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CRYPTO 101
Ep. 668 Navigating Crypto Market Volatility with Trading Strategies from IG North America (Tasty Trade)
00:45:00
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- [00:00]
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- [00:59]
Brendan
All.
- [01:00]
Bryce
All right, everybody, welcome back to another episode of the Crypto 101 podcast. I'm your co host Bryce, joined as always by my good buddy Brendan. How you doing, brother?
- [01:10]
Brendan
I'm doing good, doing good. We got a familiar face over here for everyone that likes to tune into our summits that we do a couple of times a year. You're probably familiar with JJ Kinahan. I actually got to interview him last time. He's been around in the markets for 30 plus years now. You going to recognize some of his work. But I mean, Bryce, this is, this is a really exciting one for me because I remember talking to him last time and immediately afterwards, I guess JJ, you don't know this. I shot Bryce and TiVo a message. I was like, we got to get him on the pod, bring this guy back. Didn't get a chance to listen to him. Everybody needs to. So I, I don't want to glaze it too much, but this seriously was one of my favorite summits that we did in recent years.
- [01:53]
JJ Kinahan
Well, thank guys. I hope I can live up to the expectation. You know, I think what you're really introducing me is saying he's old, so he's seen a lot.
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Bryce
He's seen a lot of price action. Just a market veteran who's like, he's, you know, ran market making entities. You're currently the CEO of IG North America, which is the parent company of tastytrade and Tasty Live. But we want to kind of, you know, just catch you up with our audience and get our audience acquainted with you. Like Brendan said, you gave a great introduction at one of our live summits. That we did a few months back, but we'd love to kind of get acquainted again. So jj, tell us a little bit about who you are and what you're building.
- [02:33]
JJ Kinahan
Certainly. So I started my career, as I believe you referenced, as a market maker at the CBOE in the, we'll just call it mid-80s and traded at the time in the OEX. This is the S&P100, which was the busiest pit in the world at one time was 600 people jumping up and down, yelling and screaming for a living. It was, it was really a fantastic place to be as a young person. Obviously, you know, that pit change I ended up in the SPX and pit trading in general changed. So when Tom Sosnov, Scott Sheridan started thinkorswim, they were, you know, I went and worked with those guys. We ended up selling thinkorswim to TD Ameritrade. I stayed at TD Ameritrade for 16 years and did just about everything you could do in the trading business, from running the thinkorswim platform to doing government relations to managing an advisory service. So it was really an amazing, amazing run for me. And we had just a great team of people over there. Tom and Scott, meantime, had started tastytrade. And so in 2022 they asked me to come board and be CEO of the. After they had sold it to Ignition, be CEO of the North American side of the company, which as you, you said Bryce Tasty Trade, Tasty fx, Tasty Crypto, Tasty Life.
- [03:53]
Brendan
Yeah, I mean, and it's been a crazy ride since we last talked too. I mean a lot has happened. If you look back, I think this year went a lot different than, than a lot of people expected. At least a lot different than I expected. We started off with what felt like, you know, three gut punches with all these different black swan events. Yeah, I remember the, the not the open AI, it was the deep seek one was like the initial one and then we had tariffs, then we had all these other things and then we, we plummeted down and everyone thought the world was ending. Now everything's hit new all time highs. Whether you're looking at bitcoin or the indices, everything's hitting new all time highs and recovered. But it's been this wild ride since we last got to talk and me and you both, you know, we'd like to live in this world of trading and investing and all this. I guess what has changed for you since we last chatted?
- [04:49]
JJ Kinahan
Well, I think to your point, last time we chatted was sort of Right around the time, you know, that the President unveiled the tariffs. And so there was a lot of, I don't like to use the word panic, but there was a lot of consternation, shall we say, in the market, as you said, selling off. And now, as you just said, we're near all time highs. It really is amazing. And I think that some rules of investing, and Brendan, you and I talked about this when I was on with you. Some rules of investing go across no matter what the product. I don't care if you're somebody who's trading a Doge digital asset or somebody who's trading Apple stock. It's all about not being all in or all out. And if you were the type of person who had too big an investment when we sold off, you probably hit the panic button, got out, and now you're sitting here kicking yourself saying one of two things, I'm an idiot and I'm never going to do it again, or they screwed me.
- [05:54]
Bryce
Market manipulation.
- [05:56]
JJ Kinahan
You know, you achieved something great, you screwed yourself. But anyway, and it really, it goes to show, I think just some of the basic rules of always being probably a smaller investor trader than you think you need to be. And also that way downward movements if you're long, you can buy more things if you want to at a better price rather than saying, oh my God, I have to panic. And you know, you guys have done this quite a while now, even though you're young guys. I know that at some point you learn that lesson. And we all know that's a painful, painful lesson.
- [06:30]
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- [07:46]
Bryce
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- [08:35]
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- [09:03]
Bryce
Yeah. Oh my gosh, it really is. It's where you learn. Everything in markets, though, is from getting those wounds, you know, and from kind of letting those wounds scar over and heal. And like you said, we're young, but crypto trades, you know, eight times as fast or eight times as much, you know, trading minutes in the year than there is in normal stocks because it's 24, 7, 365, whereas I think stocks are like 252 days out of the year, whatever. And so it is interesting. Just, you know, crypto is really, I've already got some grays. My wife's pointing out a couple of grays in my hair. She goes, man, this crypto stuff is really, really taking it out of you, man. What's going on?
- [09:43]
JJ Kinahan
I'm like, and the only other thing I'll add, Bryce. And again, you Know, I, I think people tend to sometimes get discouraged when they're investing in anything. And, and that's part of the natural cycle. And by the way, one of the things, having done this for a long time, you will make the same mistakes occasionally, but you want to get them down to occasional rather than often. And keep in mind, no product owes you anything. They don't owe that. You should make money from it. And I just think some of those things, you know, we all fall into this. You guys do an incredible job on this podcast. And I know that there's people who join all the time. And, you know, part of the natural cycle of investing is trying, they say, don't have emotion. I think that's kind of crap. It's money. Everybody has emotion when it comes to money. But the best way to do it is to keep yourself so that you, A, you lay out worst case scenario up front, and B, you stay kind of small, and then you don't have those gray hairs like Bryce. Look at him. He almost looks 25.
- [10:45]
Brendan
You know, unfortunately, Bryce, I'm younger than you and I'm in the same boat. I was at a barber a couple weeks ago and they were talking to me about it. I was like, all right, you know, I'm not coming here. But, you know, the, the volatility certain certainly works in both ways, right? Good and bad. But looking back on this, jj, what is, like, the proper way that people could have handled this situation? Because as much as we hate to say it, there's going to be more events like this in the future. There's going to be more just unforeseen catalysts. And crypto, like Bryce said, moves at multiples of what a lot of people are used to. And I think that that can be really scary because in the TRADFI markets, you know, you saw the markets move up and down 20, 30%. In crypto, you saw the markets move, moved down like 60 to 80%. And for a lot of people, you know, they were going into this thinking, oh, it's going to be a positive year for regulation and this and that. They got caught off guard and it hurt and it was scary. And then they went down. Some people probably sold it, went back up. They're like, should I FOMO back in looking at situations like this one for future reference, like, what is the proper way to handle those? Because like you said, like, emotions do. Do get involved as much as you can, try to suppress them.
- [11:57]
Bryce
I think you mentioned position sizing, right? That was the main one that I. That I kind of took away from. From everything you've been talking about, but.
- [12:04]
JJ Kinahan
Yeah, yeah, absolutely bright. So I think that we'll say that you're somebody. And again, I know you have a lot of newer people who are really trying to learn. And again, I really appreciate how much you guys are helping people understand this. It's difficult. And by the way, it's not only younger people. A lot of people my age are trying to figure this out, too, because it's a different way of investing, which is great. But I think the biggest rule for.
- [12:29]
Bryce
Sorry, I was just gonna say, like you. I wanted to emphasize that point because there are a lot of folks that are, like, my dad's age, right? You know, in his 60s, you know, he's trying to really start to grok this stuff. And they're the people with all the money. Like, people that are our age or that are, you know, in college or just graduate. We got no money, so it doesn't matter. You know, we're gonna get on board whether we want to or not, because it's going to be the application of the future. The people with all the money, the. The age, I guess they're called the baby boomers, right? They've got, you know, all the wealth and stuff. Like, now they're realizing, you know, we can't buy bonds anymore. You know, stocks are. You know, we could buy stocks here and there through ETFs and the market. But crypto's, the exciting stuff. Crypto's where the volatility is, and people are really starting to get in. And a lot of our subscribers are, you know, 40, 50, 60 plus, that are really trying to figure out, all right, this is a new. A new thing to invest in. But I just wanted to emphasize that point because people feel like they're alone. They don't get it. They're just getting used to the Internet and so on and so forth. But you're totally right.
- [13:26]
JJ Kinahan
No, I love that you're talking about that, Bryce. And I always find it exciting when I do talk to, you know, people my age who may not be in the markets, et cetera. And one of their first questions is always, so, what is this Bitcoin? How does it work? And so, you know, being able to have something like yours, what you guys do and say, here, here, go get educated. And to your point, these are people who are willing to try things and do have some money where, if it goes against them, can be like, okay, I learned something from it. But, you know, back to where I was starting and what should you do? Position sizing. One of the things I like to do and the way I advise, like my own children, etc. Is we'll say if you had $3,000 to invest and that's what you were going to put into one of the crypto assets, we'll say bitcoin, because it's still most widely traded and say, okay, you know, bitcoin trading around, again, use all ease of math. We'll call it a hundred thousand, even though we know it's higher. And you say, okay, I want to have an average price of buying Bitcoin at $90,000. So I would probably break up that $3,000 in the five six hundred dollar increments, say, I'm going to buy some at 100, I'm going to buy some At 95, I'm going to buy some @ 90, 85, 80. If it continues to go down, it's not terrible, it's opportunity. And I don't think people think that way. What they, what they'll say to me, well, what if I buy it at 100 and it goes straight up? And as I always say to them, so your biggest problem in investing so far is that when you buy things, they go up too quickly for you. So again, one of the things I think you really have to get comfortable with, and it's a complete different mindset, but this is how professionals trade every day. Movement's your friend. The only way movement's your friend is if you have money to do something when things go against you. Starting out with an average price in your head that's lower than when we're trading now really will help your investing long term.
- [15:21]
Bryce
That's totally right. One of the things that Brennan and I preach a lot to some of our folks that are, you know, in some deeper level of subscription services to our technical analysis research is the anchored volume weighted average price. And so using this anchor volume at average price is a great way to, to have not just some arbitrary number in your head of like, hey, I want to get this arbitrary because, hey, I'd like to buy Bitcoin at $50,000. But that might not be, it might not be realistic. And so this sort of calculation that you could run and anchor it to certain pivot points, like, you know, election night, which really moved the market, or, you know, inauguration day or the, you know, liberation day, you anchor it to these sort of key pivot points in the market and you could kind of see the average price that the market participants paid since this moment in time. And you could say okay, well that should be a support or that should be a resistance. And then if it comes down and kind of holds up as support, we're going to, we're going to buy there. Or if that resistance kind of holds up as resistance, maybe we're going to short there. And there's a lot of interesting things that come with that. And I, I, I like it a little better than just your static, you know, simple moving averages, you know, 20 just because this is the average price, the last 20 days, like that, 20 days is arbitrary and, but you know, ta, a lot of it is self fulfilling. A lot of people use ta, so that's why it works and, and so on and so forth. But I wanted to kind of, you know, in the same vein of that discussion, you know, You've obviously spent 21 years as a market maker. You know, you've done you know, 30 years in the, in the markets. Is there any, and I don't want to say silver bullet, I wouldn't call the, you know, AV WAP a silver bullet, but are there any strategies or time tested sort of tactics maybe because we've talked about risk management, but like any tactics or indicators that you might use, open interest tracking, you know, cot, anything like that?
- [17:05]
JJ Kinahan
Well, I like where you're going with open interest because to me I've always wanted to be the smallest fish in the biggest pond.
- [17:12]
Bryce
Okay.
- [17:12]
JJ Kinahan
I never want to go trade something that nobody else is trading because the people who are there then are all professionals. I want to trade with the other retail traders. Not that I know more than anybody and anybody who thinks that's silly. It's just if there's more people there, there's more markets being made and you have less, you know, we can call it slippage, you can call it whatever you want between bid and ask. I'll use an equity example just for ease. Spiders, if you go and trade that etf, they're penny wide all day long, you're not giving up much in and out. Now some of the cryptos that are less traded you might see, you know, markets that are five, six dollars wide. And I'm not talking necessarily about Bitcoin, which is, you know, one hundred thousand dollar product where you would expect to see a larger, but you will see some of these that are $3 and they still have dollar wide markets. That's not good for you as a consumer, so to speak. You want markets possible. And Bryce, if I can go back to what you just brought up on the V Web I do love that. But one thing I would say to people, and I'm sure you guys experience it, I'd love to get your take on that, is how many people to you have, have wrote into you guys or, you know, I emailed you, whatever it may be, and say, hey, you were right, but I just didn't do it this time. I wasn't disciplined or whatever, because that's actually the key. Yep.
- [18:36]
Bryce
No, we've seen that. We've, we've seen that, we've heard that in our forums, all that kind of stuff, you know, because we caution people like, hey, crypto trading is, you know, risky. It's, you know, a lot of, you know, all this is probabilistic. You have to use your stop losses and all that kind of stuff. But sometimes people, you know, they're just following along and in, in, in their mind, like, oh, yeah, like that makes sense. I'll go and do that. But then they never do. And then they missed out. And yeah, we, we see that. I think a lot of it. Is that self discipline, one of the most important things as a trader or as an investor. Brennan, I mean, you're in these markets every day. What do you think on this?
- [19:12]
Brendan
Yeah, I mean, it's, it's fascinating and I like a point that we said earlier that there's people from all ages. We see a lot of, I don't want to say like an older crowd over here, but definitely like a more mature crowd. I'd say the majority of, at least the inside of our audience tends to be people who probably aren't like 18, 20, maybe early 30s. And. But there are a lot of them out there and that's what you see a lot of, especially on social media these days. Days. The cool thing is that we have seen the technology behind trading just evolve at such a rapid rate. And we talked about this and you've preached about this a lot. But you say, like, you know, that technology has leveled the playing field here or it is leveling the playing field. What specific tools or platforms have been game changers for retail traders in your eyes over the last couple of years?
- [20:09]
JJ Kinahan
Well, I'm going to be a little biased here because I want to say it started with thinkorswim.
- [20:14]
Bryce
It did.
- [20:14]
JJ Kinahan
Now it's going to tastytrade. But here's what I will say. If you really want to see the influence of. And you guys both touched on this a little bit, if you want to see the influence that crypto has actually taken to the more general market, think about the fact of 24 hour equity trading. Now that is a byproduct of, I think Bryce, you quoted the hours that everything is trading earlier. That is a 100% byproduct of the fact that people realize that there's no reason we should be shutting down. And you know, I've been of the opinion that within five years we'll be trading on weekends on the equity side. I just think it's a natural. We've seen that we can do it in crypto. There's no reason you won't be able to do it in equities and people may not love it. And the bigger problem, the reason you can get things done quicker on the crypto side, because people have this question for me a lot. Why can they move so fast in the crypto world and it takes the equity world so long to get it done? Two primary reasons. Number one, you know, the equity market, let's face it, is steeped in regulation from where it came. Not that I'm saying crypto doesn't have regulation around it. It does. And I think the nice thing is people are becoming more, way more comfortable with that fact. But number two, I don't know of a crypto company and I'm sure there's, you know, some on the edge that I'm just not familiar with, that their technology is not fairly new and really being kept up at a quick pace. You go back to some of these old brokerage firms and they've been around a long time. Their technology is, you know, steeped in the 70s. So because of that, it just takes a long time for them to get things done. So that's the only thing, in my opinion that will actually keep us from going to weekend markets is the fact that some of these older firms with older technology also have great influence and it takes longer to get anything done on that side of the business. I'm sure you guys get this question actually probably a fair amount also. But it is one thing I think people have to be very conscious of.
- [22:25]
Bryce
Yeah, and, and Brendan, maybe you could lead us in a discussion about tokenization. I just wanted to bring up one point because I feel like there was this moment where it must have clicked for I think Larry Fink primarily right. CEO founder of BlackRock something clicked two years ago or three years ago when he realized, I just wish I would be able to talk to him one day. What was that moment where you realized, oh my gosh, my entire business of asset management, of which I'm the largest, is about to become tokenized. And now, you know, he's, you know, spinning up all these different tokenization funds. The Bitcoin ETF makes more money for him than his S P etf, which I thought was pretty crazy or whatever they call it, their large cap sort of index. You know, it's got higher management fees and all that kind of stuff. And it manages much smaller amount of money. But he could see the sort of pathway forward which is going to be tokenization in real world assets in 247 trading. And he probably was like, oh my gosh, I got to get on board and lead this charge rather than resist it. But I don't know, I just kind of saw the lights go on with him like, I don't know, a couple years ago. And then he went full, full head of steam towards RWAs and stuff.
- [23:37]
JJ Kinahan
And I think Bryce, to your point, that switch, you know, as you said with him, perhaps Jamie Dimon, what has, what is really done for, you know, if really tie a lot of the things you guys have talked about, talking about older clients, talking about those guys coming on, you needed that sort of stamp of approval, in my opinion, that people could say, oh, okay, this isn't the scam, this is real. These are regulated markets. And I think that that is what has 100% helped the growth over the last couple of years is you do have older people, as you guys, as you said, who have money, who are coming in either experimenting or have experimented and are expanding their trading because they have more money to do so. And that has probably been from the retail side. The greatest reason we've seen so much growth and so many coin, you know, the variety of coins expanding, which I do believe we'll get to an area, it'll probably take a little bit longer. You'll have coins just like you have stocks. They'll just continue to grow. There'll be a hundred of them that have really nice liquidity right now. I don't think I'd be comfortable saying that. There's probably more admit you guys know better than I. I don't know where I would say that there were more than about 15 that have really good liquidity at the moment.
- [25:01]
Brendan
Yeah. And you know, that's probably why we haven't seen super small cap ETFs yet, Bryce, is because they know like, hey, there's probably a little bit more maturity and stuff. And I think that they will come with time and it looks like they're on the way. But for the moment, you know, even a lot of the crypto ETFs, even the ones that are, that are still being applied for and aren't even approved for the most part, they're the large cap ETFs, you know, things that have tens of billions, hundreds of billions or trillion in market cap, like Bitcoin, Ethereum, you see Solana, xrp, like all the big ones, because they know that's where there is the most liquidity and volume and probably attention as well. But going back to what we were saying just about tokenization, it has been fascinating to see blackrock get on board and launch a fund. I believe Vaneck got on board and they launched a fund. And most recently, the most interesting use of it has been from Robinhood. So it will have been about a month ago from the time that people are watching this. But Robinhood came out and they said, we are going to be creating layer two and we're going to be tokenizing the stock market in both the publicly traded market. And we're also going to be looking at even trying to tokenize privately traded companies.
- [26:18]
Bryce
And open AI did not like that.
- [26:21]
Brendan
I saw their tweets.
- [26:22]
JJ Kinahan
Yeah, I just saw a statement from them, I believe yesterday. They are less than happy to your point.
- [26:28]
Brendan
They are. And they were basically saying that it's not actual equity and stuff and which is very important to understand. We were actually talking about this internally because, you know, Aaron, who used to be here on the podcast, he was talking to us about this. And it's definitely important to understand. And I think that there's going to be a lot of kinks that get solved in this process, but it's very early on. And the reason that I bring this up is because Robinhood is the first major player to say we are going to be tokenizing pretty much the entire stock market. And what does this do? Well, this gives people all over the world, they always say, like, hey, Europe is going to be able to have like just a new era of access to US equities. And you're also going to be able to trade these with the goal of 24 7. It's going to start, I think, 20, 24 5. It's going to try to move to 247 after everything gets figured out. But it's, it's fascinating. And so my question for you is, like, how do you view all of this? I mean, you've been in the markets for 30 years. You've done a lot of work. What does this all mean to you? Is this a good or a bad thing? I've just seen a lot of mixed reviews.
- [27:36]
JJ Kinahan
I think it's really exciting. To your point, I think it's going to take us longer to get there, actually than we. I saw something today that the eu, one of the regulatory bodies, has some questions about it again. So these types of things, I think Brendan, always take a little bit longer than you think they're going to. And Robinhood leading it, Good for them. But it means that it's going to be very expensive to do because it means a lot of your legal teams are going to be involved for a long time on doing this kind of stuff. Again, if you think about the technology, you think about where we're going does seem inevitable. However, you brought up a really, really important point about what is the actual value of it. Yeah. And I think that's going to be the part that's the most difficult to get over, perhaps with the regulators and with the understanding of the general public. So don't get me wrong, I'm all for this. I think it totally makes sense. But there's going to have to be a level of education that's done here that's much beyond regular stocks. It's almost, think about it, it's a derivative. So it's like an option. You have to do a lot of education when people start trading options. So anything that's a derivative product of the equity itself takes a lot of understanding so that people can actually understand the risk that they're taking. But it completely makes sense. And, you know, it's just amazing how fast over the last year and part of it you bought, you guys brought up earlier, new administration, et cetera, how fast all this stuff is moving. But again, the regulators over the last 48 hours or 72 hours seem to have really been like, hold on, what's going on? Much of it, to your point, could be around the comments from OpenAI, but I think the next couple of weeks, this is going to be a really interesting summer. It's not the go fishing and forget about it. This is going to be a really, really interesting, interesting summer.
- [29:41]
Brendan
Yeah. And you know, I think to that point, I think regardless of like what Open AI and I don't know, even like bigger companies or institutional might think I might have a hot take here. But I don't think that the average retail trader cares. I think it's very important for them to understand, right. They need to understand that this is not equity, that they don't get voting power. Like they don't get any of the, the shareholder stuff that would come with owning the actual stock. I think understanding that is essential because people need to be educated and you know, they need to know what they're getting into the same like they would with, with any other kind of contract or leverage or spot or whatever it may be. However, I don't think, and I've seen that's the biggest drawback because people are going to say, oh, it's not equity. I don't think most of retail cares if it's equity or not. And that's my hot take because when you look at a lot, especially retail, especially younger traders, they just want exposure. They just want to make money. They want to get in, they want to make their bag, they want to get out if they can get in and you know, long a synthetic or a tokenized version of a stock make money off of it because they weren't able to in the past. I think they're happy in the same sense that I think that if they can jump in and get access to OpenAI, you know, five years from now, three years from now, all of a sudden they are just doing wonders. They're the just go to company of the world because of what AI has grown into. If people can get exposure to that, I think that that's what they, they care about. And there's probably risks associated. And I've seen people say, well, there's a reason that it's a privately held company. You know, there's a reason that this isn't publicly traded. But to my point, and I want to get your opinion on this, but like I don't, I don't know if retail cares and maybe that's a good thing, maybe that's a bad thing, but you'll probably have more insight into that.
- [31:35]
JJ Kinahan
I actually don't think to your point, retail cares about the voting rights because their voting is pretty miserable anyways. But that's been something that the SEC has been trying to change over the last couple years to get them to vote and take more interest that way. I think the regulators absolutely care about this. And you know, the one thing that it does make me question and again, I don't know enough to, I haven't dug deep enough into this, but how does affect float of stocks? So, you know, again, that's, I know it's a derivative, but it's still indirectly affecting how much shares are out there. So, you know, do you have more derivatives than you actually have stock outstanding? So I do think that that is something that there has to be some sort of answer around. And by the way, I'm not Trying to be a naysayer. I'm just trying to give you some of the things that I believe are being thought about right now for why. And then the last thing is more of a PR thing and that is when we have a sell off, it's going to be inevitable that people, people will lose some money, those people will come back. Unfortunately, some, some unscrupulous, I will say attorneys, etc, may try to start suing everyone in sight. And so with that, you know that's going to be a front page story on the Wall Street Journal. That's always bad for a product long term because it hurts confidence. And I think we're in such early innings with this. You're as much as we all want to move fast whenever you have anything that hurts confidence in a product. It took the options market a lot of years after the crash. Take futures markets, many years. People are finally like, okay, these are very good markets, very liquid markets, etc. This is early stages I would just hate to see because as I said, I am a believer in it longer term. I just want people to be careful so that it's not where you lose people. You know, anybody over 40 lose 50% of that audience because they think they got screwed or something like that. So that's my only pushback on it.
- [33:43]
Brendan
Yeah. And you know, I think that it's, I think it's a totally fair point, man. There's, there's things that people need to understand when they're getting into this and we have to look at it through both sides of the lens right there. There's a good, there's bad, and that's why we bring people like you on because we can have our opinions as natives. We're probably going to be a little bit biased here and there in the favor of the crypto market. But you know, we do appreciate you, you know, again, just looking at it from both sides because I think that's what people need to understand. They need to be educated, they need to understand and then they can make these decisions for, for themselves. And that's where we want to get people to.
- [34:18]
JJ Kinahan
Yeah, I'm free markets for free men and all that. Let's let people manage their own things. But I just, I like to think about how it affects the industry overall.
- [34:29]
Bryce
Totally. And it's, at the end of the day, it's a technology upgrade and so regulators can't resist it. They just got to get on board. And you know, just like with the Internet, it's the same thing. It's like, oh, My gosh. Now, you know, now we could email everything around, now we could look at websites. It's like, all right, well, we're going to just have to have regulation form around that, because that's just progress. It's inevitable almost. In a sense, this is kind of what this tokenization theme feels like.
- [34:55]
JJ Kinahan
I agree with you, Bryce. The one thing that would make me nervous, though, and again, I don't want to get into a whole regulatory thing for sure, is I want to make sure that it's regulatory. It's one regulator, at least in the US for everybody, because you don't want to get into that situation. I think one of the things that's held us back has been the state. By state regulation. It's absolutely awful. And you guys, you know, you guys know that probably better than I do. So if we can get one. That's the beauty of the SEC and the cftc. It's one regulator for the entire country. It makes things significantly easier to get things done. It sometimes seems like it's taking a long time, but it's sure better than going to 50 different states to get this done. So that's the, that would be an overriding theme that I'd really like to make sure. To your point, it is a technology upgrade, but we know regulators sometimes can get, you know, I won't say get in the way, but have their say there. So as long as we have one regulator federally, boom, awesome.
- [35:56]
Bryce
And I think it's going to happen with the, the Clarity Act. Right. So we've got the Clarity actors, market structure builds coming through, hopefully by, you know, September or something. I think people are saying it'll, it'll come through, I think. Yeah. Maybe September, right? Is that what they're saying?
- [36:11]
JJ Kinahan
Yeah, we. I had the privilege of talking to Representative French Hill a couple of weeks.
- [36:15]
Bryce
Wow.
- [36:17]
JJ Kinahan
And he's head of the Congressional House Finance Committee, and he is on board with this bill. I will say he truly understands crypto in a way that I did not realize that somebody who's dealing with so many issues would. And so that, you know, very, very much on board to get this done. And to give us, to your point, clarity on everything. So I think it would be the best thing for the industry if this passes.
- [36:40]
Bryce
Yeah, man. I'm really, really hopeful that happens. And a lot of people are feeling pretty positive. But I want to make sure that we, we spend some good time talking about what IG North America is doing in the marketplace where you guys sit and kind of the, the different touch points for the, the market that you guys have. Tell us a little bit about the business.
- [36:59]
JJ Kinahan
Yeah, the crypto business has expanded significantly. And, you know, we were subject to something called essay sab191, which I won't even go into. I'm sure you guys covered it at some point a while ago on a podcast. Basically, if you didn't custody the assets and use the third party, I, you know, we use zero hash. Then you were subject to an additional level of money that you had to put up, even though it was already funded by the customer. Funded by zero hash. We also had to fund it. It was a terrible use of capital. It's the only time in my life I've ever had a product where I was trying to not advertise and not really list anywhere. And yet it does show the, the hunger for crypto because people were still using it, didn't love it, but, you know, it's one of those things. So that finally came off. We're able to really expand the business. The business continues to increase significantly. And again, you think about the type of trader that's at our shop, they trade equities, but they really, you know, more than 85% of the trades are still options and futures. So these are people who. Crypto is a natural addition to their portfolio, be it as an investment or as trading. They understand complex products already. They understand complex relationships. So to them, crypto is just, it's another trading product which is absolutely awesome. Now it's again, and you guys have bought it up. And I love that, you guys, you know, the two times I've had the privilege of being on with you guys, I always talk about the education. And so I do think it's important that they continue to get more and more educated as to how these products can work. And even the, you know, what I like is all the emails we get on the back end of, how is this actually happening? How am I buying this? And so the more people understand that stuff, the better. But at, you know, the tasty business, Tasty crypto is continuing to expand really quickly. And we continue to add coins. Just over the last three months, we've added 20 coins.
- [39:08]
Bryce
And for folks who are listening, can they, you know, go create a tasty account kind of wherever they are in America, anywhere in the world? And could they think of it as a wallet or as an exchange or both?
- [39:24]
JJ Kinahan
We do both. We do have a wallet. And so, you know, no problem to use that. You can actually fund your. If you want to fund your trading account to Trade other products with your wallet. You can do so and so again. Oh, sorry about that, guys. Tastytrade.com, you know, and, or tasty crypto.com. and you can go on and you can trade stocks, options, futures, equities, crypto. All right there.
- [39:54]
Bryce
That's incredible, man. I gotta get an account. I would love. And I'm hoping that this is one.
- [39:59]
JJ Kinahan
Of the things that I can help you. Please let me know.
- [40:01]
Bryce
Yeah, I was gonna say I'm gonna follow up with your assistant here in email and get an account. We'll get a referral link for our, our community or something like that. Because if you guys do those, I'm not sure.
- [40:12]
JJ Kinahan
Oh, absolutely. We absolutely do that. Please. I, I will make sure the person. You know, if you follow Laura, I'll make sure we put everybody together. That'd be great.
- [40:20]
Bryce
We'll do. No, that, that'll be awesome. Okay, we've got a little lightning round that we like to do. We'll close it out here with just some fun. Again, obviously nothing that we ever say on this show's investment advice. These are all just our own personal opinions. But, you know, for your own style. Are you a day trader or a swing trader?
- [40:39]
JJ Kinahan
Probably more day.
- [40:41]
Bryce
Day trading. Okay, so do you go to positions?
- [40:43]
JJ Kinahan
How about day? Depending on the. The product. Futures, day, options and equity. Swing.
- [40:50]
Bryce
Okay, perfect. Love it. Spot or leverage?
- [40:54]
JJ Kinahan
Leverage only because I have more experience in the futures market than, you know, I've traded them for so many, many years. Except for, of course, crypto.
- [41:04]
Bryce
Yeah. Technicals or fundamentals?
- [41:09]
JJ Kinahan
More fundamentals. But there's a third choice which is probabilities, which is what options are based on. And really that's what I look at.
- [41:17]
Bryce
Tell us a little bit more about that. We're going to double click. You know, we're going to take a step out of the lightning round.
- [41:22]
JJ Kinahan
If you think what options are, they're only giant probabilities that tell you the probability of an option being in the money on expiration day. So whenever I trade anything, I look at what are the probabilities of where the we'll say stock, for ease of this stock underlying is going to be. You can use it for crypto too. You look at the crypto options and say, okay, here is maybe I'm looking out the September. Here is the probability that Bitcoin will be trading at 120 by September. Maybe it's a. You know, right now, just off the top of my head, I believe it's about a 41%.
- [42:00]
Bryce
So that means it's a 41 delta option.
- [42:03]
JJ Kinahan
Yeah. Probabilities are a little different than up, but thumbnail it's delta. Well, if you just look at. We have probabilities on the platform. Probabilities of in the money because it overlays volatility. But delta in probabilities are going to be. You can. As I said, Bryce, we use it in our deltas as our thumbnail. And so you can say there's a 41% probability that we'll be there. Okay. Do I think that probability is high enough in order for me to go out and pay whatever the premium is right there to be in the money on September? And to your point, what's my. What's my holding period? If I bought this call at $3 and we're going to go to $5, will I sell it? Or if I'm buying the spot of bitcoin itself. Okay. I think that that probability makes sense to pay this price.
- [42:50]
Bryce
Love it. That's awesome. Okay, we'll go back to the lightning round. We've got chart chart indicators like rsi, MACD or pure price action.
- [43:02]
JJ Kinahan
Price action.
- [43:04]
Bryce
Oh, this is a good one. Buying your winners or buying your losers?
- [43:11]
JJ Kinahan
I'm not sure what you mean by that.
- [43:13]
Bryce
Basically like double down on a winner or double down on a loser.
- [43:19]
JJ Kinahan
I see. I'm more probably buying your losers.
- [43:22]
Bryce
Okay. And to get a better dollar cost average kind of on the thing that you were.
- [43:26]
JJ Kinahan
Yeah, like I said, I go in with an average price and I also playing the probability game.
- [43:31]
Bryce
Love it. And there's so many ways to play this game. That's the beauty of it. And a couple more questions. What's more important? Finding the perfect GEM for a 10x or mitigating risk every day?
- [43:41]
JJ Kinahan
Mitigating risk every day.
- [43:43]
Bryce
Gotta stay in the game.
- [43:45]
Brendan
That is where I see people go so wrong in crypto.
- [43:49]
JJ Kinahan
Yeah.
- [43:50]
Brendan
Is they see these people posting P. Ls they hear the story of this person put $1,000 in and they be became a millionaire. Everyone goes wrong because they're so focused on finding the hidden gem in crypto that will 100x,000x 10,000x etc. And they don't mitigate risk. I just wanted to stress this because I could not agree more on any point of this entire podcast that risk mitigation is what separates the people who succeed long term and the people who are short term winners and don't succeed long term.
- [44:23]
Bryce
Totally. And there's so many different levels of risk. Like I was talking to somebody recently who lost A big chunk of change. And he was in a market neutral trade. Okay, how do you lose a bunch of money in the market neutral trade? Well, protocol, risk. The protocol went defunct. Somebody had some kind of back door or the bridge was too centralized, there was a hack, and now he's stuck out a bunch of money. And so people think, you know, he's like, you know, very smart guy. It wasn't my math, it wasn't my programs. It was just risk that I didn't really account for because it was an abnormal risk kind of thing. Like, so there's just so much risk. I mean, no, I guess people are forgetting the lessons that we learned from FTX and Genesis and Blockfi and Voyager and the list goes on and on.
- [45:10]
JJ Kinahan
Bull markets tend to do that, Price.
- [45:12]
Bryce
Yeah, no, it's so true, man. And so that's why history rhymes, right? Because people kind of forget the problems of the past. Well, last question I have for you is really just about tasty and the powerful tools. Is there one? And again, this part of the lightning round, is there one tool that you guys offer that kind of makes. It makes the retail trading experience much more powerful? Or do you have like a favorite aspect that you want to shout out about the platforms?
- [45:39]
JJ Kinahan
The analyze. So it gives you the ability to analyze your position to add, I'll call them fake positions to it to say, okay, if I were to do this, what does it mean to my overall position? What does it mean to my buying power? How much of my account am I using up to do this? So it allows you to plan through as much as humanly possible beforehand. We're talking about mitigating risk. Well, there's no better way to mitigate risk than to run through some really bad scenarios. And again, whenever I make a trade, I always start with what's worst case scenario. Because once you understand worst case scenario, we talked about emotions. It takes a lot of the emotion out of it. I mean, you'll still be pissed when you lose money. At least you won't make a decision like, oh, my God, I have to do this right now. You'll have planned it through. And to me, it's one of the most important things you can do. No, actually, no matter what level of trader you are.
- [46:31]
Bryce
Yeah, I couldn't have said it better. We always say one of our mantras is plan your trade and trade your plan just to that point. And one of the other things we also say is logic and emotion never occupy the brain at the same time. And so if you're feeling really emotional. My wife loves this one. If you're feeling really emotional, you're probably not acting super logical. And so you really can't bring that emotion into the markets because it'll cloud your, your judgment and you'll, you'll make less money. And we all want, we all want to just make money here. We don't want to get too, too emotional.
- [47:01]
JJ Kinahan
That's what, that's what, don't use that. I've been married over 36 years. Don't use that one too often at home.
- [47:09]
Bryce
Love it. Well, well, jj, we appreciate all of your, you know, your wisdom that you've shared with us both about the markets and marriage and all such things. But no, we're really excited. We're definitely going to follow up. We'll get a referral link for our community and spread, spread the good word about tasty crypto and all things you guys are building. You know, where can people kind of follow your journey? Are you on, on LinkedIn or Twitter or anything?
- [47:35]
JJ Kinahan
Yeah, on Twitter I'm at the JJ Kinahan and so I, I, I am on LinkedIn JJ Kinahan, but I post, post a decent amount on Twitter. I write a column three days a week for Forbes.com so Monday, Wednesday, Fridays, I write a column for them also.
- [47:54]
Bryce
Oh wow, that's awesome. Lots of places to find JJ and to follow along with him. We'll have links to that in the the show notes. So please follow along and jj until next time, guys.
- [48:06]
JJ Kinahan
Always, always a pleasure. I really appreciate you having me back. Have, have a great week and if I don't talk to you for a little bit, have a great summer.
- [48:12]
Bryce
Amen.
- [48:23]
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