SMB Capital Foundation Training Review – Is It Worth It?

SMB Capital Review
  • Quality of Education
  • Price
  • Credibility of Educators
4.2

Summary

In this article, we take a critical look at SMB Capital’s pivotal training program, the SMB Foundation Training. We look at the credibility of SMB Training, the quality of the education, and how fair the price is.

SMB Capital is a proprietary trading firm located in New York City. The firm was started by Mike Bellafiore and Steven Spencer in 2005. SMB provides coaching, training, and capital to traders, and they employ an “eat what you kill model,” meaning traders only get paid if they produce trading profits.

In addition to their lucrative trading business, the firm has developed a training division that doubles as both a source of profits and a funnel of new traders for the firm. They offer educational courses like SMB Foundation, SMB Options, and Reading The Tape. In this article we’re going to look at SMB Training’s Foundational course, and attempt the most important question: is it worth the money?

Who is SMB Capital?

As mentioned earlier, Mike Bellafiore and Steven Spencer started SMB Capital in 2005. The firm’s rise to prominence can be accredited to two factors. The first is their appearance on the TV series Wall Street Warriors, which aired in 2008. The series recreated a version of the Turtle Traders experiment, in which SMB recruited inexperienced traders to teach them how to become profitable traders.

The second factor in their rise to prominence is the credit crisis. Many traders and portfolio managers from big banks were out of work and had to take “eat what you kill” positions with prop firms like SMB. Many successful traders got their start at SMB like Adam Grimes, for example.

Mike Bellafiore has successfully marketed the firm by becoming the face of their company. He’s written two books, One Good Trade and The Playbook. He’s been interviewed on podcasts like Chat With Traders, Michael Covel’s Trend Following, and TradingStory. Additionally, Mike does his fair share of media. He and other SMB members are often guests CNBC, CNN Money, Bloomberg, and Fox Business, and Mike writes for Yahoo Finance, Brett Steenbarger’s blog, and his own blog.

All in all, SMB Capital is one of the most well-known proprietary trading firms and is one of the few firms where non-Ivy League traders can get hired and be trained by top traders.

For those wanting more information on SMB Capital, Mike Bellafiore’s book One Good Trade is one of my favorite trading books. It narrates the life of Mike, sprinkling useful trading principles throughout.

SMB Foundation

The SMB Foundation is SMB’s most comprehensive training course. The course teaches a broad range of skills to become a day trader of equities, like trading fundamentals, trade execution, finding stocks in play, reading the tape, reading charts, and trading psychology. The course can be taken online or in-house, at the SMB Capital headquarters.

Here are the differences between the online course and taking the course in-house:

Both of these options are quite expensive but the amount of material provided dwarfs most other trading courses. Additionally, it’s not a course of Bella effectively miming Investopedia articles, the course has hours of live trading from Bella and other traders, this another stark contrast to many trading courses out there.

Order Flow

When most people think of day trading, technical chart analysis usually comes to mind. While chart reading is certainly an aspect of the SMB Foundation strategy, much more focus is put on interpreting order flow. The “tape” (time & sales) is consistently referred to as a leading indicator in this course, and it’s a principle that is put into practice everyday at SMB Capital.

Here is a quote from Mike Bellafiore that sums up his and SMB’s view on tape reading:

I meet way too many new traders who mistakenly think that trading is only about learning technical analysis, and then loading up. Reading the tape, learning how to decipher the order flow in a stock is the first skill, the very skill a new trader must develop. The advantages of reading the tape are one: entering your trades at better prices. Two: offering trading plays that may not be apparent on your charts. Charts are lagging indicators, the tape is a leading indicator. Three: reading the tape improves your consistency. A solid intraday trader should be positive for 80% of all of their trading days. Many great traders advocate this technique like Paul Tudor Jones, Steve Cohen, Linda Raschke, and the late Jesse Livermore. For me, tape reading offers the trifecta. A: you can load up. B: you can load up at better prices, and C: you limit your risk.”

There are few basic concepts in tape reading that are heavily emphasized throughout the course. Those are prints, held bids, and held offers. While it seems like it would be quick long, it takes dozens of hours of eye “muscle memory” to really the develop the pattern recognition skills. The course will effectively develop these for you as there are several hours of live trading examples where Mike and other SMB traders talk through their trades and point out what they see on the tape and charts.

Stocks in Play

Another concept that is repeatedly stressed in the foundational course is the practice of trading “stocks in play.” The practice involves ensuring that you are trading stocks that are experiencing catalysts, volume, volatility, or all of the above. The main characteristic that a “Stock in Play” should have is something unusual or unexpected is going on.

The course stresses that even using sound trading principles and practices on stocks that aren’t in play can lead you to being a negative or break-even trader, unless you specialize in that type of play.

Here’s a list of a few catalysts that may classify a stock as being in play:

  • Stock beats Street consensus on any aspect of quarterly/annual report
  • Nearing 52 week high
  • High short interest
  • Analyst upgrades/downgrades
  • Significant pre-market volume
  • Government investigation
  • Unexpected announcement

One can find these stocks through stock screeners and news feeds. It will probably take time to refine down all of your screens and filters to spit out the necessary stocks in play.

Corresponding Futures

The idea that the broad market index’s trend trickles down to the majority of the stocks within the index is one ignored by a surprising amount of day traders. The foundational course stresses the importance of using a stock’s corresponding futures contract as a leading indicator. It’s the idea that when the S&P ticks down, absent of significant upside momentum, most of the stocks in the S&P will also tick down.

My Thoughts

You can say what you’d like about the price of these courses, or the fact that buying it online only gives one access to the course for 60 days, however, it’s my opinion that you’re unlikely to find a course that rivals this one when it comes to day trading stocks. These guys have been living and breathing this business for several years and have developed countless successful traders.

I, and probably most other traders, would argue that there is no better way to learn trading then from a direct mentorship. This entails somebody teaching you things, then helping you correct your errors and set new goals as one gets better. This is what SMB offers in their $25,000 in-house foundational course. It’s value is definitely debatable at that price, however.

The next best thing to direct mentorship is being able to look over a successful person’s shoulder. Imagine wanting to start a restaurant and being able to shadow a successful restaurant owner for a few weeks, it’s difficult to quantify the value of an experience like that. That is what the SMB Foundational remote course offers, at a steep discount to the the in-house course, at $9,900. Again, it’s still quite expensive, even for the trading course industry.

Ultimately, nobody can decide if one of these courses is worth it except you. Each individual’s financial and personal situation will dictate that.

18 thoughts on “SMB Capital Foundation Training Review – Is It Worth It?”

  1. Hi,
    I read your evaluation of SMB and it is very informative
    THANK YOU for your effort !!!
    Ok now, I do not day trade but I do short time [2-3 wks.] option trades ,mainly trading reversals on the daily chart with technical analysis. Perhaps you can enlighten me how and with which indicators to have a positive trading outcome . I already use strict position sizing but I may miss some important points when to open a trade at the most opportune time and when to close it.
    Any comments from you are very much appreciated

    Thank’s again for even be accessible through this media.
    Hochachtungsvoll ,

    P H Oltersdorf

    Reply
      • its hard to imagine an investment of 20k+. To learn stock Trading? i was following the online media and was interested in getting involved; but the investment is hard to swallow. 1/2 my lifessavings to possibly gain edge is a bit excessive. Im sure smb will do fine. Be cautious all.

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  2. RECORDED WEB TALKS to induce you in to buying their expensive training scheme. no evidence that people are likely to earn any money from the course other than SMB

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  3. I have known many traders who worked for SMB capital and they all go through this program and the ones who succeed at trading DO NOT use any strategies they learned from the program.

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  4. Show me the proof, either audited statements or redacted brokerage statements. They force you to use their platform probably charging way more than current market rates found elsewhere, . I was told one of the option strategies they teach is to sell at the money puts on stocks going into earnings. That is absolutely insane and a sure recipe to lose money. They parade around their “7 figure” traders but don’t tell you about the 80%-90% of the people who leave the shop within 6 months. Smells very fishy to me. I would not even consider this place unless you talk to at least 10 people who have gone through their very expensive training program.

    Reply
    • Sounds like they failed because they didn’t work hard enough to me mate. That’s just 80%-90% of people who should have worked harder.

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    • It’s irrelevant. The ones that are making 7 figures are the ones that learn the most, loved feedback and followed the playbook

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  5. I should have read the comments above before buying SMB’s “Options foundation course”. It was a very poor recording of a live workshop that they did 10 years ago. (that looks like was recorded in the 90s).

    The sound quality was so poor that they had to crank up the volume, thereby making it unbearable to listen to as there was so much white noise in the recording.

    To add salt to injury, because this is a recording of a live workshop, Seth (the instructor), asks questions from workshop participants, who then mumble the answers and then Seth just says “that’s correct”.

    You, as the viewer keeps wondering “what is correct?”

    I would not recommend their course to anyone. Specially given that there are so many free resources on the internet that cover the same content and that are recorded with decent quality.

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  6. I spend 2 hours watching their video presentation in which they taught you 3 trades

    1) premarket volume and volatility setup

    this one I am already doing , nothing I saw in their video is drastically different

    2) Fundemental change trade setup

    some sort momentum trading, this kind of stuff has been around for a long time, everyone use it, successful traders can’t be taught

    3) 2, 3 day trades

    Might be valid but I suspect you can substitute “day” with ” hour” or “week” it might still work

    overall, these setups are nothing new and they are lucking real life win or lose examples

    I think I will pass

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  7. I spent a month at SMB training about a year and a half ago, they are the real deal.
    Do they have flaws, yes they do, who does not? I have purchased too many online and in-person trading courses over the years, and looking back, they were all not worth it. The reason 90 -% of all traders never make money and give up, is in most part, the training does not work.
    If anyone thinks that they will learn how to trade in a short period is fooling themselves.
    Learning to trade is one of or not the hardest skills to learn.
    I started off learning how to Trade along time ago, too many years to even think about.
    What I did learn is how you start off with your education is the most critical first step to take.
    If all the educators out there offering you there courses told the truth, it will go something like this. You will never learn to trade by taking my course or anyone else’s education. Why you may ask because learning how to trade is equal to learning how to become a Doctor, Lawyer, or an Engineer, if anyone thinks they will learn any one of these professions online part-time is fooling themselves. You need constant immediate feedback as to where you are making mistakes. To sum it up, what it takes to learn how to trade. If you take any one of the online courses out there, remember to tell yourself this course is only a small part of a long road ahead. If you start off at a firm like SMB your chances are a lot better then trying to learn online. If I started off at a firm like SMB I would have been profitable many, many years earlier
    I do not work or have any affiliation with SMB CAPITAL.

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  8. It all depends on the amount of money you have to spend. There are allot of training courses out there for a few thousand bucks. Check them all out before spending that kind of money.

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  9. Pros

    I received a “free copy” of SMB Foundation course a while back (The course is 22 GB in size). All in all, it gives you a lot of trading info that I ended up using in my own day trading. Their strategies work but the learning curve will be tough and you will need a good year to become proficient with their strategies. The strategies aren’t difficult, its something you have to practice a lot though (Tape reading being one of them).

    I enjoyed the course for the most part, but I would not pay $9,900 dollars for this program. If you were going to trade at their firm and learn directly from them I would say it may be worth it, but it really comes down to your dedication in wanting to learn to become a great trader. It is very difficult, but this course will give you the road map to success if you have the motivation to trade 5 days a week, a few hours after the market closes to review your trade journal and get ready for the next day, be up early to watch the premarket, get all your stocks in play ready, have a detailed trading plan ( and I mean detailed) so you know what you are going to do for most situations. And sit in front of the computer watching the tape, monitoring positions, re-evaluating positions. Every day you do this. Do this for at least a year and you may make it as a day trader if you can learn from your mistakes, and there will be a lot of mistakes.

    Cons

    You do get a lot of videos to watch and pdf’s to read. Plus a bunch of excerpts from “One Good Trade” haha
    The video quality is good enough to see clearly, but it was produced over a decade ago. They showed live trades with stocks such as Lehman Brothers, which went out of business in 2008. All the examples are shown using the trading platform Lightspeed Trader. All the course information is still relevant (for the most part) but this course really does need to be updated with more current market conditions. There may be a new version of this course but the one “I received” was old and I don’t know if they have updated it or not. Many of the ‘over the shoulder’ videos of traders in action were hard to follow. They have a glossary of trading lingo but they don’t explain things as if your are newbie when you are watching the videos so I could see a new trader having a difficult time following what was going on.

    Conclusion

    If I was fully motivated to become a day trader no matter what, I could see myself paying for the course IF I was going to trade and learn at their prop firm in New York. I think you could learn a lot there. But if you are day trading at home, you can get all the info on youtube although you will have to go through all the bullshit to get to the good stuff. They have decided to over charge for their exact method of trading and most people that go through the course will probably fail too. Not because the course is bad but because the road to becoming a good trader is long and you need to work very hard.

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  10. Overall it seems like a person could try out some of the trades they give away for free and spend 6 months to a year paper trading in order to get a feel for the rules and action accompanying each type of trade. ToS has a decent paper trading application and it is free. It is not free from artifacts such as unreal slippage and fills but, hey, it costs nothing to see if the overall trade seems to work before risking a dime.

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  11. All Non Sense and scam thing.. dont go for it..

    Like I expected .. end of their 2 hrs webinar they will pitch about the Training Course that is costing you $ 5000/- n u get discount of $1997 for wasting your time. They will say this is limited time offer .. n their webinars are there 24*7.. ha ha ha.. cm on guys.. talk logic –
    this is really raise question that firm making millions of dollars every day charging you for education –
    if you really have such wonderful strategies why are you charging so less.. n if you really not looking for money.. make it free.. run contest. n get the winners employed with you..

    All Non Sense and scam thing.. dont go for it..

    Reply

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