41):
it and then you get into thisbad cycle where you feel like
you have to make it back right.
Speaker 1 (15:45):
Let's talk about that word risk.
I study finance at NYU.
One of my majors risk isvolatility.
Risk is about risk of ruin.
How should retail think aboutmanaging risk?
And how does one even do that,given all of these tools that
now retail, the ability ofretail to access?
Speaker 2 (16:07):
Well, I'm going to combine what you asked me on the
last question with this one alittle bit.
I think one of the things thatretail traders become really,
really good at is managing theirmoney, and what I mean by that
is the years I traded on thefloor.
I never thought do I haveenough money to make this trade,
I just made the trades.
What happens for retail is theyhave a set amount of money.
Maybe somebody has $40,000 intheir account.
(16:27):
Well, they have to think tothemselves should I risk $1,000?
Should I risk $2,000 on thistrade?
So they really start to becomegood at managing individually
every single trade as well astheir overall portfolio, and I
think that that's a really smartway to look at it.
Am I just going to?
You know risk to one, two,three percent per trade, and I
(16:51):
think that that's you start tobecome smarter in that way in
doing so.
So I think the other thing thatpeople have to develop going
back to me talking about the onecontract is what's your
personal risk?
An individual Michael may beable to say, ok, I can trade you
know $100,000 worth of risk andit's not going to bother me.
In the least I may say you knowwhat I trade more than $20,000
(17:12):
worth of risk.
I feel really uncomfortable,and so I think people have to
get themselves to a point.
Maybe for some people it's $200worth of risk.
Whatever it may be, we're allat different points in our lives
, but you're also at differentpoints in your risk tolerance.
So just because somebody elseis risking a lot of money
doesn't mean you should do it,and you know you have people
(17:34):
like yourself who are out herereally trying to educate people
the right way.
Unfortunately, there are toomany people who will just say,
oh, I risked all this, made allthis.
They don't show you all thelosers on the way, and so with
that, I think one of the bestthings that people start to
learn who are going to surviveat all is what's my personal
risk tolerance, and that youshould never apologize for it.
(17:56):
You should feel good about it.
Maybe if you're starting outand it is $200, have three or
four successful trades, then sayyou know what?
I'm going to go to $300 now.
Step up the ladder slowly butsurely.
If you're younger, particularly, time adds up.
You know I always joke.
You just want to hit single,single, single single, and all
(18:17):
of a sudden you've got a prettynice stack for yourself.
You don't have to hit home runs.
Time takes care of a lot ofthat in terms of just building
smaller amounts on every singletrade.
Speaker 1 (18:28):
I'm sure you've seen that meme.
I've used that myself before.
Buy the dip, buy the dip.
Already bought the dip, I haveno more cash to buy the dip.
Every single one of these dipsretail comes in.
Where is retail getting thiscash from?
I mean, it's amazing to me thatthere's still all this.
I don't use the term dry powderbecause I think that's cliche,
but it's amazing to me thatthere's still all this.
I don't use the term dry powderbecause I think that's cliche.
(18:48):
Right, but there's a lot ofmoney that's still seemingly
just like ready to deploy.
Speaker 2 (18:51):
Well, I think you know one of the things also is
401ks have been a great thingfor that.
I think many younger peoplehave been drilled into their
head.
Put some money aside At least Ihope they have drilled into
their head.
Put some money aside, at leastI hope they have.
You know, I get amazed everytime I go anywhere at how much,
(19:14):
to your point, if you go to anice area of a city or something
like, how does this many peoplehave this much money?
But it is really amazing thatpeople continue to have money to
trade.
Now, one of the things we willalso see is many people have
retirement money here and theyput aside a different amount to
trade.
Now, one of the things we willalso see is many people have
retirement money here and theyput aside a different amount to
trade the market with.
So, to your point, I think italso depends and this is
(19:35):
something I would advise peopleto do is what's your purpose on
your trade, and what I mean bythat is is this trade supposed
to be a one or two day trade,that is, your trading money, or
is this where you're saying,okay, buy the dip, a stock that
I really like, and I'll useMicrosoft as an example, not a
recommendation only becauseMicrosoft.
(19:56):
Every time we've seen a dip buyover the last five or six years
, microsoft's been one of thefirst or second stocks retail
traders start to buy.
It really is amazing.
We study the behavior of ourclients and every time that's
the stock people seem to havethe most confidence in in times
of trouble and are putting theirmoney there.
(20:17):
They have incredible cash flows, as we know, so it makes sense
to a lot of people that that's astock people turn to.
So I always look for whenpeople start to start buying
Microsoft.
But what I mean by that is am Ibuying Microsoft in this
situation because I think, ok, Iwant to hold it for a long
period of time?
Or am I buying it and sayingyou know what?
I think we're going to rallyover the next three, four or
(20:39):
five days and I'm going to tryand sell it higher.
Really, knowing why you'regetting into a trade before you
make the trade is a great idea.
I've made the mistake manytimes.
I'm going to guess you have acouple also, michael, where you
went from being a trader I'mgoing to sell this in a day or
two to being an investor.
Oh, this will come back at somepoint and that's the worst
(21:01):
possible thing you can do.
You're going to be wrongoccasionally.
Know where again, know whereyour risk is and know where
you're getting out.
The worst thing to possibly dois say this time's different,
and I always joke.
The only thing that's going tobe different is it's the most
money you're ever going to lose.
Speaker 1 (21:16):
Yeah, I just had a little joke that an investor is
just a trader who's in a red.
I think that's the real way tosay it.
Right, that point aboutMicrosoft's interesting, so it
takes me back a little bit tosort of the Peter Lynch know
what you own kind of thing.
So that becomes what people arefamiliar with, right, because
most people are probably on aMicrosoft-enabled OS operating
(21:36):
system.
What other stocks do you findretail tend to sort of just keep
on gravitating back towards.
Speaker 2 (21:56):
Well, the Spider ETF is always largely traded, a
normal QQQ ETF.
When it comes to the individualnames, the, you know, the
everyday names that are tradedare exactly what you would
expect Apple, NVIDIA, Microsoft.
You know, AMD is kind ofinteresting that it's one that's
in there a lot Meta.
Then you have weeks like thiswhere you have some interesting
earnings.
So Home Depot has been a stockthat our clients the last couple
of days have traded quite a bit, and Target, because they both
(22:18):
had news.
So I would say to your pointearlier, if I look at the if you
will, mostly Mag7 stockscompared to the what I'll call
new stocks, In the new stockspeople are trading a bit more
speculatively that the earningsmoves will move up a certain
amount, down a certain amount,whatever it may be, as compared
(22:41):
to some of those MAG7 stockswhere people are saying, longer
term, I'd like to own this stock.
So again, I don't mind when Isee that because people oh,
don't you hate the speculative,people do it.
No, they know why they're inthe trade and that really is the
bigger difference.
They have an opinion.
There's nothing wrong withhaving an opinion and setting
(23:02):
this is the time frame I havefor that opinion.
I actually think that's abetter person interacting with
the market than someone who justhas an opinion and says I'm
going to let it go forever,Because that normally is not
something people can weather thestorm on, because every time
there is a downturn like, oh myGod, I have to get out.
Speaker 1 (23:18):
How do, at least on the TastyTrade side, how do some
of the retail clients, viewers,find new ideas?
You alluded to education quitea bit and sort of idea
generation, but talk me throughhow that actually looks on a
platform.
What's the journey like?
Speaker 2 (23:33):
Sure.
So you know I'll start with ourTasty Live side, which is
providing content all day long.
So, starting last Friday, youknow the hosts on many of the
shows like OK, we have HomeDepot coming up next week, home
Depot pre-earnings was expectingabout a 5% move one way or the
other based on their earnings.
(23:53):
So that's pretty highvolatility for Home Depot.
So right away now you have aokay, a 5% move on a stock like
that.
You're talking about almost $16one way or the other.
So do you think that the stockwill be more than $16 or less
than $16?
You can start to play it thatway, because that's what the
(24:14):
options market was pricing in.
And one thing I would encouragepeople, even those of you who
never trade an option, onlytrade equities one of the really
good things options do is theysay what a one standard
deviation move is expected bythe market.
All market participants comingin give an expected move, and so
(24:36):
with that, it's a reallyinteresting way to start trading
stocks too, because you can say, okay, if I'm going to buy a
stock for six months and I'mgoing to put in my stop order
down $3, but the stock in thattimeframe is expecting a $10
move.
Mathematically you're going toconstantly lose money.
So again, looking what theexpected move is is going to
(24:59):
help on that case.
But back to the Home Depotexample.
If you're going to buy thestock and you know it's that big
a move, well again, if you buythe stock expecting it to go up,
you put in a stop order down $7.
Mathematically you're puttingyourself in a very difficult
place.
So these are the type of things.
And, by the way, when HomeDepot earnings came out, the
(25:21):
stock moved $9.50 almostimmediately to the upside, ended
up moving back down about $4.50.
So net on the day it had abouta $14 move top to bottom.
So again, the options markettends to start pricing this
stuff in a few days before interms of what will be the
expected move on a stock overall.
(25:42):
We just let people know theseare the type of things you
should be looking for.
If you find a trade idea inthere, great, here's one.
If you think it's going to beoutside that move, here's one.
If you think it's going to beinside that move.
So just giving people ideas tothink about.
Of inner, outside moves, here'sone.
If you think it's only going togo up a couple of dollars.
That's the type of thing we tryto do.
Then we use our platform forthat, to show people how we are
(26:06):
looking at these expected movesand which options we're looking
at for those types of things.
So it really is just about okaywhat's the best way to show the
tools on your platform?
And, more importantly, what'sthe best way to give people
ideas?
Even if they're not going touse what we said, we get them
thinking.
I think one of the mostdifficult things for a retail
(26:27):
trader, if you think about it,is you know they've done their
prep work things.
For a retail trader, if youthink about it, is they've done
their prep work whatever theyhave their cup of coffee.
The bell goes off at 9.30 amEastern and they're like, oh,
what should I do?
I wonder what everybody else isdoing.
So we're trying to give themthat connection as to what many
other people are doing.
Scott Sheridan from ourbrokerage side comes on every
(26:49):
day at 10.15 Eastern and said,ok, in the first 45 minutes here
are the top 10 symbols thatwe're seeing being traded today.
Again, we're just trying togive people constant ideas as to
what else is going on in theworld, just to make them think.
One of the great things aboutthe market overall, as you know,
is it's just about you know.
It's a fight against yourselfas well as against the rest of
(27:13):
the world, and really justgetting ideas, really starting
to think, just helps you hone inon what you want to do, what
you don't want to do, probablymore importantly, and what you
do want to do.
What are ways to do it a veryefficient way.
Speaker 1 (27:28):
Talk me through some of the activity you saw during
the let's call it the tarifftantrum.
Yeah, the kind of volatility,because I think that's
instructive in terms of sort ofseeing how investor behavior or
trader behavior is.
Speaker 2 (27:40):
So I think there's a couple of really important
lessons for people in that.
So, as you know, theannouncement came out after the
close that day and for those ofyou who don't follow S&P 500
futures on our platform, thesymbol is forward slash ES.
Even if you're never going totrade a future in your life, I
would encourage you to startfollowing them because they tend
(28:03):
to lead the market, be it up ordown.
That's where the money goesreally really quickly because
you can get 500 stocks instantly.
The markets are incredibly deepand liquid.
Right after it got announced,it rocketed up.
It rocketed up.
The futures were up about 32points.
Then, as we started going,country by country came flying
(28:28):
back down the other way and, asyou probably remember, after the
close the futures were downwell over 100 points.
It was a gigantic move.
We don't normally see that kindof move after the market close.
An important lesson, a couple ofimportant lessons.
The first important lesson isagain knowing what your risk
(28:48):
tolerance was, knowing what yourrisk tolerance was If you had
S&P 500 positions on.
Hopefully, people trimmed thoseup, if you will, a little bit,
didn't have any loose ends andwere very comfortable with the
risk they were going to take.
Going into that.
The other thing about it forthose who do trade options, it
was a great testament as to whyyou should close out your
(29:09):
options positions, becausethere's something called
exercise and assignment whichhappens after the close.
So what that meant was that,with this big move, people who
thought their options wereworthless all of a sudden,
overnight, those options becameworth a whole lot of money on
the put side if you had soldthem.
So again, closing out yourpositions is a really, really
(29:33):
smart thing to do.
It means discipline, and thosewho are successful long-term are
disciplined.
And it's easy to say bedisciplined.
As we all know, it's hard to bedisciplined.
I always joke if I wasdisciplined on everything I do,
I could walk past Oreo cookieswithout eating three of them.
But you have to decide whereyou're going to be disciplined
(29:54):
in life.
It's tough to be disciplined ineverything.
And if you're going to engagewith the market, I would truly
encourage you to be disciplinedon the amount of risk you're
willing to take, to understandit and to close positions when
they go your way.
You know, as you've, I'm sure,used on the show Michael and
heard a thousand times, you knowbulls and bears make money and
pigs get slaughtered.
(30:15):
You don't have to get the lastpenny out of every single trade
or every single investment youmake.
You don't have to be the low,you don't have to be the high.
There's plenty of room inbetween to make a lot of money,
and I encourage people to closeout their positions when they
can.
So what was then?
The behavior we saw the nextday was a crazy.
The next three days were crazytrading days Lots of opportunity
(30:39):
, lots of back and forth.
The market, though, overall,was having a tougher time.
After that, to the point I madeearlier, one of the things we
noticed is we started to seepeople coming in and buying
Microsoft.
Along with Microsoft, theystarted to buy Meta.
Those were the first two stocksthat, overall, from a retail
(31:00):
perspective, started to get alot of play Along with the other
thing that we saw in times oftrouble, like we saw what you
will often see clients.
What you often see retail do andI've seen it my whole career is
they tend to buy things likethe Spyder and the QQQ.
Why do they do that in times oftrouble?
Because they're afraid to takerisk on an individual stock.
(31:22):
They want an index-relatedproduct, so they'll come in
there representing the S&P 500and the NASDAQ.
When I start to see lesstrading on those two products
and more trading in individualnames, that means to me people
are starting to get moreconfidence, and that's what we
saw after day three.
People starting to buy moreindividual names started with
(31:44):
Microsoft.
Meta went to Apple, actuallywent to Boeing.
In that situation I started togo out a little bit more to some
of the traditional Dow stocksas well as the Mag7 related
stocks.
Pretty soon, on a normal day,we're going to see 35-ish
percent of our trading beingSPDR and QQQs.
(32:07):
During times of trouble, we'regoing to see that maybe be 60%
of our trading.
But we noticed it was goingfrom above 55 level down to
about a 40 level at the end ofthat day.
So we're like, okay, retail hasconfidence in this market again
.
And as we kept going up, wekept seeing that spread back out
(32:28):
as people came back intoindividual names and it starts
with a narrow amount and justkeeps spreading out as folks are
like hold on, this stock hasn'tgone up as much as maybe some
of the major ones and I have anopportunity there.
So it really is interesting tosee that the ones that tend to
go, the ones that went up lastin this situation and I don't
think you'd be surprised by thatare the retailers, because in
(32:52):
many ways they're the mostaffected by tariffs.
But you can see just in the lasttwo days, with Home Depot
earnings yesterday, with Lowe'searnings today, the differences
on how people are thinking abouttariffs and how people are
actually, even in two retailsthat fight against each other
all day long Lowe's saying theyhad good sales, my Home Depot a
(33:13):
little disappointing.
What does that actually tell me?
That tells me that maybe thehigh interest rates people are a
little more afraid to movehomes.
Lowe's is traditionally thoughtof the more high priced
alternative, so perhaps peopleare putting more money into
their current living situationsrather than changing homes
(33:34):
because of the higher interestrates.
So it's a really interestingparadox going on right now and
just starts making me thinkabout okay, what does this mean
for the housing market and forhousing stocks going forward?
Sorry, I know I went off on alittle tantrum there at the end.
Speaker 1 (33:47):
No, no, that's great and I think it's instructive to
hear that perspective.
Speaking about perspective, assomebody who's been a business
leader for as long as you have,across all these different
entities, I'm curious to hearyour thoughts on what it takes
to build a successful franchise,especially in a saturated
industry where you might have toget creative on the UI and UX
side and the marketing side.
Talk me through any lessonsyou've learned over the years.
Speaker 2 (34:12):
Well, I think the biggest lesson is always work
with good people.
I've been very fortunate.
The people I've worked with mywhole career I've known for a
while before I started workingwith them, and so when you start
that as your core of yourbusiness, that helps
significantly.
Then the next thing is when youhire and we're fortunate you
take away some of the people whostarted this business, et
(34:34):
cetera.
Our average age is about 32, 33years old.
We have so many phenomenalyoung people and one of the
things that actually aggravatesme is when I hear people my age
saying oh, the youngergeneration doesn't want to work,
blah, blah, blah.
I'm like well, then you're justhiring the wrong people.
I think that's a myth.
(34:55):
People want to work.
What you have to do is helppeople feel part of something
bigger than themselves.
Everybody wants to be part ofsomething bigger than they are.
How can you help them have thatfeeling that this is great and
you want them to be part of it?
And the other part of it ishold people to a consistent
standard and say this is ourstandard.
(35:17):
Are you meeting it?
And if not, unfortunately somepeople won't and you have to
part ways, but most people wantto if you are consistent about
what the standard is and if youhelp them get to the standard.
Everyone struggles in theirlives and I mean I'm sure you
and I can name you know 25, 30people who thank God they were
(35:38):
in my lives, my life at acertain point and help me get to
the next level.
And I think one of the things Ifeel thankful for is that as I
get older, I get to help a lotof younger people.
But to your point about UX, UIthe business has changed so much
.
There have been so many newcompetitors who weren't even in
the business five years agonecessarily, or weren't major
(36:00):
players, who are now more thanmajor players.
You have to.
You know our business is onlyseven years old.
You have to constantly thinkabout what's next.
What are the next product setsmy client wants?
The biggest thing we all haveto prioritize, I think, at any
business, is what's my tech teamgoing to work on next?
(36:20):
Because you're always trying toprioritize.
You only have so many dollarsand so many people.
What's the best tech?
Priority for the next thingthat you need and how fast can
you deliver it?
Priority for the next thingthat you need and how fast can
you deliver it?
Speed and accuracy.
And what I mean by accuracy isyou also want to make sure that
your platform is never down.
We're in a 24-hour market now.
We trade crypto 24-7.
(36:42):
You have to be up 24-7.
You know overnight trading.
We've had futures overnight foralmost since our inception, so
that makes sense.
We're about to add 24 hourequity trading.
So everything you do, you haveto think about the fact that we
always have to be up, but youstill have to do maintenance and
things like that.
How do you plan those windows?
Overall, it's only becoming moreand more complex and I think
(37:05):
that, because crypto proved thatthere can be 24 seven trading,
I would it would not surprise mewithin five years if we are
talking about 24-7 trading onevery product.
Well, I won't say every product, but certainly equities.
You're seeing more of the ATSis getting involved there and
we're going to have, I know, acouple of new ones released
(37:26):
within the year.
So there's going to be morecompetition in terms of where
those orders go.
And if you think about it, youknow we talk about, you know the
American markets being the best, et cetera.
Many foreign people want toinvest.
Well, why wouldn't we givethose people the opportunity to
invest when they're actuallyawake.
As we see demand coming in fromAsia, as we see demand coming
(37:52):
in from Australia, we're goingto continue, I think, to see the
markets that we trade be openedup more and more so those
people can trade during thehours that they are awake and
they are more functioning.
And the biggest thing we'll see, hopefully, then, is liquidity
going there, because at the endof the day, that's what retail
truly needs.
I always tell folks I think youwant to be the smallest fish in
the biggest pond.
You want to be in, you want tobe out.
(38:14):
Nobody even knew you were there.
The reason is, if everybodyelse is there trading, the
markets are going to be reallytight and you can get in and out
at any time, and for a retailtrader, that is the actual, you
know true blood going throughthe veins is liquidity.
Speaker 1 (38:30):
I'm actually glad you mentioned the 24-7 trading
movement because I think that'smaybe a good place we can wrap
the conversation up around here.
But do you think that's goingto change anything?
And then, from the TastyTradeside, is there anything that's
being done to sort of prep forthat?
Does anything change on yourend?
Speaker 2 (38:48):
Well, you know, as I said, we're about to roll out
24-5 equity trading by the endof June.
So all the preparation thatgoes into it making sure your
systems are ready to go, and notonly that, but making sure your
support is ready to go too andthen you have to think about
okay, when dividends are paid,how you handle all that.
(39:08):
I know this is a crazy thing,but what time does the day
actually end in terms of what'sthought of as the next day trade
?
What's thought of the previousday trade?
So there is a lot of thoughtand planning that actually goes
into this overall.
So we're really excited.
Our clients are really excitedto have this access and so that
they can trade.
(39:30):
Let's face it how much news hascome out overnight or after the
close over the last six monthsto a year?
It's just becoming more andmore and more.
We want our clients to be ableto react in real time if they so
choose, and I think it's onlynatural.
So that is 100 percent.
100%.
(39:51):
Something we've been workingvery diligently on.
As I said, we already do thatfor futures.
So it wasn't a complete changefor us, maybe adding a little
bit more support, et cetera,just so the team doesn't ever
get overwhelmed and our clientsalways have a good experience is
obviously number one.
Speaker 1 (40:05):
Make the pitch for using TastyTrade over any other
platform and talk about sort ofhow people can sign up and
access the service.
Speaker 2 (40:13):
Well, I appreciate that.
So tastytradecom and if youwant to, you know, take a quick
look at our content tastylivecom.
So those are the two primaryareas to get ahold of us or to
apply for an account attastytradecom.
Our platform is built by peoplewho traded options and futures
(40:33):
for a living, and so we built inthe platform we wanted to trade
off of, and we've done this ourwhole careers.
So I think that our pricing isincredible.
Our customer support I would putup next to anybody, because
you'll be talking to somebodywho did this for a living.
They understand the risk.
(40:59):
We constantly talk about risk.
We give amazing risk tools,because what you'll find is, if
you think of risk first, you'llbe doing this for a long, long
time.
We have a long list of veryloyal clients, and I think that
is because we're very, ourplatform is very good and our
service is absolutely top notchin the industry, because we
realize that you, as the client,pay our salaries every single
day, and so, with that, we'revery conscious of making sure
(41:22):
you're happy, because if you'renot, there's too much
competition in this space andyou will leave.
We never, ever, ever want thatto happen.
Speaker 1 (41:30):
Appreciate the conversation, jj.
Hopefully those that listen tothis and watch this enjoyed it
as well.
Learn more and check outTastyTree, and hopefully I'll
see you all next episode of NeatLag Live.
Thank you, jj.
Speaker 2 (41:42):
Thanks, Michael.
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