Podcast Summary: The Compound and Friends
Episode: Tom Sosnoff Will Teach You Trading
Date: September 19, 2025
Hosts: Downtown Josh Brown, Michael Batnick
Guest: Tom Sosnoff
Episode Overview
This engaging episode features Tom Sosnoff, a pioneering force in online brokerage and options trading education. Sosnoff, the founder of thinkorswim and Tasty, shares his journey from Chicago’s trading pits to leading fintech innovation. The episode explores the evolution of retail trading, the mechanics of options markets, the psychology and probabilities of trading, and stories from decades spent at the frontier of finance. Listeners are treated to tactical market insights, personal philosophy on wealth and success, and a deep dive into the culture of trading.
Key Discussion Points & Insights
1. Tom Sosnoff’s Origin Story (13:02 – 16:02)
- Sosnoff explains how he entered the market as a floor trader, taking the contrarian role out of necessity:
"I grew up never having an opinion about the markets. I grew up just taking the other side of what anybody else wanted to do. So I'm a pure contrarian."
— Tom Sosnoff (12:09) - The physicality of the trading floor:
"It was the last frontier of true capitalism in my mind back then. And I didn't even know what I was doing."
— Tom Sosnoff (15:51)
2. Skills & Makeup of Successful Traders (17:54 – 18:47)
- Diverse backgrounds among successful floor traders: ex-athletes, PhDs, and those without formal education.
- Success in trading is unpredictable; winners often emerge from unexpected backgrounds.
"Some kid from some south side parochial school in Chicago that didn't even go to college, and they kill it."
— Tom Sosnoff (17:54)
3. The Shift to Quantitative, Math-Driven Trading & Retail Sophistication (21:48 – 29:34)
- Tasty’s focus is on math, probabilities, statistics, not stock picking:
"We built Tasty to build a firm strictly around quantitative probabilities, statistics... We're a math freak firm."
— Tom Sosnoff (21:48) - The sophistication jump in retail trading—from 7% options trading volume at TD Ameritrade in 2000 to over 70% at the time of acquisition.
"When they recently sold to Schwab, the TD Ameritrade, their business was over 70% options and futures."
— Tom Sosnoff (28:45) - Retail investors have benefited from better content, more efficient platforms, and superior access to information.
4. Trading Psychology and Probability Edge (30:25 – 33:38)
- The importance of stacking probabilistic odds, not seeking “theoretical edge.”
"If you want a 70% probability of success on every trade you make, you can do that, no problem. And law of large numbers will deliver that win percentage to you, but they won't necessarily deliver return to you."
— Tom Sosnoff (31:11) - Why most retail traders lose: emotions, mis-sizing, expectations for outsized gains.
5. Outcomes for Retail Traders: The Distribution Curve (34:17 – 36:33)
- Breakdown of outcomes for Tasty’s retail traders:
- 16% “blow out” (lose all funds or quit)
- 16% outperform by a significant multiple over risk-free rates
- The rest cluster around average/“the middle,” with 34% each above and below the median
"16% of the people blow out. The attrition rate’s about 16% ... 16% deliver returns over 20 or 25%."
— Tom Sosnoff (34:27)
6. Speculation, Making Decisions, and Trader Mindset (35:46 – 37:15)
- People trade because they crave quick decisions, asymmetrical upside, and the intellectual challenge.
- Sosnoff believes trading sharpens cognitive processing, leading to greater success in other business and life pursuits.
"People that are very wealthy... make the quickest decisions you’ve ever seen... Their brain just works faster. It works for athletes."
— Tom Sosnoff (35:52)
7. Active Trading vs Passive Investing & Platform Stories (43:50 – 47:49)
- Sosnoff does not advise against passive investing but focuses on providing robust tools and education for those who want to actively manage.
- Legendary user story: The now-famous “Karen the Super Trader” grew a $100,000 account into $100 million trading options on his platform.
"She caught the absolute bottom in 2008-2009... Over that period, she made $100 million."
— Tom Sosnoff (46:12) - The episode notes this story did not have the happiest ending, illustrating both possibility and risk.
8. Building Thinkorswim, Tasty, and Selling to TD Ameritrade & IG Group (48:16 – 55:09)
- The design philosophy of thinkorswim: combining superior technology with user experience and a “cult-like” customer base.
- Insider stories of the sale—including the infamous 3-way deal with TD Ameritrade and the Ricketts family (the latter needed cash to buy the Cubs).
- After Tasty’s sale to IG Group for $1.1 billion, Sosnoff remains involved out of passion and camaraderie, not financial need.
9. What Drives Tom Sosnoff Today (55:36 – 58:05)
- Still works hard for enjoyment and the gratification of building and creating with friends.
"I don’t give a crap about the money... What I do, I’m having fun. Like, the investments I make, I'm having fun. The businesses I build, I'm having fun."
— Tom Sosnoff (57:30) - Deep satisfaction comes from making those around him wealthy through opportunity and generosity.
10. Reflections on Culture & Industry – Chicago vs. New York, Robinhood, Innovation (70:36 – 72:07)
- Chicago: traders’ culture; New York: financial management, asset gathering.
"Chicago, there are no traders in New York. There's a financial community in New York that is huge... But we would argue there's no traders."
— Tom Sosnoff (71:09) - High respect for Robinhood’s viral growth, but stays focused on the sophisticated segment.
11. Final Thoughts and What’s Next (72:12 – End)
- Hints at a forthcoming (but secret) next act or innovation.
- Sosnoff’s focus remains on invention, creating value, and never retiring:
"For me, what’s really fun is building stuff... I’m not gonna ever retire. You’re right."
— Tom Sosnoff (72:46)
Notable Quotes & Moments
-
On trading discipline:
"The only way genius fails is when you trade too big." — Tom Sosnoff (30:56) -
On retail investing and options boom:
"Teaching people about managing your own money is so fricking important... you're just as smart as the next guy." — Tom Sosnoff (42:57) -
On options-trading ETFs and structural flaws:
"They can’t use the listed markets... so they are forced to go into the OTC markets and they just get, they don’t understand how bad they're getting ripped off..." — Tom Sosnoff (66:12) -
On building a business with friends:
"I work with all my friends. Like, most of us have been together 25 to 45 years... These are my only friends." — Tom Sosnoff (55:44) -
On motivation today:
"It didn't change my life at all. But, you know, I still work my ass off." — Tom Sosnoff (55:36)
Timestamps for Key Segments
| Segment | Topic | Timestamp | | ------- | ----- | --------- | | 1 | Tom's Floor Trading Beginnings | 13:02 – 16:02 | | 2 | Who Succeeds in Trading | 17:54 – 18:47 | | 3 | Quantitative Trading, Platform Evolution | 21:48 – 29:34 | | 4 | The Reality & Psychology of Trades | 30:25 – 33:38 | | 5 | Distribution of Trader Outcomes | 34:17 – 36:33 | | 6 | Decision-Making, Wealth, and Mindset | 35:46 – 37:15 | | 7 | Options Myths & Success Stories | 43:50 – 47:49 | | 8 | Building & Selling Thinkorswim and Tasty | 48:16 – 55:09 | | 9 | Motivation, Wealth, and Working with Friends | 55:36 – 58:05 | | 10 | Reflections: Chicago vs New York, Robinhood, Innovation | 70:36 – 72:07 | | 11 | Closing: What’s Next? | 72:12 – End |
Tone & Closing Thoughts
The episode maintains an energetic, candid tone—full of classic trading brashness, war stories, and irreverence for Wall Street orthodoxy. Sosnoff is portrayed as a relentless innovator with an enduring passion for the business and for making markets—and building opportunities for others. The hosts connect on a personal level about satisfaction, joy in work, and the realities behind financial success.
Recommended For:
Anyone interested in financial markets, options, fintech entrepreneurship, or the psychology of risk and decision-making—whether you’re a retail trader or just curious about the evolution of market access and trading culture.