Trading Psychology Unveiled

Jun 1, 2025

JJ Kinahan, CEO of IG North America and veteran trader, shares insights on the seismic shifts in retail trading. He discusses how retail traders now have access to professional-grade tools and rapid information flow. The conversation highlights the psychology of traders during market uncertainties, revealing patterns in their moves from ETFs to individual stocks. JJ emphasizes the importance of understanding personal risk tolerance and making calculated decisions, urging new traders to start small and be more strategic.

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INSIGHT

Rise of Retail Trading Power

Retail trading power increased due to better platforms and education, especially during COVID.
Instant fills and professional-grade tools enable retail traders to act as quickly as institutions.

ADVICE

Define Risk With Option Spreads

Use option spreads to define risk clearly before trading.
Knowing your worst-case scenario helps manage emotions during trades.

ADVICE

Start Small with One Contract

Start trading with one contract to manage risk and learn effectively.
Gradually increase risk as you gain confidence to avoid harmful cycles.

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Remember when trading meant calling your broker and waiting an hour just to find out if your order was filled? That world is gone.

JJ Kinahan, CEO of IG North America (parent company of Tasty Trade), shares how the playing field has fundamentally changed for retail traders. With 21 years of experience trading on the Chicago Board Options Exchange and leadership roles at major brokerages, JJ offers rare insight into this transformation.

Today's retail traders wield professional-grade tools, instant executions, and information flows that rival institutional capabilities. The most dramatic shift? Options trading is no longer exclusive to professionals. As JJ explains, "Options are giant probabilities" that can be used strategically when traders understand the risks involved.

The conversation explores a fascinating retail trading psychology: during market uncertainty (like the recent "tariff tantrum"), traders initially flock to broad ETFs like SPDR and QQQ, gradually returning to individual stocks as confidence rebuilds—starting predictably with Microsoft and Meta. This behavioral pattern offers valuable signals about market sentiment that even professionals watch closely.

For new traders, JJ's advice is refreshingly straightforward: start with one contract, know your personal risk tolerance, and understand why you're entering each trade. "The easiest thing in the world is to risk more money. The hardest thing is to risk a lot, lose it, and then get into a bad cycle where you feel you have to make it back."

Looking ahead, the trading landscape continues evolving toward 24/7 access, with Tasty Trade launching 24-5 equity trading by June. This shift reflects growing global interest in US markets and the expectation that investors should be able to react to news in real-time, regardless of time zone.

Ready to level up your trading knowledge? Explore how defining your risk parameters might be the most important skill you can develop as a trader.

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