In this video, learn the answers to 17 Questions for a Proprietary Trading Firm Co-Founder (with brutally honest answers). Two veteran traders sit down to dive deep into how our proprietary trading firm and our traders have become remarkably successful. Let’s get to work on sharing the answers to help you improve your trading.
View Video Transcriptin this video learn the answers to 17
questions for proprietary trade firm
co-founder with brutally honest answers
hi I’m Mike bellafiore co-founder of SMB
capital and we’re a proprietary trading
firm located in midtown Manhattan and
I’m also the author of the trading
classic one good trade and the playbook
click our subscribe button so you don’t
miss any of the videos they’re producing
for you in the trading community in this
interview two veteran traders sit down
to dive deep into how our proprietary
trading firm and our traders have become
remarkably successful let’s get to work
on sharing the answers to help you
improve your trading I wanted to welcome
back to the options tribe today one of
our fearless leaders Mike bellifiore and
thank you for making all this possible
for all of us because all of this flows
from the culture of SMB capital which I
can tell you I’ve been with in it for
ten years now and it is a really great
culture to be in because well not well
it’s not only an incredibly successful
culture it’s also one really dedicated
to people improving and it just it just
it comes out of every pore of everybody
at SMB that desire to improve and that’s
why we have the options tribe meetings
every week to help give you some
information that help you to improve as
an options trader it’s so this year that
we’ve had sorry to cut you off but I
will jump into that this is the best
year that we’ve ever had an SMB and our
best traders are having their best years
that they’ve ever had and they are all
still getting better it’s amazing and
you see it and you see them working on
their craft I haven’t seen any of these
guys since March but it doesn’t matter
nothing changes I’ve seen them on zoom
meeting since then and they’re the same
people with the same energy and the same
desire to improve and same new ideas
generation at all times so I’m going to
pull up now an Instagram post that
appeared recently and we all know the
guy in the center to be someone we all
call swag
and Mike you posted this on Instagram I
know because I got I knew this
information beforehand because you sent
us all an email letting us know that
this young man who is probably what is
he 28 29 years old Mike he looks like he
looks like he’s low looks like he’s 12
years old if you met him you’d think he
was someone his son and he you know
coming in to be with your dad day but he
is he is very young looking but
extremely brilliant guy and we’ll call
him swang he has oh but before June 30th
I don’t know if you can interpolate here
or not but before June 30th he has
already earned net trading profits of 10
million dollars how did he make so much
money this year Mike he a is very
talented talent is a very real thing in
trading B I think you actually remember
when he first started even with us long
enough where you would remember him just
starting I do and the first thing that
he did that was very impressive as he
became consistent so for those who
aren’t yet profitable or not doing as
well as they want at SMB we asked our
guys to first focus on being consistent
so our main business is hiring traders
to trade firm capital and splitting
profits with them they go through an
extensive training program so that we
feel confident that they can trade firm
capital well but also that they can grow
we’re not in the business of building
$50,000 your traders which by the way is
great for lots of people we’re in the
business
growing seven-figure traders and in this
case eight figure traders and that ten
million dollars net is from the
beginning of the year it’s from January
1st 2020 certainly I would have to add
one of the variables to be that the
market has been opportunistic for short
term active trading volatility has risen
that’s certainly a factor in this but
I’d also have to add the variable that
his performance is astonishing his the
trading results are remarkable
he has along the years understood what
his strengths were and built from them
he is an incredibly fast thinking person
tremendous processing power and has
crafted his trading style around that
when he recognized what he did well he
started to express those ideas in some
different ways so he has graduated into
trading options as well directionally
and adding that as an important revenue
line to his business as well he has
worked very well with the resources at
the firm we’re very lucky at the prop
front firm that we’re at that we have
amazing resources like dr. Brett Steen
Barger who coaches and mentors the
traders the best trading coach in the
u.s. coaches our guys and some of the
biggest traders and at some of the most
prestigious firms in the world their
traders he has tapped into the
importance of having a risk manager who
works with you on a daily basis keeps
you in check keeps you from not losing
too much on your bad days or your bad
trades which happens if you trade long
enough he leads our desk and gee
chatting me throughout the day nobody
Jie chats me more than swang console
they give me updates on what he’s
trading how he’s working on a sizing how
he’s doing overall he announced to say
this I said this in an ode to our guys
and I say this for the people listening
yep he is up eight figures this year his
path to be an eight-figure trader has
not been perfectly smooth he has not
just always done well and done better
there have been some real challenges
along the way
if you want to learn three real-world
setups that our traders use including
this simple setup that we teach all of
our new traders and the set up that
turned one of our traders into a
seven-figure big money earner check out
the free webinar that we’re currently
running just go ahead and click the link
that should be appearing right now at
the top right hand corner of your screen
that’s gonna open up this free
registration page in the new window so
don’t worry you’re not gonna lose this
video you’re gonna learn more in a
couple of hours from this trading
workshop than from years of online
education so if you are a retail
independent crop trader trader that gets
off the tracks now and then he has as
well and I say that because if he could
figure out how to get back on the trucks
and the best story that I can give you
is that very recently during a review he
had one of his very rare recent
drawdowns
he he had actually been losing money for
a little bit of time and we meet during
our monthly meetings to go over pass
results we put statistics in front of
everybody we’re transparent with
everybody and you can see the drawdown
and dr. Steen Barger and now a famous
SMB quote said to him don’t let your
swing trading get in the way of your
swang trading and he was starting to do
some stuff different that was outside of
what he does best
and so I could go on and on I well those
are some of the reasons why he has done
so well but yeah he he has he has made
eight figures and net trading profits
since the start of the year I just got a
deep shock from him
we both are excited to see where you can
go from here
you started SMB in 2005 and it’s a prop
trading firm in Manhattan very
competitive and tell us for people
who’ve never even heard the term
proprietary trading for what what are
the advantages of trading at a proper
means instead of trading your own
capital independently would it make
sense for retail and independent traders
to consider trading for a prop trading
firm yes if you want to be somebody who
makes seven figures in a year north of a
million dollars in a year if you want to
if you’re somebody who wants to find out
just how good they can be the very best
you can be you want to become your very
best trader you want to play at the
highest level that you can play at you
need more resources you can only do
something you only do so much alone and
so at a prop firm prop firms have more
resources than you can have individually
we have more capital much more capital
many multiples of capital that we can
provide for traders you get more capital
you can make more money assuming your
strategies work we have better
technology that means you can be alerted
to the trades more often that you trade
best that means that you can execute
better on entries and exits that means
you can execute with larger size because
your technology is better you have great
coaches like dr. Stein Barger and great
resources like our core manager and
myself
it’s the
spencer who had my partner as well we’ve
been doing this for 20-plus years who
can can give you some advice when
markets start to change when the market
regime shifts we can see that and point
that out and point you in the right
direction some strategies that are worth
focus you have other traders around you
who are terrific swang it’s no
coincidence that swang sits next to
shark who is a phenomenal trader and the
two of them make each other better swang
is seeing how much money shark is making
in a particular trade and that pushes
him the trade a little bit bigger or it
gives him the idea to be in the trade in
the first place that maybe he wouldn’t
have thought of by himself it gives you
when you have other traders around you
it gives you the opportunity to trade
jointly so one of the things that we do
at our firm is we have joint accounts
guys actually team up they share ideas
they put money into them against them
talking more amongst each other and
improves their idea flow if you put a
couple more ideas in front of a trader
like swang a month that’s gonna really
add to his bottom line you know the
other huge thing is that when you’re
trading at a prop firm if you are losing
money
it’s a drawdown if you’re trading your
own retail or independent account when
you’re losing money it’s your money
you’ve really lost a hundred thousand
dollars or three hundred thousand
dollars that’s out of your pocket you’re
really thinking I have that much more
money less I have that much less money
when you’re trading at a prop firm and
you’re treating somebody else’s capital
it’s a drawdown you’re gonna make it
back it’s just the mark and you keep
pushing and you keep pressing from there
so can’t go through all the advantages
but those are some of them and those are
some of them at our firm
yeah it’s once you understand how the
system works it’s it becomes less and
less attractive to trade your own
capital really and much more attractive
to trade firm capital for you know all
the reasons you mentioned Mike you’ve
written two books on trading one good
trade and the PlayBook there’s they’re
so readable and just so interesting and
so informative you’ve written thousands
of blog post you’ve shared hundreds of
videos on SMB capital’s youtube channel
which everybody should go to right now
and subscribe to because it’s
unbelievable the amount of information
we’re putting out there so my question
for you is why aren’t you more secretive
of what works for firm traders is it
isn’t it smarter to not tell everybody
what’s going on and not tell everyone
and just hold the information to
ourselves so we don’t share everything
and I would suggest that the generous we
are generous as we are on for instance
SMB capital’s youtube channel which is a
tremendous resource for developing
traders for new traders for experienced
traders from the feedback that we’re
getting from traders all over the world
tremendous resource we’re very proud of
the quality education that we share on
SME capital’s youtube channel if you
haven’t seen it go check it out see what
you think we’re really not sharing as
much as maybe people think we are
sharing a lot but they’re certainly not
sharing everything and there’s certain
things we never talk about certain
strategies we never talk about for which
the firm makes a tremendous amount of
money that i wouldn’t be fair for us to
talk about for for the traders at our
firm because there is a limitation on
how much size can be traded for certain
trades and so we just don’t talk about
them I won’t even tell you the names of
the trades but they’re certainly our
strategies
you won’t hear us talk about
but for discretionary trading we do talk
about that and for discretionary trading
that has a lot of liquidity we do talk
about that and the reason why we share
firstly is because it’s in our interest
to meet more people who can do what we
do and by us putting out to the world
what we do we’re attracting the right
type of people we don’t want to attract
get-rich-quick traders are people
looking to get rich quick we’re not
looking to attract people who want to
make $50,000 a year and again that’s
great I’m not anyway that’s just that’s
not for us that’s not what we do that’s
not where we’re adding value we are here
to develop really really large traders
on the equity side and we need to
attract the we need to attract the right
type of people and talent lies in so
many different places and if we are just
secretive about what we do and we go
through the traditional recruiting paths
that other people go through we’re gonna
limit the touches that we get with those
very talented people
the seven-figure traders that we’ve
developed at the firm since 2005 some of
them come from non-traditional places
some of them we would not have met and
developed if we just did the traditional
things and those traders really move the
firm to two different places so it’s
it’s it’s in our interest to do that and
we’ll keep doing it and I think we we do
certainly share a lot and there’s
there’s there’s a
a lot that people can do with what we’re
teaching we’re essentially showing you
what it’s like to be a professional
trader we’re teaching you what you need
to do to be a professional trader we’re
thinking you we’re teaching you how to
think through trades when you watch a
video that I put up on YouTube the
biggest takeaway is we are teaching you
how to think through a trade like a
professional trader does and you can
take that and you can apply it lots of
different other strategies absent that
quality of thinking absent the variables
that really move markets you’re gonna be
lost so I hope we share that with the
community Mike I know you’re a voracious
reader you’re constantly talking about
the book you’re reading now and and it
comes out in your writing and on your
YouTube videos and everything you share
because you get excited about things
what’s the best recent book that you
recommend to people who really want to
become great Raiders atomic habits by
James clear we are the compilation of
our habits our productivity is the best
practices that we turn into habit and
then we wait for those results great
book go check it out I know I get his
I’ve subscribed to his Thursday
newsletter I know your subscriber to and
you start looking forward to Thursday’s
because his thoughts are so incredible
this was a New York Times bestseller I
think wasn’t it Mike
really really popular book what are you
reading now
I’m reading a man who saw the market how
Jim Simons launched the Quandt
revolution by Greg Zuckerman mm-hmm very
interesting and I don’t mean to date you
but fascinating book that was that’s
about Renaissance capital one of the
most successful quantitative trading
firms ever in the history of trading the
firm was built the town over from where
I grew up I just get a kick out of some
of the local references that are made in
the book the pubs that they go to the
restaurants they eat at were places that
I certainly frequented while I was
growing up and I just get this big kick
out of the fact that one town over and
we grew up in the sleepy Harbor town on
Long Island you would never think that
the world’s where the world’s great
quantitative firms was being built one
town over from where I grew up or in the
town that they built this in and yet
these guys were building this massively
successful firm the locals didn’t root
you know we didn’t hear about this firm
when we were growing up it was sort of
secret it was secretive as you were
saying but they were doing quantitative
trading not discretionary trading for
the most part so that’s more
understandable but the other really
fascinating thing about the book is the
age at which Jim Simons started trading
seriously started this firm seriously
and the age of the people that he hired
that went on to really be key players in
building Renaissance they were forties
fifties and had never traded before in
some cases imagine that in our game a
lot of times is dominated by young
people coming right out of college
mm-hm and boy these guys were different
they were different in their backgrounds
very little about markets great
mathematicians their age where they were
what they had done in the past
fascinating buckle the man who solved
the market is he still kicking Jim
Simons
I don’t know he’s definitely getting up
there I think he’s still around
I mean Renaissance is still doing very
nicely
Stephanie’s asking for us to mention the
name of the book again it’s the man who
solved the market how Jim Simons
launched the quiet revolution by Greg
Zuckerman Stephanie now the $64,000
question who is the best trader at SMB
my trouble here so I’m gonna I’m gonna
steal for my grandmother here during
Christmas my grandmother would give the
three boys in the family Christmas gifts
one was the favorite one was number one
and one was the best and so is the best
overall trader best well-rounded overall
trader swang is the best flat-out trader
raff was number one at Pinel in 2019
Benjy and his team may may grow into
being able to handle the most capital of
anyone at the firm the engies team is
the quantum correct they are not a
quantitative teams that they’re more of
an automated team I don’t want you
getting any more trouble so I’m not
gonna drill down on that well that
question and I know all these guys and
yeah thanks for that question yeah there
there it just makes you it makes you
feel worse that you’re you’re the age
you are because these guys you know I’m
61 these guys I knew shark right out of
college he was in the same class that I
was I took equity foundation at the same
time that shark did he was right out of
college I was you know right out of the
insurance business and you know you just
could tell that he was going somewhere I
didn’t really think this was going to
happen but you know he just had you just
had that instinct we all kind of had
that instinct about him that he’s going
to be something special and he sat in
our options foundation course dutifully
while we were filming it let’s see here
for equity foundation about six months
later I filmed options Foundation and
that whole initial class came back in to
the conference room for about two weeks
as I was filming that and they all
participated and I noticed that shark
was very active very interested taking
notes and he didn’t trade options for
quite a long time after that yet he took
in all that knowledge and now options is
a very important part of what shark does
if I’m if I heard correctly yeah and I
would say that his most recent
advancement has been in how he has
structured trades
mm-hm and that structuring is both with
equities and with options and because of
the way he’s structuring these trades
that and of itself is allowing him to
experience significantly more edge I
wanted to let you know that there really
are sound viable long-term techniques
for trading options for income and in
fact we’re currently running a – our
free intensive workshop at the moment
we’re will be teaching you three of
those strategies that real professional
options traders use including a really
simple but incredibly effective
technique that some of the greatest
investors in the world like Warren
Buffett use all the time plus an options
trading strategy that has a statistical
80 percent probability of profit month
in and month out plus an option strategy
that you can employ with the stock that
you like where you’ll make your target
profit whether the stock goes up goes
nowhere or even goes down a small
percentage so if those strategies would
be of interest to you then you should
check out the free options class that
we’re currently running just go ahead
and click the link that should be
appearing now at the top right corner of
your screen that will open the free
registration page in a new window so
don’t worry you won’t lose this video or
you can just head on over to options
class com to register for this free
intensive workshop it’s a rare
opportunity for retail traders and
investors to learn directly from Wall
Street traders but that’s exactly what
you’ll be getting through this free
online workshop so click the link to
sign up now and don’t miss it these are
these are very young guys they’re very
polite decent people by the way all of
them they they are very happy to be
helpful and share information these are
not cocky young guys these are good guys
cocky young guys don’t really make it in
our firm and they don’t really make it
you know pretty much anywhere but these
are very very good guys who work
extremely hard and deserve every penny
they’ve made and it was all you know it
was all result of effort you know and
obviously a combination of their skills
and the resources they’ve had alright
put you on the spot again who is the
person in the trading world you you you
can exclude present company like who’s
the person the person in the trading
world that you most admire Oh easy for
me dr. Brett steam barber the best
trading coach in the US and the most
generous person in the world of trading
he has unlimited energy to work with our
traders from the star traders all
the way down to the newest of the
interns he amazingly you know a lot of
people think of dr. Steinberger as a
psychologist and I think a lot of people
think of a psychologist at a trading
firm is somebody who helps people with
their head get their head straight and
he does some of that but what he mostly
does is he helps people build their edge
even better he mostly is giving feedback
on how guys can really develop trading
edge and he will say I don’t want to put
words in himself but he will say you
can’t have a good trading psychology if
you don’t have edge and if you do
there’s probably something really wrong
with you because if you’re repeatedly
losing money you shouldn’t be in the
zone or calm or happy you should be
pissed yeah he is unbelievably generous
guy it’s one of the it’s it’s one of the
greatest parts of being part of SMB is
having access to dr. s one of the most
decent human beings I’ve ever met in my
life and he’ll do anything I recently
about two months ago on a Saturday I
sent him an email and I said I’ve got a
friend who’s struggling trading she has
nothing to do with SMB she just a
personal trader trades futures with
friends of ours Mike and I said she’s
struggling with some things is there any
chance you could you know just have a
chat with her and he said absolutely he
gave her an hour on a Sunday this is a
complete stranger to all of us and she
called me back different she goes I I
cannot believe fret Steen Barger just
gave me an hour for free you know just
because he happens to know you and
that’s the kind of guy he is and we have
this resource who’s the guys available
24/7 you sent him an email to in the
morning you’ll get an answer back
probably pretty quickly and he’s just
one of them you know many resources we
have
what was the first thing you did good
embarrass you here what’s the first
thing you did when you first made a lot
of money as a trader oh that’s a great
question first thing I did I remember
this first thing I did is I bought a
membership to the Reebok Club on the
Upper West Side in New York and I have
to say that turned out to be a terrific
investment maybe the well I should say
the best investment that I’ve ever made
in that that’s where I met my wife
shootin hoops on the basketball court at
the Reebok club on the Upper West Side
of an ad I never knew that that that
paid often a major dividend didn’t it
that’s fantastic Sal so what is the one
discretionary thing you spend a lot of
money on it’s worth it to you yeah so I
think one of the best things that I did
a couple years ago was hire a personal
trainer mm-hmm I view that as an
investment I do spend time at the
beginning of each year thinking about
investments I can make in my time so
that I grow that I get better that’s
important for the firm that I am doing
that not particularly persuasive for me
to tell guys that they should be growing
or to be looking for guys who should be
growing if people like you who runs a
run the desk or somebody like myself
isn’t doing that as well so I have a
personal trainer I work out with my
personal trainer three times a week as
you know our firm used to have a
terrific Midtown office in New York City
we still have it it’s just we haven’t
been to it because of CO vid for a while
I took my family and we moved to the
Jersey Shore at the very very beginning
of kovat and I’m still working out with
my personal trainer virtually three
times a week and worth you know worth
every penny and then some how many how
many years you’ve been doing that I’d
have to go back and look at my calendar
but it’s it’s been it’s been a couple
years now it’s been really it was a
really good investment that I’ve made
and you swim every day right no we not
quite and since we have been out here I
think that’s probably something that’s
been off the table for a bit well that’s
what happens during pandemics yeah you
get thrown out of your schedule well
speaking of improvement you know SMB is
great it’s the best career move I ever
made by a mile and yet no place is
perfect right so what what do you see is
the area that you would love to see SME
grow and what what area do we really
need to grow into become more complete
and more great yeah automated trading
I’ve been spending a lot of time trying
to hire interns who are more likely to
be better at automated trading mm-hm we
have spent a lot of time thinking about
the infrastructure so that we get better
at automated trading we continue to do
that we encourage our traders day by day
month by month to be spending some time
working on some automated bottles we
encourage traders to team with other
traders to build models that’s where
we’re seeing the most success of the
firm is traders teaming
to build models I think a lot of
countries and grout models and again
getting back to your theme of being
secretive hey if you have a model you
should keep it to yourself not tell
anybody and it’s this individual
exercise we found that the collaboration
between traders the collaboration
between teams is what leads with which
what is what has led to the best
successes and automated trading so we
can do better there we have made some
improvement but if I am assessing an
area where we need to do better it would
be there so is that because there’s the
most potential and automated trading or
is it just an area where there’s more
room for improvement that’s a great
follow-up question to me that’s a
question of technology I think there’s
three ways that technology can help
traders alerts that alerts you to your
favorite setups scripts that get you
into your favorite setups automatically
and you trade out with discretion and
automated models where you write rules
into a trade and you write rules out of
a trade I actually know that you’re
working on a new system with a new
colleague of yours and and building a
signal for a potentially powerful new
signal that you are trading presently
and that we can talk about with the
trading community perhaps soon and
you’re doing that in collaboration with
somebody else yep do I think there’s a
tremendous amount of opportunity as
discretionary traders we talked about
swangs a P&L there are two traders right
behind him really close to crossing ten
million and PNL for the year like swang
I mean really close
so there’s just there’s a lot of
opportunity as discretionary traders
overall is there more opportunity that’s
probably a question for a quantitative
traders to to chime in on the way I look
at it is there’s a lot of opportunity in
discretionary trading there’s a lot of
opportunity and automated trading and we
should give our traders the resources
and the optionality to be good at both
or either makes sense so what just like
SMB is not perfect and you want to make
improvements in automated trading how
about at the individual trader level
what do you think they ought to be doing
more of if you could make one important
improvement in the traders at SMB what
you know what would those be what would
that be one of the things that I think
traders ought to be doing more of across
the board is mindfulness training my
thesis is that mindfulness training will
be as commonplace as exercise is on a
daily and weekly basis when you and I
were a little bit younger mm-hmm I think
you can remember exercise was something
new it was this new phenomena that we
should go jog or we should go lift
weights yeah well I wasn’t been in that
wasn’t yeah
that wasn’t something that everybody
agreed needed to be a part of their
routine now for the most part that’s
accepted my sense is that in short order
mindfulness training will be part will
be accepted as something essential to
everyone
most people’s routines to ensure that
they are as healthy as possible
headspace is a great app for which
traders can use to start and
I have a business partner who you know
very well ziad Masri who started a new
company called Sol hub which you guys
can check out and I’ve been playing
around with a bunch of his mindfulness
videos and breathing techniques been
really enjoying them he’s got great
music on these exercises which I really
love
one of them is is actually imagining
your breath crashing with like like
waves do so your breath is crashing with
the waves which is great for me because
we’re actually porch enough to be at a
place that’s right on the ocean and I
can actually when I start literally
joy’s I literally see the waves crashing
and then I close my eyes and go to the
exercises so I really enjoy that and I
just love music check that out
all right Mike when are you gonna write
another book it’s been a while in fact
my dad who passed away five years ago a
year before he passed away he got a
signed copy from you of the playbook so
I know you haven’t written one in five
years and are you planning to write one
and if so what’s it gonna be about yes
it will be about the 7 and 8-figure
traders that we’ve grown at the firm and
who I coach some of the select traders
that I coach outside the firm that’s
what you do a little bit of coaching as
well and in your spare time that is
right it’s hard to believe you’re doing
that too with everything else I know you
have going wow these guys especially
these guys are special and I really
enjoy it it’s one of the really good
decisions that I made to grow as a coach
and as a mentor was deciding to take on
a couple of really special traders
outside the firm and help them mm-hmm
and as any great coach will will tell
you I have learned an awful lot coaching
them and they’ve made me so much better
and while certainly time gets limited
running a proprietary trading firm and
doing all the stuff that we do and
running the desk as you know I mean it’s
just a lot that goes into that but you
know something that I’ve never spent one
minute with these guys thinking to
myself you know oh I have to go do
something else they energize me I really
look forward to talking to them and
reading their daily report cards and
working with them and seeing and seeing
how successful they have become and how
much better they’ve gotten and I mean
incredibly gratifying when you’re first
hire a traitor what what’s the sort of
the thing you’re looking for what’s the
key trait that you’re focusing on in
your decision simple I want to be people
who are interested in getting better why
because those are the traders that are
going to be able to last through
different markets markets change regimes
change those are the traders who can
become 7 and 8-figure traders those are
the traders who are gonna appreciate the
firm and its resources more because
they’re gonna recognize that look they
could probably be pretty good on by
themselves but could they become as
great as they’ve become by themselves I
think they I think they would
acknowledge that but maybe not and and
so for those reasons those are the
people firstly we want to be recruiting
and you see that you know people think
these are kind of cliches but you really
see the guys my observation is the guys
who’ve worked the hardest are the ones
who are having this unbelievable success
it’s not this is not some kind of sort
of idealistic world we’re talking about
that’s the real world the guys who
really put the work in or the ones who
are who are tremendously successful put
it this way it’s a get they’ve got to be
putting the work in or they can’t be
successful okay I got a gchat from slang
write up the clothes you know I’m up X Y
Z for the year and his words now let’s
keep pushing yeah yeah
and you see that in him and that’s why
he’s getting more and more profitable
every year
what is something these are you know
tense difficult times we’ve got a
pandemic going on we’ve got a very very
fragile economic situation 30 percent
unemployment people out of work during
these difficult times what is helping
the successful traders psychologically
what’s keeping them yeah it’s very
important for traders who are having
success who’ve had success this is what
I am reading from them and their daily
report cards that’s their trading
journal there’s sharing with me on a
daily basis this is what I’m hearing in
our phone calls and our zoom meetings
from them this is what I’m reading from
them in their G chats with me is the
importance of giving back they’re
talking about this they’re talking about
what they’re doing to give back and each
of them are doing it in their own way
for instance
trader was talking about finding a food
bank how they found a food bank to
donate to I’m on the board of trade or a
cause that donates to terrific charities
and that’s something that traders can
get involved in but they to a person
they are all thinking about the ways
that they can give back the ways that
they can use what what what they feel
grateful for the money that they’ve made
that they’re grateful for and they feel
fortunate to have made how they can
share it in a productive way to help a
bunch of other people out super
important it’s great advice and it helps
you to become a much more complete human
being in the long run and it’s what
you’ll be remembered for young guys may
not think about being remembered for
things but as every year goes goes by
you you do and that’s the that’s the the
long-term reputation you build all right
Mike put you on the spot again if you
had to give a single piece of advice to
a new new trader developing trader what
would be after all these years what
would you boil it down to as the most
important piece of advice you give
people okay I’m gonna be succinct and
I’m gonna go back to atomic habits by
James clear develop a routine of best
practices that you turn into habit to
drive your trading performance
so it comes down to habit and best
practices the affected best practices
that you turn into habit that you
execute on on a daily basis those are
the things that bring the P&L so for
example one of the things I just find
this story by the way
so inspiring so one of the traders who I
actually coach outside the firm is
somebody who has been north of five
million dollars in his trading career
probably knocking at the door at ten
million this year and again outside the
firm incredible joy to work with
so fortunate to have met him and watched
him grow as a trader knew him actually
I’ve known him since he was in college
just a remarkable person he so he’s like
one of the most successful day traders
in the u.s. in his words he now has
enough money that he could reasonably
live comfortably without making another
dollar in his trading career and that’s
not what drives him anymore he wants to
get better he wants to improve he has
his own goals and the thing that he
still does to this day is he records the
screens and he goes back at the end of
the day Andrey watches the tape of the
most opportunistic trades during that
day and and and watches the order flow
over and over and over again so he
improves his reading the tape skills so
he builds his intuition to be able to
trade certain setups better so he can
trade these setups bigger with more
confidence and he just watching tape
like a quarterback in the
thell is watching game tape we get
prepared for a future opponent I mean
again this is somebody who doesn’t need
to do this and yet he is and this is a
an effective best practice that he’s
turned into habit that he continues to
do which is helping him continue to
improve it’s incredible I would say if
somebody would were to ask me what’s the
core theme of SMB I would say it’s
process focus on process and the results
will flow from that and that’s never
changed in the ten years I’ve known you
Mike in the ten years I’ve been with the
firm and all that you’re saying it’s
just reinforcing that
and it’s proven out because these guys
came right out of college they didn’t
know anything and now they’re making ten
million dollars so what is what’s going
on now what is the the thing you’re
excited about now the most recent
advancement innovation project at SMB
that is really exciting out there and
that’s one of the cool things there’s
always some new answer to that question
in the last ten years have been at least
ten answers that question probably
twenty so what’s the current kind of
innovation that you’re working on that
you’re excited about you know I gotta
give credit to dr. Stein Barger and to
interns from our recent class and for
those of you would go to SME capitals
YouTube page there’s a video we just put
up and that video is how to traders work
together to build a clear repeatable and
highly profitable stock trade let me
take a half a step back so the second
book I wrote is called the playbook
and in the playbook I teach how to build
your trading business essentially to
break down certain trades and variables
so that you know what they are so that
you know what to look for and so that
you actually trade that playbook now
those stuff but the trades you know that
you trade well you measure those trades
keep track you keep score of how you’re
doing in these trades but you know what
you’re doing you know what you’re
looking for you know the names of these
trades and you execute on them and these
two interns and the way that we used to
do it at the firm and the way I wrote
about it in the playbook was you do this
individually this is an individual
exercise that you do at the end of every
trading session you find a set up that
made the most sense to you and you
archive the variables you decode the
variables from that trade and you make
it into what we call a playbook you be
able
name the archive that you trade that and
what these guys did at the urging of dr.
steam burger is they did this together
they are doing playbook trades as a team
as a as a twosome mm-hmm
they’re breaking down and building a
PlayBook together and what that does is
it makes it more fun and it gives you an
extra pair of eyes of insight into
certain trades and it helps you to build
on some of the strengths that maybe your
partner has and maybe you don’t have for
instance in this one particular pairing
one of the guys is really good at coding
and back testing and so I can lean on
this other guy add that as one of the
variables into and you can see it in the
video how they use historical analysis
to make a good trade even better mm-hmm
and I love the idea as many play books
as possible in the future being done by
two and three person teens being done in
a group being done jointly having play
books built together and to see what
that brings to the front just love the
idea well Mike I want to wrap up with
kind of a final comment and a sort of a
final question and that is every firm
any kind of a company needs a leader
that really is conveying enthusiasm
if the leaders not convey any enthusiasm
you know it’s going to have a very quick
dampening effect on the company and I’ve
been through these experiences in my
career and I can tell you that’s true
for some reason you just have this
constant enthusiasm and yet I’ve known
you for 10 years I have never seen you
more excited than you are now about SMB
you know most people would say you know
you see get tired something you you know
it gets boring it gets routine that
doesn’t ever seem to happen to you and
now in the middle of a damn pandemic
I’ve never seen you more psyched so what
is it what what’s going on that’s making
you so excited about running SMB so by
the way there’s a really good book since
you called me out for reading a lot of
books but one of the traders who I coach
outside the firm got me to read this
quote by Ryan holiday that’s called the
obstacle is the way which all the great
athletes are reading and all the great
coaches are reading which I have read
recently and I’ll take part of what you
said and connected to which is we have
this pandemic we’ve got to take all of
our traders who are physically in our
office and we’ve got a transition into
virtual trading which is not our
business model and it gave us an
opportunity to either fret about the
difference or innovate and I think one
of the things that we’ve done is we’ve
learned how to be really good and
communicate really well as a virtual
firm and in fact I would suggest in some
ways our communications even better
virtually all of us trading at our home
then physically in the same office at
the same time and so that obstacle the
pandemic
was in our way but it has taught us some
things about communicating better and
working together more and how important
that actually is that I feel really good
about but the thing I feel the best
about and I gotta share two quick
anecdotes March was our best month ever
it should have been a really really good
month but I mean our performance was
just astonishing remarkable even as good
as the market was but the capital that
we trade I mean just such out
performance and you know couldn’t be
prouder of the guys and the numbers they
put up were just it was so gratifying to
see how happy they were and the levels
of success they were having we have a
monthly meeting with everybody at the
firm in teams each month we did it all
virtually after March because of cold
that we do it with dr. steinberger and
Carlton our floor manager we spent one
full day doing it after March and when I
was gone dr. Steen Burger King to me
and one of the chat even after he’d
spent the whole day together and so I
call him quickly and he says Mike my god
the success that your traders are having
and the talent that is that that is at
the firm and I’ve never felt better
about the firm not because of the
results but because of the success and
because of the potential for success
that these guys could have because when
you put up numbers like that it doesn’t
go away you figure out how to do it in
other markets as well and the other
anecdote that I would just leave you
with is um it’s clear from us that the
decision we made about three months ago
about three years ago excuse me
to really double down on our internship
program to really hire people who have
gone through our system so we have a way
of training we the way we have a very
specific culture we have a way of
looking at markets in the world and
performance I’m not suggesting that we
are the ones who have the right answer
or the only answer we have our answer we
have what works for us and since 2005
nobody has developed more consistently
profitable and seven-figure traders in
our space than us . . we are the very
best at that in the entire world the
results are the results and what we
decided to do a bunch of years ago is
say let’s really work hard to hire a
great class of interns let’s give them
our training if you’re a u.s. college
student let’s really be selective about
who’s gonna be an intern but let’s let’s
really spend a lot more time hiring
interns and not just nobody we’ve ever
met before let’s get them in the system
let’s work with them and let’s double
down on our training and our education
for these interns and let’s hire the
best interns that we get at the firm and
let’s put our capital behind them and
see what we can develop and in doing so
in combination with as you know we also
run it completely separate from SME
training and an SME training you can get
into the firm by taking our training for
a fee per SME training and all of the
same training that our interns yet and
our new hires yet you can go through
that and for the most serious of the SME
training students you can apply to the
firm and we have found some really good
people through SME training who we
might not have met with the only higher
insurance
maybe these are non-traditional people
maybe these are people can’t be in New
York maybe these people are out of
college lots of different reasons
maybe these are people who have had a
little bit of success but not a ton and
need some more training and because of
that at our firm right now we have the
deepest talent pool that we’ve ever had
the interns are more talented the new
hires are more talented the junior
traders are more talented the developing
traders are more talented it is the most
talent we’ve ever had at any time in our
firm’s history and so Wow the pl is
being driven by the guys who mostly been
with us for a long period of time we see
that there’s gonna be a lot more star
traders that are not coming they’re not
showing up on the P&L yet but are gonna
the new sharks the new swangs they’ll
have their own nicknames these come of
these guys are gonna have their own damn
nicknames that well you have to you have
to eventually or you can’t be a trader
long term no but I mean it’s we have
learned that as you said process traders
buying into the importance of process
I’ll just leave you with this quick
anecdote I had a conversation just
yesterday with the trader who is very
very close with a trader outside the US
who literally is this exchange it’s a
foreign exchange so it’s not as big as
the US it’s not a small country but it’s
again it’s not the US this guy that this
trader is talking about is literally the
best trader in that country he’s the
best in his space in that country
best and this friend of mine was saying
that he had taken S&P DNA and how much
it is it had helped him different
different country different market
different way the market the markets
trade by understanding process to
prepare how to review how to find the
right stocks and the importance of
finding the right stocks important to
building your PlayBook all the stuff
that goes into how we shape and train
traders is super powerful across the
world and so gratifying to hear that and
see it that there are a lot of people
who can trace their trading careers back
to SMB original equity foundation course
which is now kind of morphed into the
DNA program in the winning trader
program it certainly kick started my
career in trading I ended up focusing on
options but all the principles are with
me every day and with our desk every day
well Bella thank you
it’s an exciting year for the firm it’s
really really great to be part of it
it’s it’s so fun and so gratifying to
see all these people growing and see the
firm you know having so much success
after you know so many years of doing
everything right and all the blocking
and tackling and then you get into a
market like this in a tall it all you
know develops into something really
really significant okay go ahead and
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