SMB Capital Review
- Quality of Education
- Price
- Credibility of Educators
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.
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
SMB capital is not worth the investment. Take your money somewhere else
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.
Can you elaborate more the reason pls? thank you
Trade often, trade small and keep a diary of why you entered and exited the trades. You will find the methods that will consistently work more often than not, r and those that will not work often enough.
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
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.
@Bill can you please give a few names of these people? I would like to converse with them about this.
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.
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.
if you are a trader making 7 figures or 8 figures with SMB then why would you want to stay with them after 2 or 3 years of making that kind of money continue to pay them their %–especially if you are making that consistently trading options as you would have more than enough money to trade on your own after that and keep 100%
They take 50% others I’ve found take 20% even 10%
how many have they trained and how many of them are working for them making 7 figures after the mentorship.
It’s irrelevant. The ones that are making 7 figures are the ones that learn the most, loved feedback and followed the playbook
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.
Sounds like a honest and well thought out response.
Thank you and sorry you had to pay the price for us to know what we would be getting into.
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
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.
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.
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.
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.
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..
I went thru several of their courses five or six years ago when they were live and a lot cheaper. I had done several others including one from T3 Live and SMB was far superior. I liked the fact that they realized everyone had different personalities and styles, and helped you find your strengths and what worked best for you. I was surprised that both Mike and Spencer were very accessible and always answered my questions and emails.
I am not surprised they now apparently offer these classes in taped form as I am sure as often as they were doing them it was time consuming. At today’s prices I doubt I would have taken any of their courses, though. However, if you have a large trading stake to begin with and want to get a leg up on day trading, and are willing to put in the time, their courses might be worth checking out.
I bought their DNA Trading Course for $1997 this year. It’s okay but MOST of the content is the same as the content they post on YouTube for free.
Here’s the tough pill to swallow (or punch in the face): A month later I got an email from them offering their second course called The Winning Trader program where they promise “not to hold back” and teach you their 19 strategies. It also costs $1997.
I literally thought I would get everything in the first course and wouldn’t need to buy the second one to learn their strategies. I feel like an idiot for trusting them.
A second issue I have with their DNA program:
They offer a call every morning with stocks you may want to play for the open or for the day – here’s the catch: it starts so close to the opening bell I don’t have time to plan any trades. Other services I have tried send the daily stock picks out by 9:00 AM – I’ve had to go back to the service I was using.
To conclude: The person above who mentioned that you can get everything you need for free on YouTube is right. The stock picks they offer are pretty good but you get them so late that it leaves little time to plan for the open. I think the SMB founders are smart and I trusted they would deliver – the second email to pay for yet another course has shifted my opinion of their integrity. I hope this post helps someone save $1997.
Thanks Mark your post has made up my mind and I will not be purchasing their course due to the back offer sale of another $1997 super course, that bait and switch sales technique is a turn off for me.
I give the DNA program a 6/10
The problem is that you can’t duplicate their trading ideas, as you do not have the in house technology.
In saying, it has benefits and I have picked up good trading concepts, especially on the mental side.
I am not sure it was 100% worth the price, I just find the whole thing a bit confusing
thank you Mark for your feedback and I won’t be purchasing their option program for $1997, because this looks like all they do is upselling their programs, well who is trading then? I will stick with YouTube free content.
Can you tell us more about that course. What about their SMB Scanner? Is it worth it, because right now they are offering lifetime access to it?
If SMB is such a good trading firm generating very good return, why would they need to have this “training course” as a revenue source, I mean does Goldman offer any training course for outsiders for a fee?
This is the best comment in here! If they are selling it that is where their money is coming from, not from trading.
Good point. I was thinking of getting it. Not any more.
I watched the two hour video today and I did not like the fact that they turned on a timer so I have to decide by midnight.
Just watched the webinar/ recruitment / sales promo.
It is amazing how someone can talk for two and a half hours without saying absolutely nothing. 😀
The original price is $50,000 but only for today and just for you its $1993. if you order now because your money won’t be good for us in 3 hours. 😛
Okay. So from the comments I read, their plan is to suck you dry upselling and keep upselling courses for years on you. Wasting your time and money. If for some strike of luck, you become a successful trader, they will leach on you for years, but it seems like most people will end up losing time and money only to blame themselves for not working hard enough? They say that if your system is not simple enough for a child to duplicate, you are not doing it right? yet they will blame you for not working hard? Smells BS.
My experience of this course is that it is genuinely lacking in REAL substance. YES–it gives you an overview, but its not educational nor is it usable in real life trading. You have to be a part of the SMB culture to understand what they’re doing. This “course” or more specifically – an abritatry selection of YouTube videos or poor quality recordings from 2011 – is am absolute ripoff with the $2000 price tag being a joke, My advice to anyone looking for REAL education and mentoring is to look elsewhere before giving these guys any of your money or consideration. They have REALLY disappointed me and I have nothing but contempt for the snake-oil salesman methods they employ to suck people in at a premium and
Thanks to everyone who has shared their experience with SMB. I have decided because of your comments to not purchase the $2000 course
I did their DNA training. A lot of redundant information and old videos.
A lot of missing information as well. Example « tape reading » is mentioned but not enough to actually learn from and if you want to know more, it’s another upswell.
Also, at no point in time did I see any track record.
So I would certainly not sign up again and don’t recommend it at all.
wat alternative would you recommend?
any good traders to follow on youtube?
Thank you all for such great feed back. Any other specific sources Youtube are recomended?
I have been at this off and on for 20 years! I will say this, put your money into a simulator or join a broker that allows you to use a simulator (Paper trading doesn’t work well, in my opinion, because it is delayed). Youtube has a lot of information for free to get you started. If you put the time in, you can become a successful trader, but it takes work and time! The key is to keep your losses small; I know everyone says this..but believe me, it is a big piece of success. I have blown up two accounts over the years…very painful.
Mike,
Thank you for the great advice. I am almost 1 year in and have lost about 30% of my account but I will keep searching for more education to improve my trading and keep my losses small.