We're not trying to build out traders who make $100,000 a year. If if that is your goal, don't come here. That's something we're here for. We're here to build out traders who make seven figures and more.

We just focused on training Traders from scratch and giving them the best chance to succeed through training through Education and Training can come to us and ask for more capital. And you know, when you're here for a long time, you can get up to 20 $30 million in in capital to trade. Uh, on special situations. There are traders that can get up to $50 million on a special situation when you're a prop.

Trader If you're down a couple hundred, you don't think of it as I've lost a couple hundred, of my money I Don't think of it. it's not out of my bank account. It's a draw down. It's a part of the process.

What if I told you that day trading can be a real job. You get paid to learn how to trade. You get to be trained by seasoned Traders on Wall Street and your boss will even give you Capital to trade. Well, I'm not joking.

I'm going to be visiting a very well-known proprietary trading firm here in New York City SNB Capital. In this episode of The Humble Traders podcast, we're going to learn from Mike Bella the co-founder of SNB Capital and Jeff Holden the head of Trader development at a firm. You're going to learn the comparison between Prof firm trading and Retail trading, what kind of mentorship they provide for Traders and valuable advice from these coaches who developed successful seven and even eight figure. Traders Ready to learn with me today! Remember to hit the like button down below and join me on this very special conversation at SNB Capital Let's go Welcome to the Humble Trader Show We have a we have two very special guests today.

Welcome Mike and Jeff from SMB Capital. Thank you thank you thank you for being on show. Thank you for to York Oh yeah yeah we're in Midtown Manhattan You guys have a hell nice of a view here. Yes, we are very.

We are very fortunate and grateful. Okay Mike um everyone knows you as the co-founder of SNB Capital U. So if you could tell us and the audience a little bit about where you got started, how you found trading, and how you found it S&B So I was trading I traded at a prop firm for for a long period of time and then I had this crazy idea that uh there was this I don't know if it's crazy idea but I saw something at least to me that was so clear there was this very clear need in the marketplace that for some reason just it just was very clear to me and that was there needed to be better. Trader Training for newer traders that when I started the market was a lot easier.

then the market was getting much more complicated, much more complex and there wasn't this transition by firms to keep up with the training that was going to be necessary for new traders to make it for New traders to have the best chance to succeed. There was just just this huge Gulf that was not being fulfilled and I was just watching Traders fail at a much higher rate than when I started. Oh okay and so I don't know I just in my head it was just like so clear to me we need to fix this problem and if somebody fixes this problem that that could be a business that we could, somebody could grow a firm off of that idea. And so I just got in my head and it was just so clear to me that I needed to do this that this is something that I could do that.

This is something that I would enjoy doing that. This would really work and I just remember nobody else thought that, um, lots of people around me they did not see what I saw right. Lots of people I brought this up with did not believe that this was a very good idea. You know that that I would just start this prop firm you know, essentially from my apartment or you know, my trading desk at a at a firm and and build this new entity.

You know all these their firms were established and had lots of resources that uh, obviously I didn't have at the time and so. but it just was just so clear to me that I could just see these Traders struggling I could see way too many Traders failing around me and I could see the problem that firms and prop firms and Retail Traders and independent Traders were having in this new market. Um and so you know when I when I Shar this idea. there was a lot of push push back even when I went to my now partner Steve Spencer remember saying hey, why don't we do this, why don't we start a firm and why don't we focus on training new Traders and remember him being like can you just leave me alone I just want to trade You know, like go back to your trading desk over there, leave me alone and I'm going to go trade apple and so um, but I don't know I just it.

just it was just so obvious to me that this needed to be done. So back then a lot of the prop firms that everyone, well that was on the street they were not. They don't have a structured Uh program to train the Traders they had a training program that was outdated. uh-huh I see that that was not keeping up with the changes in the marketplace, the complexity of the marketplace.

and and so I I saw this opportunity that that was there and so uh, I just started I just started SNB Capital I just started building the training and recruiting Traders and working on the processes to train Traders better and uh I dragged Spencer along. Eventually I I coaxed him into helping me as well and we just focused on training Traders from scratch and giving them the best chance to succeed through training through Education and Training and and working on that that business model and uh I Remember doing every single job is at the firm you know I answered the phones I answered the emails I did all the training I we did all the trading I did all the admin I did all the back office stuff. Um, you know everything I did every single job at the same time. Yeah, cuz that was the very beginning.

just you and Steve Yeah, it was the very beginning. How many years ago was that? Uh, we started in 2005 the end of 2005 and uh I just look back on it and uh I've been asked about this and and I think of it as really one of the stupidest ideas I've ever had in my life to think that I could start a proprietary trading firm. um I just I'm not sure how we ended up doing it I it was really hard I I don't know that I'd go back and work that hard ever again. Um, but uh, it worked out, it worked out but it was.

it was still was not a great idea. Um, well I mean it ended up working out. but sure. I I was I think I was naive about how hard it was going to be.

It's been really hard. it was really hard, particularly at the beginning. Uh, you know the doubters had some good points. Um, but eventually we we figured out how to overcome everything and and have some good luck and be able to attract some really great people.

Um, but the reason why it worked is because we really did just focus on solving this problem that existed in the marketplace and being totally right about that. That that is a really good business model. finding good people who really love to trade and training them really well and backing them and giving them resources. That is actually a really good business.

I See yeah it must have worked out really well because you guys have been doing this for 20 years now and have created some of the top traders that we see on social media. Yeah, um so where did you step into SMB Capital like what's your role here Jeff Shifting to you now? Yeah, so probably the story of how I got here is a better better story to start with. Okay, um I was I got into trading I had some interest in it, had some people who talked me taught me a little bit about it and very early on I realized and one of the things that they taught me before I had done anything professionally when I was just trading independently was that you have to find an edge and once you have an edge in the market, then you can actually have a shot of getting up that development curve. So the first thing that I learned was find an edge and I found an edge and I was trading it and looking back now it was like a very straightforward Edge but it was something that I was like okay this is great I can see the path to being a successful Trader and as I was trading that that very specific Edge it occurred to me as I started looking around and and learning about other Traders how different it was trading one Edge versus being able to trade five or six or seven different unique edges and how I would sit there and make one or two trades a day and felt pretty good about that.

That was nice. Um, and then I'd read about somebody on social media that worked at a prop firm making you know they were looking at eight different stocks and trading three different edges that day and it occurred to me that if I was really going to do this, I needed to do it with the right people around me and I really needed to challenge myself to see if I could put myself in a position to grow as a as a Trader and as a person. So I was looking around and and actually took the training that that Bella talked about developing. um and that really opened my eyes to what trading could be.

and about six months later I had emailed Steve you know I went in and if they said in the training, do one Playbook a day I would do two playbooks a day if they said uh, watch tape for 30 minutes I'd watch it for an hour like I just took it on myself to whatever they said to do in the training I was going to do that plus more and I was going to try and do that as well as I possibly could. and I posted a lot of things and sent Steve a bunch of emails I think every day I sent him my Daily Review for like six months. Finally I just emailed him and I said Hey listen I think I'm I'm seeing some growth I'm seeing some of these other edges that you guys are talking about but I need to be there if I'm going to really be great. Um, he was nice enough to let me come in an interview I met with Bella I met with um, you know a couple other people at the time and wound up with an offer at the firm.

This was about, uh, this is my sixth year so so that's your official transition from retail to prop trading and it really was about being around people who are finding unique edges in the market. not just one Unique Edge but unique edges in the market and having that adaptability to trade different markets. As Bella said, since I've been here I think I've seen three or four different markets like big Market regimes. you know we had extreme volatility during Covid.

you know we get ETS that every once in a while we had that grind up bull market before that, you know? then we had the bare Market Uh, last year and so we've seen these different Transitions and the ability to trade multiple edges gives you the opportunity to adjust your trading as a different Market occurs. Yeah, that really was what drove me into being a prop Trader Um, and then once once I got on the door it was like the people here are amazing. Um Belle is right that the talent here is incredible but more. it's the type of people that that really Thrive and and succeed here.

they're just good people. They're really good people. They're the type of people you want to be around more. Um, the type of people who are really going after something great and it kind of, you know, has me had me more interested in wanting to get better and better and better and then also looking around at the other Traders especially the the junior Traders and seeing how could we help them get to a point where they could really help senior Traders grow.

So there wasn't really a role I Don't think it just sort of started evolving over time, particularly during covid Um when everybody was remote. it was like we weren't able to do the same check-ins. it wasn't We weren't able to have the same conversations and so I just started reaching out to to some of the more Junior traders that I knew and some of them that I had even recruited and we just set up weekly calls and so we were talking about their progress. We were, you know, really trying to help them realize the resources that were available even if they were completely remote of what's going on at other places at the firm.

What are other people working on? Um, when all that started to come together, then we started to come back into the office and I guess this sort of Trader development role organically kind of occurred. Um, and so now I get to work with these people and and these amazing traders that are at various points in their development curve um, on a more regular basis. Which is really fun for me because I see what they're doing and it's like for a lot of them. if when I was at that point in my Trader development, if I was doing that I feel like I feel like it would be a totally different experience for me.

Um, and so I hope that you know in a couple years as they continue down that curve, they're going to really shine and help take SMB to the next stage and the next level of our growth. So let's take a step back. Um, at a high level. What do you guys do here at S&B Capital for Traders And in the trading industry? So we trade stocks, we trade equities, we trade a little bit of Futures Uh, we trade as both discretionary Traders pushing the buttons Okay, and as automated Traders And so when you come to a firm like SMB you trade multiple products.

You can trade in different ways. So uh, there are some people out there that are purely discretionary. They just want to make up their own minds and push the button. Okay, that's a legacy way of making lots of money in markets.

and there are still people that do that. Uh, there are people who we call hybrid so they want to use discretion. but they want to use technology to alert them to very specific setups. So there are Traders on our desk who aren't pushing any buttons unless technology fires off that hey, this is a setup that is worth you looking at.

This is a setup that's backed by data that is worth you taking. and then the other extreme are automated Traders or quantitative Traders So rules in rules out. You develop a particular strategy, you back test it, you forward test it, you run it live and that's that's. purely rule based.

so Traders can do that as well. Okay, and you provide them the technology I ultimated Traders and Qu Traders here. Yeah, so you have the technology and the capital to be able to do both. Okay, and we, and by the way, people see that so sometimes there there may be independent Traders out there who are, uh, they're very systematic in the way they think and they they start trading as discretionary Traders And there's some good in their trading.

but there's a lot of bad and the bad is way more negative than the good. Yeah, they're losing money. random trade setups and they're like I'm smart I don't get it like I Have some pretty good ideas here, but when we all put it all together, I'm losing money and so some of those people are really better situated for being more systematic Traders for being more automated Traders for really diving into technology and uh, only trading when there's certain conditions in Marketplace Uh, and so that is something that we see on the desk. There are people that you know.

There are people on our desk who if we only allow them the opportunity to be discretionary Traders they would fail. Oh okay, but if we give them the ability to use technology and be hybrid Andor automated, they could be some of the highest earning Traders at the firm. And so that's something to think about if you're an independent Trader Who's very systematic in your thinking? Maybe had an engineering background, maybe have a really good math background, and you just can't figure out why you're not making money? Well, maybe it's the type of trading that you're doing and maybe there's some resources that would really help you. And one of the things that's interesting is we were actually in this room a couple days ago talking with one of our developing Traders Yeah and he started out thinking that he just couldn't get up that curve as a purely discretionary Trader And as we were talking about his trading and we've been observing his trading for a period of time he started about three months ago to to put some filters on his trades and then to track some statistics essentially um, to be able to create a structure around his thought process.

In that time, we've seen this tremendous growth from him because he he is just incorporating very simple systems to help support his decision- making so he doesn't have to come in every day and say I'm going to trade this stock because I think it's going to go up or because I think this news is good. He's actually put together a structure that he comes in every day and most of that work is done for him and he just sits there and focuses on the pattern recognition part of that which really plays to his strengths. So most of the deep thinking is already done and he can sit back. And he trusts his system and he has faith in it.

And because of that, he's been able to scale up pretty quickly. Um, you see him walking around with a different level of confidence than he had before because before you could tell, he knew that he was capable of making it as a Traer as an elite Trader But he just hadn't found the way to structure his Edge in the way that worked naturally for him. And it's that balance between what naturally occurs in your brain and and the way that you're composed as a person. Yeah, with the tools and the resources that are available to you, if you can match those two very well, that's where we see the fastest growth and development across the board.

For whether they're purely Quant Traders whether they're hybrid Traders or whether they're purely discretionary, if we can get that match of your personality with the resources that are available, you're really going to take advantage of those because it's just going to feel right and you see it. He's standing up tall when he walks around. You know he's jumping in, making good call outs on the desk like it's great to see. It's fun for us to see.

So do you think you know whether a Trader is completely brand new and they entered a program here or they started out as retail trading their own money and they joined? S&B Capital Do you think they definitely have an advantage here? You know to accelerate what they already know and to succeed better than they would retail like? What's the pros and cons of Prop trading versus retail trading on your own? You want me to handle that. I May I may be a little biased? Um and look, there are very good independent Traders out there they're are very good independent discretionary. Traders Out there we we know that um, if you want the best chance of success I Don't think necessarily everybody needs to go to a Prop firm but in today's markets is uh, complex and complicated and challenging as they are. I do think you need to follow the types of things that we do on a daily basis there and I think there are solutions for you to be able to do that as an independent Trader but I think you I think you need to do them.

So for instance, we're seeing people who uh, are most successful on on our desk uh in the present Market Being those who are super selective with their trades, yeah, they are using data to back up that those trades truly do have an edge. They're not just pushing the buttons when they think they have an edge that that's that's not really working as much as it did in the past. They are a part of a team. They're getting ideas from other people, They are having their ideas stress test by other good Traders On the team they are uh, getting more ideas from other Traders On the team that they can incorporate into their trading they are uh Building Technology with uh, other teammates to alert them to to to good opportunities and so you know there we're seeing.

Um, we're seeing why people are successful uh in this market and and our sense is that everyone needs to be doing that. um certainly easier to do at a prop firm because we have all of those resources here. Yeah, we have coaching and mentoring resources that quickly say to somebody, hey, why don't you stop doing that You're not making any money when you do that. like why don't we just you know, let's sit in a room like let's look at your trading stats when you do that Cu cu Our observation is that's you're losing money when you do that.

What if we just don't do that now for the next 60 days what what will happen And you know lots of times we the trader will realize I'm making money consistently again because I stopped doing that which isn't in my self-interest and so um yeah there's there's a formula to to making money in this Marketplace and whether you do it at your home or whether you do it here I think you just got to follow it I Think a big part of what you mentioned is also the accountability aspect. Um, what do you guys provide here at SNB to keep the Traders accountable that they have to follow certain rules. Risks? Um, what's uh, what's the system like here? Well, we have a risk manager and uh, you know he's the ultimate accountability you? you? You have nightmares when you start out getting your shoulder tapped by the risk manager and then it happens. You know you get into a trade and and it happens and you realize that it's more of a conversation.

You know they're really. it's really intimidating the first time it happens and it does mess with your mind to touch. But um, but there's two types of accountability, right? Correct. and the risk manager is going to tap you on the shoulder for both.

There's you're doing something that is in your self-interest We've talked about this, we've we've the numbers show it's not in your self-interest Uh, you're doing it again. Uh, so the risk manager will point that out to you. And the other thing is the risk manager will say to you, hey, you do this really really well. You got to make sure that you're putting enough risk on for this particular trade.

I See, Um, the thing about our risk manager who's great is that the conversations are not confrontational. The risk manager is not there to say you know you, you are a terrible person I Can't believe you're over your risk limits. like yeah, you know, how could you be. So that's those aren't the conversations.

The risk manager is there to help you perform at your highest. and the risk manager has very good relationships with all the Traders And the risk manager is trained really well how to talk to people who are on til and are pested um, and manage them properly so that there's a long-term relationship that's built. But the other side of that is what you mentioned of a lot of Traders have realized their best day because you know they've been pushed in the right time. You know it's really this awesome relationship that gets developed between the risk manager and the trader or even the teams where you can feel it on the desk.

When it's a big opportunity for somebody, there's a different energy on the desk, an entire team is focused on a bigger opportunity, and they're having that conversation with the risk manager. They see it coming, they know it's going to be there, and so they're talking about. kind of all right. how are you going to execute on it? There's a system in place.

It's not just I'm going to trade this bigger. Please let me go play. There's a whole system that goes into place. There are checks that they go through all the way through to make sure that they're allocating risk appropriately.

They understand where you know that trade's probably wrong and they really need to pair down the risk. So it's really this beautiful thing of that Bella is mentioning of. There is that other side of it too where they can realize their best days, their best weeks, and their best months by being pushed. Be out Yesterday made $10,000 on the open and an opening drive trade.

He's on a team with Swang who's one of the you know great traders that have come through the doors at S&B capital Okay, hard to be better than him. um and Swang immediately is talking to to Bow and in real time saying could you have been bigger you know it's a $110,000 winning trade. Great idea, could you have been bigger Swang made more than him on the on the particular idea and then I didn't know and then I went over and I was talking to bow and apparently I said the same thing to him which is could you have been bigger Like immediately our conversation is great. Great job! Yeah, congratulations you made $10,000 on a particular trade.

All right, good idea. Do you think you could have been bigger? Where do you think you could been bigger And and he actually in this case was like I couldn't I couldn't get the liquidity. Uh, he was automatically thinking about whether he really could and reviewing his trade right away like that's the mentality that goes on at a prop firm which is great that you had success. Great, that made money.

How could You' been better? Let's think about that and we're all pushing you to to think about that responsibly. We're not just saying get bigger. Yeah, we're saying get bigger responsibly I See, get bigger from what you do best. Yeah, from the best setups that their data as well.

So he touched upon. um, you know, let's say that Trader does make $110,000 and he wants to push further. Obviously that requires them to have even more Capital to trade with. How much money do let's say for a new Trader versus a protrader here.

how much money allocation do they have to trade with? Do you want to answer that? Why don't you answer I'll answer that you can answer from the money part and then I'll talk about the daily risk yeah number. So uh you you you are evaluated every two weeks okay on your trading and every two weeks you can request a risk bump. Uh Andor a uh Capital bump. Okay for your trading account.

If if you're having success and you think you can trade bigger in a particular strategy, you're going to Ping the risk manager and you're going to say hey, I want a 20% bump in this particular strategy. Uh, here's why. here are my numbers and you'll create a business plan on that strategy with with the risk manager. Okay, and then when you're doing well, you're continually talking to the risk manager.

and then the risk manager will ask the partners hey, is that okay and you know a lot of times we'll say sure, Okay, um, but we're constant L Evaluating your trading, you can come to us and ask for more capital and you know, when you're here for a long time, you can get up to 20 $30 million in in capital to trade. Uh, on special situations. There are traders that can get up to $50 million on a special situation, so you have that ability to really put on a lot of risk and a lot of capital when you earn it. Yeah, but when we start out, we'll start Traders You know, at a much lower number and we'll focus more on their daily stop, right? And we'll focus on their daily stop, which is essentially you know where you're stopped out on the day.

Um, we'll focus on that because when you're starting out, you know it's easy to think that you have Edge in a couple different things. It's easy to to not realize how big of an edge you have in one thing and actually how small of an edge you have in another. And so you're going to bet essentially flat across all those various sizes of edge. Um, it's something we've gotten away from from pretty early on, but we still see it, right? So when you're trading three different setups, maybe you have Edge in one, and maybe you have extreme Edge in one and maybe you have a very small amount of edge in in a second and then you actually don't have Edge in the third.

Well, especially early on in Traders development you'll see linear bet sizing across all three of those I see and then you'll see a flat P&l curve. And the reality is if you just bet really big on one and didn't bet on the other two, you would be perfectly fine. So the risk number is is going to start pretty low for Traders until they can show yes I know how to bet responsibly essentially. So um, a new developing Trader on our desk just got his uh, second or third wrist bump you know I think last week and he had struggled for three or four months to get his first wrist bump and then it was just like boom boom Boom like right after that.

The only thing that changed was he really was betting much bigger in the spots where he had Edge Yeah, and really, almost not betting at all. like less than 5% of his daily stop. which is like an insane, insanely small number in anything outside of his best setups. So we expect that he'll kind of continue to grow that that that bet set that bet sizing for those really good setups.

and he'll keep that other bet sizing really, really small as he tries out new edges as he looks for new edges and it wouldn't be surprising over time for him to find a new Edge And then all of a sudden he's betting two strategies pretty big and then the other one stay really, really, really small. But that Dynamic bet sizing is becoming way more important to us, especially early on in the development because that's where people are getting the risk bumps. The fastest is when they're really efficient about their Dynamic bet sizing. Is that something you teach your training trading your Traders on? Uh, here you know how to analyze all the data you have, how to know which ones to size in more, and how you scale up eventually? Yeah, Lance was really big at helping us get that concept and put structure around that concept when he started helping out the firm.

Um, like a year and a half ago I think was when he came in. So L came in and and it's something we had always always kind of known and it's something we've seen our top Traders do where they bet really big, where they have Edge and really small Everywhere else we've needed to put a structure in place so that occurs across the firm and so we will have conversations every month of where are you actually making money in your trading because sometimes you can get these outside variances in in both directions and it can cover up a lot. Um, so we really are specific about our edges and and we really do track our specific edges, We'll use something like Trader view to be able to see specifically: where am I making money, what types of catalysts and setups and then specific trades am I making money in what style of trading am I making money am I Am I scalping and I'm always making money when I'm scalping, but then I'm losing when I'm trading Big Ideas You know it might look like your p is like up to a little bit. kind of.

you know, flat. Yeah. But the reality is you have so much Edge when you're scalping that why don't you just scalp all the time I Feel like we have that conversation every month with somebody too? Yes, I won't to. Um, but it's it's uh, it's it's cultural.

Uh, which is, look when you come to a prop firm like SMB we're not trying to build out and I understand this is a lot of money for a lot of people. Um, which which is great. But just here, we're not trying to build out traders who make $100,000 a year. If if that is your goal, don't come here.

That's not we're here for we're here to build out traders who make seven figures and more. That's why we have all of these resources. And so culturally, when we see a Trader not put on the size that we think he should be putting on, yeah, that is an insult to our culture and our culture is be as good as you can be and right there while you did did make money, were you as good as you can be? And you don't have to get there tomorrow? But you need to challenge yourself as to when you're actually going to get there. and how there was this awesome comment in one of the monthly reviews that when you have Edge in the market, when you have real Edge in the market that you know you've back tested, you've studied, um, you have to be ruthless with the risk that you put on.

Yeah, because you have to take full advantage of that edge responsibly responsibly. But yes, but you have to be pushing yourself in that moment. You have to be challenging yourself because if you're not and and responsibly is is very important. Yeah, But saying trade big to trade big We're saying trade big when you have great Edge when you have great Edge Yeah and that's really something that it helps Traders get up that curve and get that confidence and walk around.

you know a little bit taller and and they're more engaged with other ideas because once you once you realize the potential of one Edge and you really maximize it then all the other edges that that you've been studying, they kind of come up faster. And people once you understand how to scale an edge too that's a skill. and then you can apply that skill over and over and over to different sources of edge that maybe a junior Trader is coming to you and saying Hey Listen, I've been studying this or here's here's five examples of this trade: Hey, do you want to work on this together and you're like, yeah, that I see that too I've seen that I Understand it. Let's find the edge in that if you already know how to scale that edge, you're going to help that Junior Trader develop and they're going to help you find another.

Edge And that's a really exciting thing. and I Know you both touched upon uh, scaling that risk and uh, obviously they're trading the firm's money. How much do your Traders You know, how do they actually make their own money? How much do they get paid here? Oh, okay, how do they get paid as well? Uh, you get a yeah, you get a percentage of your profits. Uh, so depending on how well you do, you start at 50% and you can get bonused up to 65% Uh, if you do really well.

Um, so that's yeah, that's available for you. That's a very, very nice structure actually. Yeah, for Traders who make 7even figures eight figures. Like you said, yeah.

and they aren't risking their own money. Yeah, it's a money and uh, it's uh, it's easier. Uh. I've traded my own money at times.

and when you draw down at times, it's very different. When let's just say you lost $100,000 in a month and it's your money, you look at that as I just lost $100,000 and where I'm from. that still bothers me. Yeah, okay.

I lost. That's like I've it's out of my bank account I lost1 $100,000 I'm I'm thinking about that when you're a prop. Trader If you're down a couple hundred thousand, you don't think of it as I've lost a couple hundred, dollars of my money I Don't think of it. It's not out of my bank account.

It's a draw down. It's a part of the process and you know that the bumps come and and and that's okay. and so I think it's easier mentally to just say. all right, uh I'm going to just keep trading and I'm sure I'll make that money back and I'll be I'll I'll continue to be able to trade big if you've lost $100,000 your own money A Lot of times the next periods of time you won't trade that big because you're fearful of losing more money.

Yeah, and a prop firm? you kind of. It's easier to just keep doing the same stuff and as as a firm here, let's say you do have a Trader who is who is in a in a streak of draw down. We have some of those and how do you help them get over that? Yeah, so it depends on the trader. Yeah, so we had, uh, we did very well in 20 and 21.

Um, and and 22 the first part of 22 I mean really, really Well, That was a lot of fun. Traders Performed extraordinarily when the market changed. when the FED started introducing rate hikes, there was a different Market regime and we tried really hard really quickly to explain to traders that this was a new market regime and we needed to trade strategies. What worked during 20 and 21 and parts of 22 was not now going to work in this new regime.

we were going to have to short a little bit more not buy pullbacks that wasn't going to work. Lean on our shorts a little bit more. Uh. and and we thought the market would would pull in significantly because of that.

and so uh, we had traders who had draw Downs Yeah, Uh, because the market was different. Yeah, had been. you know, just stars in that high volatility Marketplace But now in a interest rate environment that was Rising with uh no Clarity on when interest rates would stop Rising you you had a completely different you had a completely different Marketplace and completely different market and so you had to change your your type of trading. And so we had traders who, uh, who drew down and so uh, couple of the traders who drew down.

We needed to get them back to being consistent. Yeah, uh and two Traders I'm thinking about uh specifically these they drew down a lot. They drew down over seven figures. um and we actually had them start working with Lance on a very specific entry and exit system that would allow them to be more consistent with their trading.

We Chang the strategy like we we when people aren't doing well, we don't sit around and Pat them on the shoulder and say things are going to get better. They're not going to get better unless they change. Yeah, they have to adapt. They have to change what they're doing.

They have to trade things with Edge buying pullbacks where they made millions of dollars with in 20 and 21 and 22 now we're not was not working and so we we pointed out like here are the very specific ways that you need to change. Here are the very specific entry and exit nuances to that you need to adapt that we think will work with for you that you need to incorporate. um and so we did with that some some other Trader I'm thinking about needed to stop trading options so much for lots of different reasons. um but but the the secret sauce is getting guys to be taking the strategies that we're working in this different Market regime and not just do the same thing.

Dr Ste Barer wrote a great post about this recently about how uh, traders who are trading momentum and expecting to make money the way they did in other regimes are going to continue to lose money. Yeah, if they don't adapt because when volatility is low like it is now or lower like it is now, certain strategies don't work as well and you and you want to be more targeted if you're going to use those strategies at a minimum. Yeah so so during these times where you are helping the traders who are know, struggling, do you? We talked about risk bumps when they're doing well. Do you lower their risk when they are kind of trying to figure out uh, new strategies to fit the current market environment? Yeah, it's it's like starting a new yeah just because you are a star.

Trader In another Market you should prove that you're a good Trader in this this new market. Um I Think one of the things that we could have done better at the firm was I in a theoretical en environment and and sort of in in in the best case scenario, as soon as the FED started raising rates oh we should have just cut everybody's risk back to as if they were beginning traders that that would have actually been from a firm's perspective the right thing to do and just say this is a new market. Prove your Edge in this market and let's let's build new businesses. See that market.

Uh, we didn't do that and so some of the Traders Definitely Drew Down Uh, I would do that differently. Um, if I could. Yeah, but yeah. I mean risks get cut and there's more of an emphasis on being consistent.

Again, there's certainly more help. uh, we provide. Traders Like sometimes we have to provide amnesty. so sometimes the trader down a lot of money.

Uh, and they wouldn't necessarily make money until they made back all the money they were down And we'll say to them, you know what if you make money this month, we're not going to pay you out at above you know, 50 or above, but we'll pay you out at 20% and you know we'll You will make some money as we're going along and we'll work this off together. Yeah, so we'll do things like that, but yeah, it's just be consistent. Make money in this new market, find your edges and we'll build from there. You'll hear people talk about a draw down Playbook A lot for a Trader that's in a draw down, they'll have a specific Playbook and it's really kind of safer.

It's yeah, it's really focusing on what is my Edge in this environment right now and you'll see the specificity that occurs because even though it's not your own money, you know we're We're on the desk. to to make money, we're on the desk to be competitive. We're on the desk because this is a place where the person next to you is a high performer and the other person next to you is a high performer They're Elite level performers and the type of people that do well here just don't tolerate coming in and not performing well. You just you can't it? It's just in your in your blood, you can't really tolerate coming in and not being at that level.

So you'll you'll figure out how to get that draw down playbook in place which is I'm only going to focus on my very specific edges the top trades for me that are working in this environment and I'm only going to allocate risk to those once. I get my rhythm back once I get a feel for the tape once I recognize that I'm trading with consistent Edge again. then I can start to bring those other strategies back online, but you'll see that a lot and you'll hear that discussion a lot. For anybody that's in a draw down I'm just, you know I have to get to my draw down Playbook And it is that like really specific version where you're you're just letting the market show you opportunity.

Yeah, you're You're showing up every day, You're still working the system, the process that you have for putting yourself in the best position possible to make money every single day. But you're just waiting for those really key moments that that show up. and even as the market environment shift, those moments still tend to show up. You know, we saw one even yesterday into today with the big gap I mean that was an environment that's a Playbook that not a lot of Traders have been able to pull out for a period of time, but they were able to do that last night into today which put them in a really good position coming into the day today.

Jeff As a mentor here for a lot of Traders here. What's your relationship like with them working with them every single day? Yeah! I I Shy away from the word Mentor because we have Team structures and a lot of the Traders are actually learning from senior Traders on their team. Um, what I get to do is work with Traders you know as as Traders especially the developing Traders Um, what we really want to do is by the time that this new developing Trader comes through our doors and they go through their junior internship and they go through the senior internship and then they're in that new developing role, We want to see them start to grow. We want to see them hit that development curve and really accelerate through there so that by the time they get on a team, they can really add a lot of value to that team.

They can have really good relationships with the other people on that team. even that bring good ideas to a senior. Trader So a lot of what I do is work with them early in their Development Career right? They're early in their trajectory of growth and development and it sounds simple. But a lot of what we do is focus on basic skill development.

So when we talk about that, we talk about building systems, right? So um, I think Atomic Habits is a book that that a lot of us have read and I think there's a quote in there that says you fall to the level of your systems essentially. So what we're trying to do constantly is help Traders develop systems so that they can show up every day and just focus on their process, focus on their system that they're executing. so it you know. A good example is this group of three developing traders that, um, all of them just got assigned to teams or just started working with different teams.

Before that, they had kind of needed a process in order to get to that point where they could earn the spot on a team. So in order to do that, we talked with them about, hey, when you come in every day, what's the first five things that you're doing they started looking at that and they actually came up with a Unique Edge So they can start the day earlier in the morning and they can do five things that really matter to them before they even walk in the door. So it's really exciting for them. And from that, they were able to B build a trading edge around that and then able to capitalize on it.

and they've been able to scale that edge up as well, which is pretty exciting. Um, so a lot of what we're focused on is really just Building Systems for each specific Trader or even a small group of Traders So they can just fall into a routine and really experience growth there. so you know it's kind of a weird question to answer from that perspective because I don't think we view it as a one-on-one thing. It's much more of a this is the culture that we have and let's help you work really well within that culture.

We have some some amazing resources at the firm and if you're not utilizing them to the best of your abilities, Let's help you get support and make sure you're taking advantage of the resources that are available. And you also mentioned that these Traders especially the developing ones. they have a routine here, so do you mind sharing what that routine is like? Generally speaking for a developing Trader yeah you know I think the biggest the best way to describe that would be what we what we expect the the what we kind of the routine the system we create for our Junior interns. Okay, so these are these are folks.

A lot of Junior interns already have been trading on their own before they even do a junior internship or they have a strong interest in trading I Think when everybody started trading during Covid, you know now we have a much smaller percent of the population that's still trading. but it exposed so many people to trading and and trading ideas and generating trade ideas. So that was an exciting thing because most of the folks coming in from a junior Internship have been trading on their own, so they understand understand the basics of trading, but it's really creating a structure around that. So they'll start the day at 7:30 they'll get into the office 7:30 8 at the latest 8:45 We'll go into a Trader development meeting and we'll talk through the specific things, the specific trade ideas we have on the day, and we'll cover it from the perspective of covering the Catalyst what's putting that stock in play? Covering the setup that that stock currently has.

Usually that's a combination of the higher time frame and then even the lower time frame. Um, you know, technicals. And then we'll talk about the specific trades that they might see. So everybody that has a Playbook that is a specific set of Trades that you might see, and a lot of times it's it's dependent on the Catalyst and the setup that's going to lead to your trades I See, So just by doing that, we've hopefully set them up for the opportunity to just show up and let the market, let the let the trades just kind of fall into your lap.

Oh okay, that's what we do before the open. Yeah, that's kind of like pre-market planning every morning. Yep and it's very structured and it's gotten much better over the last you know couple years. It was very good to begin with but we've gotten better as as we do more of it as we as we focus more on it then from 9:30 to 11:00 Traders are trading and they're most often connected with one of the teams here on Discord okay um you know they're on a call, they're talking through ideas, people are calling things out.

It allows you to get that instant feedback of you know, is this a good trade? Is this not a good trade? You know? Are you seeing what I'm seeing? You know is my risk allocation too small or too much for this trade? Um those little things. They matter a lot when you're trading from at 11 o'clock we kind of get into a conference room and we do the our 11:00 a.m. meeting. That's where we break down what we saw in the morning.

Yeah and then we also talk about what ideas might be setting up for the rest of the day. So you know you're getting another touch point of feedback during the 11:00 a.m. especially for the developing Traders where it's you know they came in and they said I made this trade Maybe I made this mistake and we talk through the process that they can Implement immediately to not make that mistake again because we do everything with a sense of urgency. Yeah, and we Define that as the number of times that you'll tolerate making the same mistake that matters to you.

Okay, so if you come in and you make the same mistake five times, you're not acting with a sense of urgency to eliminate that mistake. Yeah, the best. Traders we see kind of allow it to happen twice and by the second they've implemented something so that that mistake shouldn't happen again. Whether it's a technology solution or they've got an accountability buddy that's going to keep them in line.

or um, they've worked with the risk manager to put special things on their account in order to prevent something from happening. Or maybe they're undersized right? So maybe they're undersized in a really good Edge And and this this happened the other day. Actually there was a Trader who was undersized in his Edge and he literally said to the trader next to me next time I do that I owe you lunch and it's like you know he knew he. he didn't want to let himself and I know it would hurt him so much to buy that other Trader lunch.

Yeah and so I don't think he's going to let himself be undersized anymore. You know it's just one of those things of of of having that sense of urgency about correcting issues. After that we kind of sit down and Traders will either do some Quant work or they'll pay attention depending on the volatility of the market. Um, and then later in the day everybody's back on calls to trade the clothes After the close, this routine gets really interesting.

Um, we see a lot of Traders say that they're reviewing their trading and they'll talk about the things that they did well or the things that they did poorly. Our Traders review their edges and they focus a lot on their edges and they focus a lot on their execution within their edges. so they're identifying. Did I actually have Edge in this trade that I took? Yeah, and what were the variables that allowed me to have Edge in that trade And then they're focused on their execution.

and if there's a gap in the way that they expect to execute versus the way that they did, they again try and identify that and they focus on that. and then they're sending out their daily report card to their Mentor. You know, you know, whoever the senior Trader is on the team sending it out to other people at the firm and then people are sometimes replying to those Daily report cards saying yeah, I saw that same thing or I've been struggling with this problem too. You know, let's work together or whatever.

So it's really like this process. it's so focused around Edge at every point. Yeah, and it's so focused on using the resources that are available to you. The trader responsibility is to have that sense of urgency to make sure that they're taking advantage of the opportunity when it's presented to them.

Yeah, and you mentioned something about um, they're being put in teams and they have a mentor or a senior Trader in the team? How do you facilitate that here to make sure everyone is in the right teams? And they're actually, uh, utilizing all the resources? Like you said, Yeah, So senior Traders are traders who typically made a lot of money. Yeah, um, you know they They most often you'll hear the senior Traders talk about why they want to be a senior Trader Because you know when they're asked that question, you know, why do you want to be a senior Trader Why Why don't you just want to be done trading or or not work with anybody else? Um, a lot of times it's because the junior Traders are bringing good ideas to them and the junior Traders are helping the senior Traders develop even more. Um, that's a big thing that happens on our desk. Somebody's thinking about how can I make an extra $250,000 this year on a strategy that I didn't even know about a year ago, right? So you know when Junior Traders are helping senior Traders recognize different opportunities that could exist that allows that senior Trader to really take advantage of it.

So that's one element of it. But then also, you'll see that everybody on our desk for the most part was grown because of the process that we have on the desk. so they want to kind of give back a little bit too. Yeah, so the junior Traders are very focused on trying to learn from somebody who's actually making money consistently.

and the skills that they're learning are selectivity. The skills that they're learning are how to size up in the edges that are present. The skills that they're learning is how to stay out of draw down. Or if you're in draw down, how to get out of that draw down.

how to go to that draw down Playbook quickly. You know those are the sort of things that that relationship are really about. It's a lot of fun to to listen in on calls, are being on calls when everybody's enjoying their trading. uh you know the energy is there.

everybody's having a good time. um you know I was in a call let's see last Friday and everybody was trading a really specific opportunity that they really you know had studied and practice and just everybody's having fun trading. It was a really good call to be on at that time because this is a very intense job. At times this is a very intense Pursuit Yeah and and everybody knows that that that pressure of like wanting to perform better and needing to perform better.

but it's kind of fun when you're with a group of people and you're just having fun trading. You know it really feels like the opportunities are just kind of falling into your lap and you're like cool I'll take advantage of that. Thank you for this. Oh, this is fun you know and you're coming up with new ideas.

So that relationship with the senior Traders and the junior Traders is really about just everybody doing things well together. I Think we also think about it as Traders here are running their own business. Our job is if there are there are serious people here running serious business businesses. If if you are a serious Trader and you want to run a serious business, this is a great place for you to trade.

And so when we think about Traders running different businesses, we think about what needs do they have. So Dan G runs a terrific business. He is a team leader. He's got bunch of Traders on his team.

He needs more ideas sent to him right now to improve his bandwidth and so we'll see certain Traders Junior traders who for whatever reason they're really good at idea generation. They're just shouting everything out. We've all seen some Traders like that those Traders are going to more are going to better gravitate towards team Dan because they're feeling a role. they're feeling a need that Dan has to improve his business.

And then those Junior Traders are getting this opportunity to work with somebody who's just has tremendous process and diligence to building a trading business. We we We use trading strategy and trading business we use interchangeably. Okay, so it Dan's the best at helping people build a trading strategy that has Edge We might take Shark. We may know a shark could use somebody who is really good at diving into Data to give him more confidence that a particular idea will work.

So we may identify somebody like that as an intern who could help shark. And then obviously that person is going to get this amazing opportunity to be exposed to one of the great traders in the on the the street and and their Edge. We may notice that Swang needs uh, a little bit of of help covering some of the China names which he likes to trade. We may pick up that a particular intern is very well versed in in that area and move the two of them together.

So the idea is, how do we help every Trader here Build A Better Business And what are the what are the things they need and they all need to be able to give and receive in in a really positive ways in the teams. Yes, Junior Traders have a lot to give to a senior Trader Yeah, uh, senior Traders can get a lot from Junior Traders And then obviously I mean what an opportunity to sit on a desk and hear everything. A Senior Trader is trading in real time. See all of their entries.

All of their exits listen to why they're entering. Why? Exiting in real time from a guy who's made you know some of the guys have made near $20 million Uh, in multiple trading years. Um, or seven figure a year traders to to have that opportunity really speeds up the learning curve is an opportunity you don't get uh at a lot of places. Um, so how can uh, someone interested who's a retail Trader Listening to this podcast right now, how can they join? Uh S&B Capital How do they apply? Snbc Cap.com Careers: Okay, it's really straightforward.

We we have our application up there for the for the Internship program or Junior internship. Yeah, Um, you know we recruit almost exclusively for our desk through this junior internship program. Okay, and then Senior internship. and then they become new developing.

Traders We implemented that I think three or four years ago. Yeah, just during Co we implemented it. Um, we started with Junior internship. We used to just have one internship and then you were a new developing Trader We changed things up a little bit and we started with the junior internship.

because the junior internship you're trading on demo people call them funny money or whatever you want to call them, but it's essentially a demo account, right? And it's a three-month internship. and you're or two months in the summer. But three months for anybody else that's doing it. You're exposed to the desk and the way that we do things.

And the reason why we created that was because we realized that that the structure that we have in place is something that works for us and it produces the trading results that that our Traders are generating. Yeah, but it's not going to work for everybody and we're totally okay with that. So we created this junior internship so that we can kind of give people that want to take advantage of the opportunities that we're presenting that chance they can step in and they can do everything they can to be successful as a junior intern. Okay, the traders that do that then move on to the senior internship and during the senior internship ship you're actually trading live capital.

Okay, you're usually getting more exposure to different teams. Um, typically it's a senior internship and not just a new developing Trader Because when Traders are trading live Capital Sometimes they find sometimes they find that it's really not for them. Maybe they don't have the risk appetite. Um, maybe they thought that they that they could do it, but they just really aren't seeing it from themselves.

So that that little senior internship has actually been a really big help for Traders to find. you know what? this isn't for me and I see and for Traders that that come in in the junior internship and they realize it's not for them, That's fine for Traders that are in the senior internship realize it's not for them. Totally respect that. We've actually had some senior traders that have or senior interns that have gone to do like really amazing things at other firms.

They found that intraday trading wasn't for them. Um, but they've gone and worked at different funds or they're working at actually some really impressive places now. Um, but intraday trading really wasn't for them. It's not for everyone, it's not for everyone and that's that's okay.

Yeah, because for us, for the people that love intraday trading, um, love focusing on edge. Yeah, you know we are here to do something great and it's really tough to do that when you're surrounded by people who are just kind of have a passing interest in it. Um, who aren't really sure that it's for them? Yeah, so and how long do they spend in the senior internship? Uh, for the summer internship, that's 2 months. And for anybody else, it's months.

So most of our recruiting comes from Um. between sophomore and junior year in college, you'll do a junior internship and then between Junior and senior year in college, you'll do a senior internship. There are folks that are independent traders that um Can can apply and they'll earn the opportunity to get a junior internship and then a senior internship through their application alone. We're always looking for people that are showing that trading interest.

Um, but the threshold is a little bit higher for those Traders Um, than it is for somebody who's a sophomore in college and and looking to do a junior internship with us. What? What do you mean? The threshold is a little bit different. Our expectations. Oh okay, mainly because you know if you're in college, we expect that you're going to enjoy being in college if you've already graduated.

Yeah, that makes sense. You kind of have to really have your foot in the ground and be ready to go quickly. Okay, um, you know you said something interesting I I I think I'd like to highlight uh, one point that you made. So so look lots of people who are independent Traders Uh, or maybe even a prop firm Traders Like here they they try and become successful Traders And and they don't make it.

We find that uh, if you position yourself in the right way that even if you don't make it as a prop Trader even if you don't make it as a retail Trader and you've you've given it a decent amount of time. Yeah, there are a lot of skills that are transferable to other really good jobs in finance. and so we just had a Trader who was with us uh, for a year and recognized hey, this wasn't for him. Active trading wasn't for him and he ended up getting an amazing job at another trading desk for you know, a tier one firm.

Like a you know, top-notch firm. Yeah, doing a different type of trading? Uh, we had one of our interns ended up recognizing during a senior internship that this type of trading wasn't for him and he got an amazing job. Um, but one of the things that is a real part of of what we do here is uh, if people for whatever reason are not making enough money or this isn't for them, you know we take pretty seriously our responsibility to help them transition into something else. And there there are a lot of people, it's okay to not be suited to be an active Trader Like that? that's that's not really necessarily a failure.

Yeah, trading is the hardest thing in finance. Discretionary trading is the hardest thing to do in finance. Choosing direction is the single hardest thing there is in all of finance. And to have done that for a significant period of time and to have had that experience, there are a lot of other people in finance who want to hire you becau