5 Questions with Merritt Black of SMB Capital

Trading Technologies
5 min readMay 15, 2018


Merritt Black trades for SMB Capital in New York, where he is focused on expanding the futures trading desk. As part of a new program, Merritt will be training new traders and assessing their skills. Our advanced risk administration tools, Trader Analytics and our premier trading simulation functionality are among the features that led SMB to choose the TT platform.

Merritt himself trades crude oil futures, primarily intraday, using Market Profile and order flow tools. In the rare event he isn’t trading, you’ll find him hunting, playing guitar, playing golf and tennis or searching for the perfect plate of huevos rancheros. We sat down with Merritt to find out about SMB and how TT fits into their expansion plans.

Follow Merritt and SMB Capital on Twitter at @merrittblack and @smbcapital.

How did you get involved in trading, and what path took you to where you are now?

Merritt: I actually fell in love with trading in the sixth grade. Our teacher brought in a newspaper each day, and we kept track of changes in stock prices. I knew then this was the greatest game on earth. I got my parents to take me to the bookstore for my first trading book, and I was hooked. I was trading live by the time I was in high school — losing money of course! By the time I was finished with college, I was managing money for friends and family. I explored stocks, forex, futures, you name it. My path has been marked with failure after failure. I once launched a CTA that ended in spectacular failure — I wanted to succeed so bad, I began waking up to trade the European open just to give myself more chances to salvage the month. You can imagine how that turned out. Ultimately, after always finding the resilience to keep bouncing back and improving, I ended up in New York at a true prop firm, SMB Capital/KTG. Surrounded by other traders and a culture of getting better every single day, it’s been a fantastic place to grow as a trader.

Do you have a specific trading event or date on the calendar that sticks out in your mind?

Merritt: One of my favorite trades I’ve ever made was on the eve of Brexit. I wasn’t even at my desk in New York. Believe it or not, I was at a catfish restaurant in Kentucky with my wife’s family. I was using a VPN from my phone to access my trade station. The opportunity was just too large to not participate. The one thing that struck me about the event was how clean the moves were — despite how thin the book was and despite how furious the moves were, levels were being respected and my order flow tools were remarkably accurate. In a matter of minutes, I had pulled more than an entire average daily range of movement from ES futures. From my phone, from a catfish restaurant. I’ll not soon forget it.

What advice would you like to share with anyone starting in trading today?

Merritt: Certainly can’t share everything I’d like to in a few paragraphs, but I’ll give this advice: learn context/a framework/a market worldview. Nearly all newbies search for the patterns or triggers to enter trades. Even worse, they search for some holy grail of indicator(s) to show them the path to consistent profits. Just don’t. Spend time developing a framework for market understanding. Spend time understanding how markets move. Learn how to truly identify where risk:reward is great. That is how you put odds in your favor. For me, that framework became Market/Volume Profile. It simplifies information and provides an excellent contextual framework. Once you’ve acquired that skill, you can move on to figuring out how to time those entries, read order flow, etc. They are totally separate skills, and in my opinion, context is king.

Do you have any trading mentors?

Merritt: No doubt coaches and mentors are a critical component for success and consistency. Trust me, I work in a firm where guys in their mid 20s are walking around with $20 million of buying power to deploy at their discretion. Guys that make seven figures year after year. Does your typical rookie trader think these guys need mentors and coaches? No they don’t, and they are wrong. Do professional golfers still use swing coaches, performance coaches and psychologists? You bet they do. In fact, my philosophy is that we all need a full circle of trading relationships. We need mentors above us to show us what we still have yet to learn. We need peers beside us to show us new ways of thinking about things and accountability, and foster healthy competition. We need guys below us that we can mentor as well. I think one of the things that has really improved my own processes and trading in general has been mentoring other traders. It forces me to get objective about what I do — to internalize my processes and truly understand my edge. It forces me to solidify my own processes. I think the most growth comes from this full circle of trading relationships.

Can you tell us about your new training program for futures traders and how TT fits into that?

Merritt: Yes, we’re tremendously excited about the new desk. Historically, SMB was purely equities trading. We believe that expanding into futures will strengthen and diversify our entire firm. We did the same thing by building out an options desk a few years ago, so we’re looking to continue growing and thriving. The trading psychologist Dr. Brett Steenbarger was on our desk last week talking about how traders need to first get better, then get bigger, and then get broader. As a firm, we’re in the broadening phase. TT will certainly be an asset for us as we expand.

We’re taking a fresh approach to hiring. Rather than focus on pedigree and the standard six-stage interview process to determine those intangible traits that will make a good trader, we’re allowing anyone to show us what they’ve got. If they can trade with edge and manage risk effectively to our standards in a sim environment, we’re looking to fund those traders with our capital and welcome them to our team. TT provides us with turnkey solutions that allow us to first vet these traders. The live simulation solution provided by TT allows our traders to execute against live markets with a premier, realistic matching engine that replicates production trading. A full suite of risk management tools and trader analytics allows us to closely monitor trader performance.

For those traders not yet able to exhibit that type of edge, we provide professional training and mentoring to help them move their trading forward. I even do a real-time trading webcast each morning walking through what I see and trades I make. This is important to me to show that we walk the walk, not just “talk the talk” like so many others. I believe there are many potential high-performing traders all over the world that just need an opportunity, and I’m so blessed to have this platform at SMB to provide that opportunity. Our goal is to find and further develop these talented people into high performers, just as we’ve done on the equities and options desks.



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