Thursday, November 17, 2016

Money Show 2016 - Tom Sosnoff

Tom Sosnoff's talk was entitled "Money and Entrepreneurship: How to go get both with Tom Sosnoff" Tom Sosnoff is a cofounder of thinkorswim, CEO of. Tastytrade Inc. This is my last entry for the 2013 Money Show.

There is a close relationship between entrepreneurship and trading money. We are a product of our environment. Market experience changes how we deal with buying. It enables us to know the value of things. This is basic economics. Trading gives you the ability to put a value on goods and services.

Tastytrade is a proponent of active trading model rather than a passive model. No one runs a business passively. In the business of life, being passive does not work. Have confidence in your convictions. Active trading is one of the best accelerates for learning how to make quick decision.

Little is learned from passive investing. Most passive participants in any business venture either fold or set their expectations around mediocrity. Trading helps you to be able to make decisions.

You should build the know-how to do the active trader way. You need to understand probabilities, strategies, risk-adjusted opportunity and domain mechanics. Active trading reduces the emotional connection to various business transactions. This helps us stay mechanical. You must understand liquidity. Apply know-how. An example is showing how our appreciation of market randomness allows us to focus on logic and strategy rather than market direction. Markets by definition are random.

Do risk analysis. Active trading increases your ability to put context around risk (probabilities, statistics and correlations). In trading, learn how to make decisions and understand risk. If you reduce risk, you improve outcomes. If you apply a simple active strategy you might be able to see how it performs against a traditional passive approach.

You need to understand leverage. Leverage can maximize capital usage. This is why leverage is good.

Use probabilities. Create expectations of a reasonable outcome. This is important in setting yourself up for success. There is the genius of opportunity. You need to understand how volatility is generated from overpriced fear. It is the highest level of public capitulation that generates the greatest amount of profit.

For the mechanics of success, use trade size, theory of large numbers, managing winners and managing losers. Trade the profit from winners and get rid of losers. There is no reward for compliancy. Continuous engagement pays off over time. Probabilities naturally work themselves out when you trade small and trade often. The Law of Large Numbers say the actually probabilities get closer to expected with the more occurrences.

On my other blog I wrote yesterday about Keyera Corp. (TSX-KEY, OTC-KEYUF)... learn more. Tomorrow, I will write about Cenovus Energy Inc. (TSX-CVE, NYSE-CVE)... learn more on Friday, November 18, 2016 around 5 pm.

Today on my other blog I will write about Alimentation Couche-Tard Inc. Redone (TSX-ATD.B, OTC-ANCUF)... learn more.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter.

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