SMB our-interesting-times-of-risk

L

Lucias

I enjoy reading the SMB blog and try to stay up on it. I try to be fair and balanced because I never know where my next opportunity might come from. But, this lead-in is a bit over the top...

Prop traders are the truest of entrepreneurs. We eat what we kill. We do not have clients. We do not sell anything or organize to sell something to someone else. No one in 13 years of trading has ever called or emailed or IMd my desk with a trading tip. Our pay is based solely on our trading skill and not gaining information that others do not have

http://www.smbtraining.com/blog/our-interesting-times-of-risk

It sounds like they claim they don't sell anything but they do sell their training and other services. Logic dictates that this implies they aren't prop traders or the statement is a false. In fact, this post links to a page where one can buy options training.

So, has anyone taken the options training? Does it teach you market making or other non retail strategies? It seems to me anything beyond simple directional options trading is best left to the specialist.
 
I can tell you from recent, first-hand experience directly with Mr. Bellafiorre that SMB's business model is focused largely upon training/mentoring income.

My personal impression, formed after a one hour personal meeting, was that live trading income in terms of profit splits or trading commissions was - and this is my personal conclusion; an afterthought.

I have very strong negative personal views about vendor programs that blend "live trading" with training in terms of ethics, fiduciary responsibility, and regulatory compliance. We are starting to see NFA complaints regarding these practices, and indeed here in ET the "Richard Regan Pro Training" thread here in the educational forum neatly summarizes the problem: that under the auspice of "training" a prop firm demands a larger deposit from a client, and that larger deposit eventually gets absorbed by the vendor under the guise of a "training fee".

We have also started to see regulatory actions regarding CTA's who also decide to offer training; namely, that a CTA who offers his personal investing track record to a trainee misrepresents the performance expectations for the client trainee. In other words, under the auspices of a private prospectus offering to a qualified investor who enters into a limited liability partnership, the CTA has power of attorney and sole responsibility for placement of capital. In that venue, the CTA's track record has relevance because the CTA alone is responsible for investment decisions and the entire framework for the partnership is designed as such. With a trainee client, of course, the CTA has no control over ultimately what investment decisions and actions that the client makes.
 
Quote from Maverick74:

Bone, I'm really curious, what brought you two together? You two seem like you are in different worlds.
More...

Completely different worlds, and that meeting affirmed it. I was approached by a third party.
 
I was about to trade with their partners T3 live back in spring (they share the same office). They "teach" you How to read the tape and they charged a very hefty sum for that. But the thing is that Tape reading-equities scalping is a dead game for humans. They Had 50 or 60 students back then and none of them made money. Their monthly turnover is pretty big. The SEC's action against Tuco caused the rest of the equities "prop" industry to change. The largest fallout from Tuco stems from the fact that it became much harder for firms to take in deposits from traders right at a time when day trading lost its competitive edge. In order to compensate for the increased risk and diminished profit margins, many day trading firms have started “selling” their trading expertise to newbies wanting to trade with the firm.

I personally have a very bad opinion of those so called "equity props" in NYC that ask for a deposit.. They have nothing in common with those TRUE futures props in Chicago or those TRUE prop in NY like FNYS or Susquehanna. I think that putting 10k from your own pocket only to get a 0,005/share and paying yourself the charting/analytical softwares, the SEC and exchange costs etc only to get a 10 to 1 laverage is a stupid proposition.

BTW: SMB and T3 are Not market Makers.
 
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