{"id":11811,"date":"2011-05-25T11:12:06","date_gmt":"2011-05-25T15:12:06","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=11811"},"modified":"2021-05-06T15:48:19","modified_gmt":"2021-05-06T19:48:19","slug":"how-i-would-have-started-my-prop-firm-differently","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/how-i-would-have-started-my-prop-firm-differently","title":{"rendered":"How I would have started my prop firm differently"},"content":{"rendered":"

Mike,
\nFirstly, I just wanted to thank you from the outset for your ongoing work and contribution to the trading community. I\u00a0have read your book, I read your posts daily and I admire greatly the philosophy of your firm SMB Capital. Your firm really is the pioneer of trading education and skill development for prop traders. \u00a0I hope you realize the level of interest you are generating as you should be proud.<\/p>\n

I am contacting as I hope to one day emulate some of your efforts here in Australia. I began my career trading equities for Morgan Stanley in London. It was an unbelievable experience but I was unfortunate to lose my job in the height of the financial crisis. From there, I joined a Prop trading firm in Sydney but have recently left in part because I wasn’t performing and because the way the firm was run was woeful. There was no training, no team communication, no encouragement, and no skill development of any sort.<\/p>\n

Of course this should first and foremost be down to the individual trader but I can’t help but feel this firm is setting itself up for complete disaster with these inefficiencies. There is such a HUGE opportunity here in Australia for prop trading to take advantage of the tectonic shift that is talking place in the world economy with the emergence of China and India. Asia will be abound with trading opportunities. Yet there is only 1 prop firm in Australia doing it well. I have begun a mere process of education via an Asian trading website I have setup and I hope this to be the springboard for many other initiatives. I actually mentioned your firm in my latest post:\u00a0http:\/\/swingtradersedge.blogspot.com\/2011\/05\/day-trading-spi.html<\/a>.<\/p>\n

You get a lot of specific trading questions. My question is in regards to actually starting and running a prop trading business. Do you have any plans to expand overseas, especially here in Asia? What were the major hurdles you faced when you began your business? If you could start again, is there anything you wish you had known or prepared for better? \u00a0And is there a certain level of capitalization that you think is required at a minimum to successfully run this kind of business to begin with? I have many more questions but I appreciate you are a busy man.<\/p>\n

My plan first and foremost is to get my trading to an elite level. I will have to do this solo for now. I hope that my blog posts and education will help my trading as well as build a powerful network of traders around me from which something can happen in the future. Any tips or pointers in my journey would be of genuine value.<\/p>\n

Once again, thanks for you work and I appreciate your time.<\/p>\n

Bella Responds<\/strong><\/p>\n

You have asked a lot of questions \ud83d\ude42 \u00a0I would be happy to answer the ones I will not answer in this post via a skype call if you are interested. \u00a0I would like to tackle the issue of what I would do differently. \u00a0I could fill a book answering this question (hmmmm One Good Firm<\/em>?) but will just offer my most important observations. \u00a0I find this a quite interesting exercise.<\/p>\n

1) I would have sued the firm that first poached some of our traders. \u00a0I made the mistake of trying to reason with this firm but they see the world very differently than me. \u00a0Sometimes in business you really do just have to sue people to get them to stop their damaging behavior.<\/p>\n

2) I would never compete in the extremely low margin space. \u00a0Being in the business of offering a trader a better deal who makes minimal gross a month is a waste of time. \u00a0Big traders, with real capital behind them, taking real risk on them is the best space in prop trading. \u00a0One GMan is worth 30 small pikers.<\/p>\n

3) I would have partnered with deeper pockets earlier. \u00a0 We recently have done this and now can offer more significant amounts of buying power to excellent traders. \u00a0There is always someone with a lot more money than you. \u00a0 There will be years as a firm where you lose significant money. \u00a0I know most traders think all prop firms do is make money. \u00a0This is not accurate. \u00a0There are years where checks must be written for your personal bank account.<\/p>\n

The cost to the firm is not just transactions costs. \u00a0There is rent, staff, the cost of capital, equipment, legal, accounting, compliance, web development, advertising, technology investments, and trading losses on weaker traders. \u00a0By partnering with deeper pockets this makes these years much more manageable.<\/p>\n

4) We have done a very good job of sticking to our niche- training new and developing traders. \u00a0The Street is very competitive. \u00a0To be great at anything requires superstar focus and a daily grind. \u00a0At the start we spent a little too much time overly concerned we were weak in certain areas that were outside niche. \u00a0Embrace what you are best at and build your firm from your strengths.<\/p>\n

5) We should have started with four partners. \u00a0There was too much work at the start for just Steve and me.<\/p>\n

6) There are certain things I do not do well. \u00a0It took me a long time to recognize what I do not do well and remove myself from those\u00a0situations. \u00a0I am terrible managing people. \u00a0I couldn’t be less interested in selling something. \u00a0We now have new partners for that. \u00a0 But I am really good at teaching, writing, negotiating, developing new training techniques, and creating a vision for the firm. \u00a0At the start I spent too much time trying to do the things I am just terrible at instead of \u00a0finding partners with better skills to cover my weaknesses.<\/p>\n

7) I could have handled loss better. \u00a0I spend many sleepless nights when we lose\/lost traders. \u00a0In trading people don’t make it, people can cut earlier than you would like, they can leave firms for another and they might find new careers better suited to their talents. \u00a0It is very difficult on me when we lose a trader.<\/p>\n

I have often said that trading is the hardest thing most will do in the life. \u00a0Respectfully, being a partner of a trading firm is much harder.<\/p>\n

What would you like your prop firm or broker dealer to do differently?<\/p>\n

Mike Bellafiore<\/p>\n

Author, One Good Trade <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Mike, Firstly, I just wanted to thank you from the outset for your ongoing work and contribution to the trading community. I\u00a0have read your book, I read your posts daily and I admire greatly the philosophy of your firm SMB Capital. Your firm really is the pioneer of trading education and skill development for prop traders. \u00a0I hope you realize … Read More<\/a><\/p>\n","protected":false},"author":144,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10,908],"tags":[108,1810,1809,1811,18],"class_list":["post-11811","post","type-post","status-publish","format-standard","hentry","category-mike-bellafiore-bellas-blogs","category-traders-ask","tag-mistakes","tag-pro-firm-partner","tag-prop-firm","tag-running-a-firm","tag-smb-capital","no-post-thumbnail"],"yoast_head":"\nHow I would have started my prop firm differently | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/how-i-would-have-started-my-prop-firm-differently\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How I would have started my prop firm differently | SMB Training\" \/>\n<meta property=\"og:description\" content=\"Mike, Firstly, I just wanted to thank you from the outset for your ongoing work and contribution to the trading community. I\u00a0have read your book, I read your posts daily and I admire greatly the philosophy of your firm SMB Capital. Your firm really is the pioneer of trading education and skill development for prop traders. \u00a0I hope you realize ... 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