Table of Contents
In this interview, Michael Katz—co-founder of TradeThePool—breaks down how his stock prop platform funds traders to trade real shares (not CFDs) with a focus on limited-risk participation. He’s back on a trading podcast to explain why stock prop firms are rare, how TradeThePool sources exchange data, and why their no-time-limit evaluations are changing pass rates and trader behavior. If you’ve been stuck trading small or boxed into one market, Katz’s approach shows a practical path to bigger buying power without wiring more of your own cash.
You’ll learn the core playbook behind Katz’s trader strategy: why patience beats sprinting through challenges, how unlimited-time evaluations reduce pressure and improve execution, and the risk rules that keep you from tripping daily/max drawdowns. We’ll also cover scaling mechanics (new funded accounts for every +10% milestone), the difference between Flex and Max accounts, and when to favor reversals in small caps versus breakouts in large caps. If you’re a Forex or futures trader eyeing equities, Katz lays out the diversification benefits—more symbols, more volatility, and more chances to apply your edge—so you can grow without gambling your savings.
Michael Katz Playbook & Strategy: How He Actually Trades
How Michael Gets Traders Funded (Without Racing the Clock)
Michael Katz prioritizes limited-risk trading and a calm path to funding. His key twist is removing artificial time pressure so traders can focus on process over speed and pass when they’re actually ready.
- Treat the evaluation like live trading: same routine, same checklist, same size—no “challenge mode.”
- Use unlimited time to your advantage: trade only A-setups; let no-trade days be normal.
- If you’ve failed before, debrief why (health, life events, overtrading) and fix those before restarting.
- Build a 10–20-trade sample before changing anything; don’t “optimize” after one loss or one win.
- Journal process metrics (setup quality, adherence to plan) rather than scoreboard metrics (P&L) during the eval.
Risk Management Built for Longevity
The platform imposes hard daily and overall loss boundaries; your job is to stay well inside them. Katz’s stance: small, repeatable risk keeps you in the game long enough for edge and diversification to work.
- Cap single-trade risk at a tiny fraction of buying power (e.g., 0.25%–0.50% of notional exposure).
- Stop trading for the day if you hit 50–70% of the platform’s daily loss limit—protect the account first.
- Use bracket orders: entry, initial stop, and first scale-out placed together before the trade goes live.
- Size by volatility, not vibes: wider stop → smaller size; tighter stop → normal size.
- Never widen stops after entry; only move to reduce risk (to breakeven or locked-in profit per plan).
Execution Playbook by Market Type
Katz sees two dominant equity behaviors for funded traders: small-cap reversals and large-cap breakouts. Pick the behavior you’re trading and apply rules that match that tape.
- Small-cap reversals (often pumps):
- Wait for exhaustion: parabolic push into a major intraday or daily level plus momentum decay (lower high on 1–5m or a failed breakout).
- Enter on the first clean lower high (short) or reclaim-and-hold (long) with the stop just beyond the signal bar.
- Cover/scale into liquidity flushes; don’t overstay when volume dies.
- Large-cap breakouts (AAPL/NVDA/TSLA-style):
- Require a tight consolidation near highs with rising relative volume into the break.
- Enter through the level on decisive tape; cut quickly if it reverts inside the range.
- Trail with structure (prior swing low/high or VWAP reclaim) rather than fixed ticks.
Scaling Up the Right Way
After passing, capital expands in steps; the trap is letting size leap faster than skill. Katz’s answer is incremental scaling tied to consistency, not one big month.
- Add size only after two consecutive green weeks, trading the same playbook.
- When capital increases, keep risk per trade constant for the first 5–10 trades to recalibrate fills and slippage.
- Split capital across multiple accounts or tickets when needed; avoid single oversized positions.
- Use a pre-written “bigger size protocol”: stricter A-setup filter, fewer names, earlier partials.
Find More A-Setups with Breadth and Volatility
Equities give you thousands of symbols and constant news-driven motion. Katz’s edge is giving traders a choice: scan broadly, then get surgical.
- Build a daily universe: top 20 movers by % change and relative volume; tag small-cap vs large-cap.
- Pre-plan levels (previous day high/low, pre-market high, key daily supply/demand) before the bell.
- Trade the first clean setup only; if it’s messy at open, wait for the 30–60 minute price discovery to settle.
- If your primary market (e.g., FX) is choppy, shift to equities where trend/volatility is present that day.
Process & Psychology That Actually Passes
Removing the countdown clock doesn’t automatically make you disciplined—you still have to slow down. Katz hammers the process because it’s the only thing you control.
- Set a maximum of 2–3 trades per session during evaluation; quality beats frequency.
- Use a simple pre-trade rubric (e.g., 5 checks: market condition, setup type, level, trigger, stop). No 5/5 → no trade.
- Treat losing days as wins if you followed the plan; tag “green process / red P&L” as successful.
- If emotionally tilted, mandate a 20-minute timeout; next trade must be smaller or tomorrow.
- Review only your A-setup folder each weekend; prune anything you can’t articulate in one sentence.
Real Shares, Real Data—Why It Matters
Katz emphasizes trading real shares with direct exchange data rather than synthetic quotes. That transparency helps your entries, exits, and slippage behave the way you planned.
- Verify quotes against exchange prints; don’t chase fills on illiquid levels.
- Respect halts and auction mechanics; plan around open/close imbalances and volatility pauses.
- Use time-and-sales plus level-2 only for confirmation at your trigger—not as a reason to invent trades.
- Record expected vs actual slippage for each setup; adjust limit offsets accordingly.
A Simple Daily Routine You Can Stick To
Katz’s framework works because it’s repeatable. Your routine should make passing the byproduct of doing the same things every day.
- 60–90 minutes pre-market: build watchlist, mark levels, define the one primary setup per symbol.
- First hour: execute only planned triggers; skip names that didn’t meet the pre-defined conditions.
- Midday: stand down unless your playbook explicitly includes midday patterns.
- Power hour: revisit leaders/laggards from the morning for secondary A-setups; no revenge trades.
- End-of-day: journal screenshots, classify outcome (A/B/C setup, pass/fail rubric), set tomorrow’s focus.
Size Risk First: Micro Stops, Volatility-Scaled Position Sizing
Michael Katz starts by sizing risk before he even thinks about potential profit. He anchors each trade to a tiny, predefined dollar loss and then adjusts position size to the current volatility, not the other way around. If the stop needs to be wider because the tape is whippy, he simply takes fewer shares; if the stop can be tighter, he allows size to increase modestly within the same fixed risk.
Katz keeps “micro stops” honest by placing them at a real technical invalidation point—never arbitrary—and he never widens them once he’s in. He’ll often use recent swing levels or a multiple of average true range to set distance, then back-solve the share count to keep risk constant. This makes outcomes more stable across quiet and fast markets, and it prevents a single noisy candle from wrecking the day. The result is a repeatable math-first process: fixed risk, volatility-scaled size, and zero tolerance for moving the stop.
Trade Mechanics Over Predictions: Trigger, Stop, Target, Repeat
Michael Katz prioritizes execution mechanics over trying to forecast the future. He defines a trigger that proves the market is doing what he needs, sets a hard stop at the invalidation point, and preplans the first and second targets before clicking buy or sell. By making those decisions upfront, Katz removes the wiggle room that leads to impulsive ads and panicked exits.
He treats each trade like a checklist: confirm setup, wait for trigger, execute at plan, manage to target, and accept the stop if it hits. If the trigger misfires, he doesn’t “hope”—he’s out and done. When the price reaches the first target, Katz pays himself and tightens risk, letting the runner prove itself or stop out with a small giveback. The mantra is simple and repeatable: no prediction required, just trigger, stop, target—then repeat.
Diversify By Underlying, Strategy, And Duration To Smooth P&L
Michael Katz spreads his edge across different types of symbols and playbooks, so one cold patch doesn’t sink the week. He’ll pair large-cap trend names with small-cap mean-reversion so the day’s tape gives him at least one cooperating lane. By mixing strategies—breakout continuation alongside reversal fades—Katz avoids being boxed into a single market regime and keeps the equity curve less lumpy.
He also diversifies by duration: some trades are quick scalps around the open, others are structured swings held through the afternoon or the next day when conditions allow. Michael Katz sizes each lane independently, sets separate daily caps for each, and refuses to “average” rules across strategies. If large caps are choppy, he leans on small-cap reversals; if small caps are dead, he sticks to liquid leaders and rides trend. The aim isn’t more trades—it’s a better balance: multiple uncorrelated edges, each with its own rules, smoothing P&L without stretching risk.
Defined-Risk Setups Only: Pre-Plan Exits, Never Widen Stops
Michael Katz treats defined risk as non-negotiable: every trade has a clear invalidation point and a maximum dollar loss before it’s ever placed. He builds the exit first—then the entry—so the bracket order (entry, stop, first target) is ready to fire without hesitation. If the plan requires a wider stop due to volatility, he cuts the share size to keep the same fixed risk. He never averages down or “gives it more room” once the trade is live. If slippage pushes a stop, he records it, adjusts assumptions, and moves on rather than tinkering mid-fight.
Katz also codifies profit taking so winners don’t turn into breakeven drifts. He typically pays at 1R–2R, tightens to breakeven or structure, and lets a runner trail against swing levels or VWAP holds. Missed fills aren’t chased; the order is either re-queued at the plan level after a fresh trigger or canceled entirely. The rule set is simple and strict: exits are planned, stops are sacred, and no trade is allowed to become undefined risk—ever.
Process Discipline: Fewer A-Setups, Unlimited Patience, No Forced Trades
Michael Katz builds winning weeks by doing less, not more. He limits himself to a small number of A-setups per day and treats “no trade” as a valid outcome. If the market doesn’t present his conditions, he waits—no scaling into B- or C-setups just to feel active. Katz tracks process metrics like setup quality and rule adherence, so even a red day can be a success if he executed cleanly.
He also uses time blocks and pre-commitments to protect discipline: a tight first-hour playbook, midday cooldown, and a written rule for stopping after a tilt signal. Michael Katz reviews only the trades that match his named patterns and archives everything else, preventing strategy drift. He resets size after any emotional day, returns to the strict A-list, and rebuilds momentum with simpler triggers. The outcome is predictable: fewer trades, higher quality, and a calm, repeatable process that compounds without drama.
Michael Katz’s message lands the same way his trading rules do—clean, specific, and repeatable. He pushes a limited-risk framework where you build the exit before the entry, size by volatility, and live comfortably inside daily and max drawdown limits. The evaluation model favors patience over speed—unlimited time on Flex for most traders, a timed Max track for seasoned pros—so you can wait for A-setups rather than force trades. Katz also stresses practical diversification: reversals on pumped small caps when they hit major levels, breakout continuation on liquid large caps after tight consolidations, and a mix of intraday and longer holds so one regime doesn’t decide your week. Real shares and direct exchange data keep fills and behavior honest, which tightens feedback loops and protects your edge.
Once funded, Katz expects discipline to scale with capital: risk per trade stays fixed, buying power steps up only after consistency, and many traders run at least two accounts to separate playbooks and sessions. He’s blunt about psychology—trade slower than you think, use only a slice of available buying power, and treat “no trade” as a good day when conditions aren’t there. The standout pattern across the whole conversation is how process beats prediction: pre-planned brackets, never widening stops, documenting a risk plan that specifies max size, target math, and the exact number of trades needed to hit objectives. Follow that, and the average time to targets becomes a function of tape quality, not hope—proof that Michael Katz’s approach is less about heroics and more about durable, mechanical execution.
