Skip to main content

SMB Capital at Indiana U: aspiring traders, take note

SMB Capital's Mike Bellafiore shares some lessons with aspiring traders at Indiana University in this video presentation from 2011.



I recently shared this video on Twitter and am including it here with added notes. Why? Because I follow Mike (author of One Good Trade and The Playbook) and SMB Capital on StockTwits and often recommend their valuable posts and videos to friends and fellow traders.

If you're new to stock trading, or are curious about the life and work habits of full-time traders, have a listen. Bellafiore shares his experiences, from starting out as a prop trader to managing his own firm, and engages in some Q+A (and light verbal hazing) with the students throughout the talk.

Some key quotes and highlights from Bella's presentation:

● Recalling his own transition from disillusioned law student to novice prop trader, Bella cites Drive author, Daniel Pink's advice to "do what you do." In other words, make a full-time gig out of the thing you are already engaged with. If you want to be a trader, open up a small trading account or start learning (paper-trading) with a simulated account.

● The market will always find a way to eliminate you. You can be a great trader making millions one year, and be totally humbled or see your account dwindle the next. 

● "What the hell do somebody's grades have to do with how good a trader you're going to be?" Trading is a skill (related to pattern recognition, psychology, etc.) and you must have a passion for it. Your geometry grades are about as relevant as your basketball skills. 

If you want a job at a firm, the first question Mike will ask you is, "are you trading?" What are you reading, can you talk about your trades and the rationale behind them? See first point above on starting early with a small trading account. 

● Part of the value in being a trader is that you are working to become an elite performer. When you realize your goal of becoming a successful trader, you'll find that you also have the confidence to become great at other things. You may also find that you are learning to become a better person all around. 

● If you're impatient or lose your temper, the market will seek that out and take your money. It's no coincidence that top traders like Paul Tudor Jones are in great physical condition, meditating, and guarding their emotional capital and well-being. "Trading forces you to be the best person you can be". 

● Domain knowledge of your field and reading is important, but you have to learn by doing. You need intrinsic motivation to succeed. Kobe Bryant practices harder after a loss, he's not just motivated by money. High-level performers need to learn through purposeful practice and critical feedback

Talent is overrated. Mike feels that there is no "great trader gene" and that traders need to embrace a growth mindset to improve. Know that you can be better tomorrow and work at it. He offers some recommended reading on these themes here.

Enjoy the video, and check out SMB Capital's blog for more (you can always find it in our blogroll). Want to know more? Check out our related posts below.

Related posts:

1. Inner Voice of Trading: lessons on ego and risk.

2. Humans vs. algos: Mike Bellafiore on the future of trading

3. Mark Minervini interview: define and refine your approach.

Subscribe to Finance Trends by email or get new posts via RSS. You can follow our real-time updates on Twitter.  

Popular posts from this blog

The Dot-Com Bubble in 1 Chart: InfoSpace

With all the recent talk of a new bubble in the making, thanks in part to the Yellen Fed's continued easy money stance , I thought it'd be instructive to revisit our previous stock market bubble - in one quick chart. So here's what a real stock market bubble looks like.  Here's what a bubble *really* looks like. InfoSpace in 1999-2001. $QQQ $BCOR pic.twitter.com/xjsMk433H7 — David Shvartsman (@FinanceTrends) February 24, 2015   For those of you who are a little too young to recall it, this is a chart of InfoSpace at the height of the Nasdaq dot-com bubble in 1999-2001. This fallen angel soared to fantastic heights only to plummet back down to earth as the bubble, and InfoSpace's shady business plan , turned to rubble. As detailed in our post, " Round trip stocks: Momentum booms and busts ", InfoSpace rocketed from under $100 a share to over $1,300 a share in less than six months.  In a pattern common to many parabolic shooting stars, the s

Jesse Livermore: How to Trade in Stocks (1940 Ed. E-book)

If you've been around markets for any length of time, you've probably heard of 20th century supertrader, Jesse Livermore . Today we're highlighting his rare 1940 work, How to Trade in Stocks (ebook, pdf). But first, a brief overview of Livermore's life and trading career (bio from Jesse Livermore's Wikipedia entry). "During his lifetime, Livermore gained and lost several multi-million dollar fortunes. Most notably, he was worth $3 million and $100 million after the 1907 and 1929 market crashes, respectively. He subsequently lost both fortunes. Apart from his success as a securities speculator, Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one's position as it goes in the right direction and cutting losses quickly. Ironically, Livermore sometimes did not follow his rules strictly. He claimed that lack of adherence to his own rules was the main reason for his losses after making his 1907 and

New! Finance Trends now at FinanceTrendsLetter.com

Update for our readers: Finance Trends has a new URL!  Please bookmark our new web address at Financetrendsletter.com Readers sticking with RSS updates should point your feed readers to our new Finance Trends feedburner .   Thank you to all of our loyal readers who have been with us since the early days. Exciting stuff to come in the weeks ahead! As a quick reminder, you can subscribe to our free email list to receive the Finance Trends Newsletter . You'll receive email updates about once every 4-8 weeks (about 2-3 times per quarter).  Stay up to date with our real-time insights and updates on Twitter .