Story and direction is the financial market. Story and direction is the financial media. The reason the financial media exists is on the back of directional speculation and story.
— Dylan Ratigan

Tom & Dylan continue their transition from theoretical strategy to real-time market conditions and discuss how certain “binary events” have an effect on the market.

In this episode, the two enter into a spirited discussion of financial rules & regulations, or lack thereof, shedding light on countless industry inconsistencies. Dylan asks about the steadfast evolution from floor trading to retail trading, and Tom gives his take on similarities, differences, and new opportunities that have risen from it.

Fed Minutes - Are They Tradable?

Dylan questions why and how an event like the fed minutes can be tradable. After inferring about direction and assumption, he learns that Tom is only concerned with volatility and liquidity. When the market is busy, Tom looks to trade it.

...going back to our floor trading days, one trader would never ask another trader what the market is doing. One trader would always ask another trader - ‘Is it busy’? In my whole existence to this day as a trader and investor, I ask - ‘where is the opportunity and is it busy’?
— Tom Sosnoff

What is "Busy"?

In years past, busy was defined by volume - noise - the decibel level throughout the trading floor... Now, the simplest way to know if something is going on is to look at how fast your screen is flashing (changing colors).
— Tom Sosnoff

Is Direction Dead?

Dylan wonders if direction is dead, and Tom clarifies that direction can still be part of the game in the form of engagement and trade setup, but for him, his bread and butter is selling volatility.

Direction, to me, is engagement. I’m directional because I like to be engaged. Direction helps you initiate trades, but we’re all smart enough at this point to realize that it doesn’t mean we’ll make money off of that.
— Tom Sosnoff

So What’s The Key...Look For New Underlyings?

Dylan wonders about keeping things fresh by trading different underlyings, but Tom swears by keeping it simple. There is no reason to look for new underlyings when the liquidity is in the big names. Following the masses is not a bad thing when it comes to liquidity.

In the world of successful investors, I don’t believe there is such a thing as searching for new names. Through lots and lots of research, we’ve found the single biggest mistake investors make is made when they don’t understand liquidity. When I go back at the end of the year to see how we did in different underlyings, almost always the top performers are in the most liquid names.
— Tom Sosnoff

What’s The Deal With Social Media?

Tom digs into what grinds his gears about social media, specifically influencers in the financial industry divulging and alluding to news about their companies via Twitter. Currently, there is no definitive rule for what can be revealed on Twitter. Tom advocates for a fair playing field for both sides. He says we should regulate all, or regulate nothing.

Now, [does this mean] the inside information [is in the] domain of the millennials who are on Twitter, and old goats who are sitting around waiting for a fax to come through from the Edgar filing are out of luck?
— Dylan Ratigan
...(on Twitter) if you make the stock go higher, nobody cares. If you make the stock go lower, you’re getting investigated. There’s been no definitive rulings or interpretations of this. You make your decision and you live by it. Put it all out there, I’m fine with that! Just make it fair on both sides, that’s all.
— Tom Sosnoff

Binary events will always be a part of trading, however, it is yet to be seen if things like Twitter or other social media outlets will be implemented into a regulation revamp. Until then, industry heavyweights, like Carl Icahn and Elon Musk, will continue to artificially inflate share prices through Twitter.


To see earlier episodes of Truth or Skepticism with Dylan Ratigan, you can check them out here!