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In this interview, Justin—the CEO and co-founder of FPFX—pulls back the curtain on how modern prop firms actually work, why so many rise fast and collapse faster, and what separates sustainable operators from hype machines. He’s not a trader selling dreams; he’s the tech partner to 100+ firms, sitting where the data, risk, and payouts all meet, which makes his take invaluable for any trader thinking about challenges or scaling with firm capital.
You’ll learn how to vet a prop firm (capital reserves, payout behavior, rule design), spot real red flags (sudden payout pauses, desperate promos), and understand the economics that drive approvals, denials, and solvency. We’ll also cover what actually keeps funded traders alive longer—measured risk, fewer trades, swing bias over frantic scalps—and why firms are tightening news-trading and hedging rules. If you want to protect your bankroll while still leveraging firm capital, this breakdown gives you the filters, the language, and the strategy mindset to do it right.
Justin D. Hertzberg Playbook & Strategy: How He Actually Trades
Market Focus & Instruments
This section clarifies where Justin D. Hertzberg puts his attention so you’re not chasing noise. Fewer markets mean a deeper understanding of structure, liquidity, and behavior—key to building repeatable edge.
- Pick 2–4 primary instruments (e.g., one major FX pair, one index, one metal) and stick to them for at least 12 weeks.
- Establish directional bias from D1 → H4 structure; only flip if price closes beyond prior day’s high/low and holds on H1.
- If realized volatility is under 60% of its 20-day average, downgrade risk or sit out.
- Avoid correlated overlap that doubles risk (e.g., long risk-index and long cyclical FX in the same thesis).
Playbook Setups (A/B Tiers)
Here’s how Justin separates high-quality conditions from “looks okay.” Grading setups force discipline, help you size correctly, and make performance reviews straightforward.
- A-Setup needs: HTF bias + fresh liquidity raid (sweep) into supply/demand + M15 break-of-structure + clean target (PDH/PDL, session VWAP band).
- B-Setup permits one missing ingredient—half size and tighten trade management.
- No “C-Setups”: if two ingredients are missing, pass.
- Review 30 occurrences per setup monthly; demote anything with negative expectancy.
Risk Limits & Position Sizing
Capital protection is the strategy. These rules keep drawdowns shallow and survivable so the edge can play out.
- Per-trade risk: 0.25R–0.5R; daily loss cap: 1.25R; weekly cap: 3R—stop trading once hit.
- Max aggregate open risk: 0.75R; never add new risk after reaching −0.75R on the day.
- Stops live beyond the invalidation structure, not at round numbers; if spread >30% of your stop, reduce size or skip.
- After a payout or an outsized green day, cut size by 50% for the next session to avoid euphoria tilt.
Timing & Session Behavior
Sessions build and release liquidity differently. Timing entries to those behaviors improves R: R and reduces churn.
- London: trade the 2-hour window after open only if the first hour expands range directionally.
- New York: favor 9:45–11:15 ET for continuation and 13:30–15:00 ET for mean-reversion.
- No fresh entries in the final 30 minutes; manage what’s open and prepare the next session.
- If the first hour is rotational (no range extension), switch to reversion rules or wait.
Planning the Trade (Zones & Triggers)
Justin turns structure into clear “if-then” execution. You’ll mark zones in advance and demand a specific trigger before clicking.
- Pre-mark two zones per side (supply/demand) on H1/H4 aligned with D1 bias.
- Require an M5 engulf of counter-move after a sweep into the zone; no engulf, no trade.
- Execute on the first M1–M3 pullback to 50–61.8% of the engulf move; invalidation is the sweep wick high/low.
- Skip late chases: if the price leaves the zone without the trigger, let it go.
Trade Management & Exits
Most P&L is decided after entry. These rules aim to bank partials, protect capital, and stay in the move when it trends.
- Scale 25–33% at +1R; move stop to break-even after a close beyond the first target.
- Trail behind M5 structure until +3R, then promote the trail to M15 pivots.
- If a strong opposing impulse closes through your last M15 pivot, flatten the remainder.
- Never widen stops. If the idea remains valid, wait for a fresh signal and re-enter.
News & Event Filters
Knowing when not to trade is a performance edge. These filters help you avoid avoidable randomness.
- Stand down 5 minutes before and 10 minutes after tier-1 events (e.g., CPI, NFP, central bank).
- Don’t enter directly into prior day high/low; wait for raid-and-reject or confirmed close through it.
- After a trend day (true range >1.5× 20-day ATR), expect the next session to mean-revert unless new data resets conditions.
- If Asia sets a micro-range (<50% of its 20-day average), expect fake-outs—halve size or wait for NY clarity.
Prop/Compliance Constraints (If Using Firm Capital)
Execution must respect account constraints to keep the account alive. These rules match common firm terms.
- Structure sizing so the daily loss limit can’t be breached even with slippage/commissions at −1.25R.
- Avoid stacking highly correlated bets; treat them as one risk unit.
- Disable trading during restricted news windows; no hedging across accounts if terms forbid it.
- Pause trading after payout requests until the new cycle metrics are confirmed.
Routine & Preparation
Process drives performance. This is Justin’s style of checklist to cut hesitation and keep execution clean.
- Pre-market (30–40 min): set D1/H4 bias, mark PDH/PDL, weekly levels, session VWAP, and two zones per side max.
- Write two scenarios (trend continuation + fade) with exact invalidation and first/second targets.
- Mid-day: only adjust bias on a confirmed range extension or event-driven shift; otherwise, follow the plan.
- End-day: capture one best and one worst chart, tag setup grade, log MAE/MFE, and note any rule break with a fix.
Metrics, Review & Iteration
Treat your trading like a product roadmap. Measurement tells you what to ship more of—and what to kill.
- For each setup, track win rate, avg R, MAE/MFE, time-in-trade, and session dependency.
- If MAE routinely >60% of initial stop, widen stops and reduce size; your idea timing is fine, but entry is too tight.
- Promote/demote setups monthly strictly by expectancy over ≥30 trades.
- Run a weekly “missed trade” audit (signal seen but not taken) to refine triggers or reduce over-filtering.
Psychology & Pace
Edge erodes when you trade P&L instead of the process. These rules keep you deliberate and calm.
- Execute in sequence: scan → bias → zone → trigger → manage; no skipping steps.
- Cap attempts to 3 per session; if you hit your daily loss cap or three scratches/losses, stop.
- After a large green or red day, switch to half-size the next session to normalize the state.
- When uncertain, trade smaller and wait for the M5 engulf—clarity before size.
Size Positions by Volatility: Risk a Fixed R, Not Dollars
Justin D. Hertzberg drives home a simple idea: size to volatility so every trade risks the same “R,” not the same cash amount. When markets are calm, you can hold a slightly larger position; when they’re wild, you automatically scale down. This keeps your downside consistent and your emotions cooler, because each decision carries equal weight in your equity curve. He stresses that a fixed-R framework beats gut-feel sizing, which quietly balloons risk the moment volatility spikes.
To apply it, Justin D. Hertzberg translates the chart’s noise into a stop distance first, then backs into position size so the potential loss equals his pre-set R. If the stop needs to be wider today, he sizes smaller; if the stop can be tight, he sizes larger—same R either way. That single rule prevents revenge sizing after a loss and jackpot sizing after a win. Over time, the result is steadier drawdowns, cleaner data, and the confidence to keep pulling the trigger.
Trade Mechanics Over Predictions: Let Rules Trigger, Not Opinions
Justin D. Hertzberg argues that most traders lose because they trade forecasts, not processes. He pushes you to define an exact trigger—structure break, volatility cue, or time-of-day—so entries happen because conditions align, not because you “feel” a move coming. The point is to turn market noise into a checklist that either fires or stays silent.
When rules lead, hesitation drops and execution gets cleaner, says Justin D. Hertzberg. You stop moving stops, you stop chasing, and you stop adding because a candle “looks strong.” If the trigger doesn’t print, you simply don’t trade—no FOMO exceptions. And when the trigger does print, you size by plan, manage by plan, and let the outcome be data, not drama.
Diversify by Underlying, Strategy, and Duration to Smooth Equity Curve
Justin D. Hertzberg frames diversification as a practical way to keep your P&L from swinging like a pendulum. Instead of stacking similar trades on correlated markets, he spreads risk across different underlyings—currencies, indices, metals—so one theme can’t sink the day. He then layers multiple strategies—trend continuation, mean reversion, and breakout—so he’s not dependent on a single market regime. Finally, he staggers durations, mixing intraday plays with swing holds, which reduces timing risk when a setup needs more time to mature.
The power move, says Justin D. Hertzberg, is treating each “lane” as its own small business with separate rules and metrics. If one lane hits a cold patch, the others can carry the book, keeping the equity curve rising instead of lurching. Correlation gets checked weekly, and when two lanes start moving as one, he dials back exposure to avoid doubling the same risk. The result is steadier compounding, calmer psychology, and fewer forced trades when a favorite setup goes temporarily out of season.
Define Risk Upfront: Hard Stops, No Averaging, No Martingale
Justin D. Hertzberg insists that risk is a decision made before entry, not after pain. Every trade starts with a clear invalidation level, a hard stop that lives beyond the structure that would prove the idea wrong. If price tags that level, the trade is over—no nudging, no “just a few more ticks.”
Averaging down and martingale are off-limits in Justin D. Hertzberg’s playbook because they convert a planned loss into an open-ended liability. One thesis equals one shot at risk, and if the market disagrees, capital is preserved for the next clean setup. By fixing the maximum loss at entry, sizing to that risk, and refusing to widen stops, he keeps drawdowns shallow and data honest. That discipline builds confidence, and confidence is what lets you execute the next trade without fear.
Process Discipline Daily: Prepare, Execute, Review, Then Reduce Size After Wins
Justin D. Hertzberg treats trading like a high-performance routine, not a roll of the dice. He preps with a short checklist—bias, key levels, trigger conditions, risk—forcing clarity before the bell. During execution, he follows the plan verbatim so the trade reflects the system, not the mood of the moment.
After the session, Justin D. Hertzberg reviews outcomes against rules, not P&L, and writes one small fix to implement tomorrow. If he books a strong green day or a payout, he deliberately cuts size the next session to avoid euphoria tilt. That cycle—prepare, execute, review, then downshift after wins—keeps him consistent, cool, and ready for the next clean setup.
A sustainable edge isn’t about hype—it’s about structure, discipline, and picking the right counterparties. Justin D. Hertzberg explains that well-run prop firms can pay their traders and endure, but the ones chasing flashy promotions often don’t survive; your job is to separate durable operators from desperate ones before you stake your time and capital. The average funded stint is short—around three weeks—so the traders who last are the ones who treat trading as a process: they size risk consistently, obey stops, and avoid gambling around news.
Do real due diligence on any prop partner: investigate who runs it, where the capital comes from, how payouts have looked over time, and whether their “too good to be true” offers are a red flag. Stable firms show history, sensible rules, and adequate capitalization; unstable ones lean on extreme discounts or unrealistic conditions. Remember that many broker-owned prop arms set them up as separate entities, not to dodge obligations but to keep regulated and unregulated activities clean—another reason to evaluate governance, structure, and incentives, not just marketing. Finally, context matters: Justin’s vantage point spans 100+ firms, so the playbook is simple—choose solvent, well-run partners; trade a rules-driven plan; and let consistent risk control, not prediction, keep you in the game long enough to get paid.
