When I first started reading up on investing, I quickly got overwhelmed with all of the different publications. I was engulfed in more knowledge than I knew what to do with...before I even made any investments.
In each investment publication that I read (online or offline), there were hundreds of articles that spoke about the positives and negatives of many different investment choices. There was commentary from analysts and show hosts, telling me which product will be going up/down next and why.
There's one analyst telling me this and a different one saying the complete opposite. Multiple firms rate X stock as 'buy' and several others are telling me I need to 'sell' X.
It left me wondering...'how do people even use any of this contradictory information?'
Then, I found tastytrade.
When I started watching tastytrade, I learned a very important lesson about investing.
Learn To Ignore The Talking Heads
I quickly realized that I would never be able to read everything that I was told I should, which got me pretty discouraged. I also realized that it would be a long time before I would even be able to fully understand some of the content I was consuming (there was a lot confusing terminology).
With this approach, it would be a cold day in July before I would be caught up enough to place even one trade...
One of the reasons that I love the contrarian and agnostic approach of the tastytrade method is that it taught me to ignore the noise and confusion of talking heads (many of whom are wrong more often than they are right - see below).
Tom and Tony speak quite often about the cyclicality of the market, and about how what goes up, must come down. They essentially espoused the theory that investors can and should be agnostic to products and/or events.
At first, this seemed a bit counterintuitive to me because it seemed that most "investment gurus" seemed to spend hundreds of hours each week listening to and analyzing what was going on with the market. I felt like I needed to copy what others were doing if I wanted to find success, but that's where I went wrong.
You Don’t Need To Spend ALL Day On Investing
Because I lead a pretty busy schedule and am not around a computer all day (if this sounds like you, read my post about trading for those with busy schedules), I was worried that I wouldn't be able to perform well because I didn't have the time to do the analyses that I was being told were important. I began to think that without dedicating most of my time to investing, I would never be able to get above average returns.
Was this a good reason for me to put my money into mutual funds and leave all the madness to the 'experts'?
With tastytrade, I found an easier way to approach investing that didn't involve me sitting in front of a computer all day long monitoring each tick of the market.
Only High IV Matters
If you watch tastytrade fairly often, you will hear Tom say that he doesn't care what the CEO of a certain company says about its expected earnings, or what the Fed announcement will be about, or what an analyst is saying about a particular stock.
Tom chooses to ignore all of the market noise and often states that he doesn't care what product he invests in, as long as the product has a high Implied Volatility Rank (there are other things he looks at like price extremes and liquidity, but IV rank is the most important factor).
The more I watched to tastytrade, the more the strategy of product agnosticism made sense to me. Study over study conducted by the research team has proven the effectiveness of placing trades in high IV environments/products, over anything else.
Instead of spending your precious time reading up on what the experts are saying about a particular stock, pay attention to the IV rank and liquidity of said stock.
For a part-time trader like me with a lot of other things going on, the agnostic approach to trading works. It prevents me from getting too deep into analysis paralysis, and allows me to put trades on more mechanically (rather than placing trades based on what others are speculating).
The KISS principle ("Keep It Simple, Silly") comes to mind as I write this post. If you wish to keep your trading simple and free from outside influence, then you should try the agnostic tastytrade method of trading.