Table of Contents
Michael Katz sits down in this YouTube interview to unpack how a 17-year equities veteran—and builder of a 70-trader prop floor—actually thinks about the tape. He’s the guy who prefers the one-minute chart, hunts A+ reversals, and uses volume like a lie detector, all while teaching teams to detach from money and make logical, technical decisions. If you’ve ever wondered how a real prop leader structures traders, routines, and risk so they can execute under pressure, this conversation is the straight shot.
In this piece, you’ll learn Katz’s practical playbook: why scalping and intraday fit certain personalities, the exact reversal tells (capitulation volume, momentum shifts across legs, key levels), and how he blends supply/demand with simple confirmations like MACD divergence. You’ll also get his no-nonsense psychology—breathing before the bell, journaling after each trade, daily pauses to kill revenge trading—and the team mechanics he used on the prop desk (finder, manager, executor) to multiply edge while capping risk. By the end, you’ll have a beginner-friendly blueprint you can test tomorrow: spot the setup, size inside boundaries, execute clean, then walk away on schedule.
Michael Katz Playbook & Strategy: How He Actually Trades
Core Market Framework
Here’s the big picture of how this trader approaches the day: simple levels, clean structure, and only the best risk-to-reward ideas. Read this first so the rest of the rules click into place and you stop forcing trades that don’t fit.
- Trade only products you track daily (e.g., your top 20 tickers or 1–2 index futures) to keep context sharp.
- Map the prior day’s high/low, overnight high/low, weekly open, and premarket range before the bell.
- Set your bias from structure, not opinions: higher highs/higher lows = look long on dips; lower highs/lower lows = look short on pops.
- If the first 30 minutes are inside the premarket range, cut size to 50% until range expansion confirms direction.
- No thesis survives a failed level twice: after the second failed attempt, abandon the idea and wait.
The A+ Setup: Reversal After Exhaustion
This is the bread-and-butter idea: fade a stretched move only when momentum and volume say “done.” You’ll pass on most reversals; the few that qualify tend to pay cleanly.
- Look for an extended trend into a daily/weekly level with ≥3 consecutive impulse legs getting shorter (momentum decay).
- Demand capitulation: a spike in 1–2 candles with volume ≥150% of the 20-bar average that fails to extend price meaningfully.
- Require a lower high after a blow-off up (or higher low after a washout down) that forms within your key level ±0.20%.
- Confirmation: divergence on a simple momentum read (e.g., MACD histogram or RSI making a weaker extreme while price makes a marginal new high/low).
- Entry: place a limit at the micro pullback to the broken structure (prior swing or VWAP reclaim), not at the extreme.
- Invalidation: hard stop just beyond the exhaustion wick (0.05–0.15 ATR on equities; adjust for futures tick size).
- First target = VWAP or prior 1-minute base; second target = opposite side of the intraday range; trail rest above/below last lower high/higher low.
Timeframes & Tools
Keep it simple: one fast chart to trigger, one slower chart to avoid noise, and one session anchor for context. Over-indicators kill execution.
- Use 1 minute for triggers, 5 minutes for structure, and daily for key zones; nothing else during entries.
- Plot only: premarked levels, VWAP, and a momentum pane (MACD or RSI). Delete everything you don’t read in real time.
- If the 1-minute and 5-minute disagree on trend, wait for alignment or cut the size to 30% and take only the first targets.
Risk, Sizing, and Max Loss
Consistency is built on fixed risk and fast cutting. These rules protect your headspace so you can show up tomorrow.
- Fixed per-trade risk: 0.25%–0.40% of account; never raises mid-day.
- Max daily loss = 1.25× your average green day; stop trading immediately if hit.
- First loss is best loss: if entry structure breaks on your trigger timeframe, exit—do not “give it room.”
- Scale in only if the initial risk is paid: add ½ size after the first target hits and stop moves to breakeven on the rest.
- News bar rule: if a position is open into a scheduled release you didn’t plan for, flatten first, reassess after 2–3 bars.
Opening Drive Play
The open sets tone but also traps. Treat it like a separate product: fast, decisive, and strictly defined.
- Trade only one opening sequence: range break + hold or fade into a premarked level; never both on the same day.
- No entries in the first 60 seconds; let the first candle close.
- If the first pullback after the break holds VWAP and prints a higher low (or lower high for shorts), take a single, pre-planned stab with ½ size.
- Stop goes beyond the opening range extreme by 0.02–0.05 ATR; target is 1.5R then trail.
- If stopped on the open, skip the next two signals—wait for the 30-minute structure.
Trend Continuation (When Reversals Aren’t There)
When the market’s clearly directional, ride the path of least resistance with a mechanical add/trim plan.
- Enter on the first pullback to VWAP or rising/falling 5-minute base after a range break with volume ≥120% of average.
- Place a stop below/above the pullback base; partial at +1R, add on the next higher low/lower high that holds VWAP.
- If price extends >2.5 ATR from VWAP intraday, stop buying breakouts—switch to taking profits into strength/weakness.
Level Selection & Preparation
Great trades are found before the session, not during it. Build a repeatable level-selection routine.
- Preselect 2–3 “decision levels” per ticker: prior day’s extremes, HTF supply/demand, anchored VWAP from a significant swing.
- Mark “kill zones” where slippage is common (thin premarket highs/lows); trade them with ½ size or not at all.
- If price chops ±0.10% around your level for 10+ minutes without resolution, put it on ignore for 30 minutes.
Execution Checklist (Before, During, After)
Rituals make discretion reliable. Run this checklist every time to keep your brain out of the way.
- Pre-trade (60–90 seconds): breathe, state bias, name the exact trigger, entry price, stop, targets, and max slippage.
- During: click once, then hands off for two bars; if stop hits, log the reason immediately in 10 words or fewer.
- After: screenshot chart with entries/exits, tag setup type (reversal/continuation/open), record R multiple, and one improvement.
Scaling, Adds, and Trims
Adding to winners builds R fast; adding to losers builds regret. These rules create asymmetry.
- Add only after partial profit banked and structure confirms (a higher low/ lower high) at or above/below VWAP.
- Never widen the original stop; new risk is managed with a separate micro-stop on the add.
- Trim ⅓ at the first target, ⅓ at the range edge or session high/low, and trail the rest behind the last structure pivot.
Handling News & Volatility Spikes
Volatility is an opportunity if rules are tight. Treat event bars like fire: controlled or you get burned.
- If a scheduled event is within 5 minutes, do not initiate a new position unless it’s explicitly an event play with reduced size (≤30%).
- For event plays, use bracket orders: entry only after the spike fails at your level; stop just beyond the spike wick; target VWAP snapback.
- If spread widens ≥2× normal, skip the next two signals—reassess after liquidity normalizes.
Psychology That Actually Shows Up on P&L
Mindset is just risk discipline in disguise. Keep the mental game inside simple, enforceable boundaries.
- Two-strike rule: two execution errors (late entry, moved stop, impulse add) end your session.
- Set a “walk-away” timer after any big win or loss: 10 minutes off charts, no exceptions.
- If tilt is suspected, switch to sim for the next valid signal; if that would have been green, you may take the following live.
Building a Small Team Edge (Optional but Powerful)
Structure turns a solo trader into a desk. Even as a one-person shop, you can mimic the roles.
- Split roles: Finder (scans and levels), Manager (risk and play selection), Executor (entries/exits). Rotate hats but keep them distinct.
- In a group, one person calls context and risk; another clicks. No one does both on the same trade.
- Share a 10-line post-mortem template daily; highlight one process win and one change for tomorrow.
Size Risk First: Fixed R, daily max loss, never widen stops
Michael Katz starts with risk—always. He defines a fixed R per trade before looking for entries, so every decision is framed by a known downside. That simple cap makes outcomes comparable and emotions smaller, because he’s counting R-multiples, not dollars. If price action invalidates the setup, he’s out immediately; the stop is the plan, not a suggestion.
Katz also enforces a hard daily max loss that ends the session without negotiation. When the line is hit, he walks, protecting confidence and keeping tomorrow’s playbook intact. And he never widens stops—if the market needs “more room,” the idea wasn’t high quality or the size was wrong. This discipline turns edge into repeatable returns instead of a few hero trades and a big give-back.
Let Volatility Lead Position Size and Target Distance Every Session
Michael Katz adjusts risk to the tape, not the other way around. On a quiet day, she keeps positions a touch larger with tighter stops and closer first targets. When the range expands, he cuts the size, widens the stop to fit the move, and spaces targets accordingly. The goal is identical emotional load per trade—no single candle should feel “too big” for your plan.
Katz leans on simple gauges like ATR and RVOL to set expectations before clicking. If today’s ATR is 30% above the 20-day, he’ll trim size and let the trade breathe; if it’s compressed, he tightens the leash and books quicker. Targets scale with the environment: stretch further only when the market is already stretching. Volatility becomes the throttle and the brake, turning messy sessions into manageable, pre-sized opportunities.
Diversify by Product, Strategy, and Timeframe—not just tickers.
Michael Katz avoids single-point failure by spreading his edge across products, play types, and holding periods. Different underlyings express risk differently, so he mixes a few equities with an index future or a liquid ETF to smooth P&L. He also splits between reversal and continuation plays, so one regime doesn’t wipe the week. Timeframe diversification—open-drive scalps versus midday rotations—keeps him involved without forcing trades that don’t fit the tape.
Practically, Katz caps exposure per bucket: no more than 40% of daily risk to any one product, 40% to any one strategy, and 40% to any one timeframe. If two names are 0.85+ correlated on the day, he treats them as one and halves the combined size. He maintains separate stats for each bucket and pauses a bucket after three consecutive R-losses until a review. This structure lets him trade what’s working now while protecting capital from clusters when a specific edge goes cold.
Trade the Mechanics: Level, trigger, stop, scale—skip prediction.n
Michael Katz treats markets like a checklist, not a crystal ball. He marks a level in advance, waits for a clean trigger (reclaim/reject, momentum shift, or micro-structure break), and places a precise stop that proves the idea wrong. If the trigger never prints, he never clicks—no “feels” or forecasting. The edge is the repeatable sequence, not calling tops or bottoms.
Once in, Katz lets the math run the show. He scales out at predefined targets, trails behind structure, and refuses to “hope-manage” trades. If the structure breaks, he’s flat; if it holds, he gives the winner room to breathe. Prediction is entertainment—mechanics are the business.
Choose Defined Risk Setups; quarantine undefined risk to a tiny size.
Michael Katz builds around trades where the worst case is known at entry. He prefers structures with clear invalidation—tight levels, obvious wicks, VWAP reclaims—so the stop is both logical and close. That lets him press when right and lose small when wrong, stacking clean R multiples instead of gambling on noise. When a setup can’t be bounded, he tags it “undefined” and treats it like touching a hot stove—gloves on, quick touch, step back.
For truly undefined risk—news spikes, halts, illiquid names—Katz either passes or uses a token size that won’t dent the day. If slippage risk is elevated, he widens the stop a hair but cuts the size more, keeping dollar risk constant. Profit taking is also stricter on these trades: first partial fast, rest trailed tight behind structure. The rule is simple: defined risk earns real capital; undefined risk earns curiosity at most.
Michael Katz’s core message is simple: protect downside first, then let the process do the heavy lifting. He anchors every decision to fixed R, a hard daily max loss, and a refusal to widen stops, which keeps emotions out and statistics in. Volatility sets the throttle—size, stops, and targets expand or contract with the tape so each trade carries an equal emotional load. He diversifies intelligently across products, strategies, and timeframes to prevent drawdowns from clustering, and he pauses any bucket that goes cold. Above all, he trades a repeatable sequence—level, trigger, stop, scale—so entries are earned by mechanics, not predictions.
On setup selection, Katz favors defined-risk structures like exhaustion reversals at key levels, with confirmation from momentum decay, volume capitulation, and a clean reclaim or rejection. He keeps tools minimal—1-minute for triggers, 5-minute for structure, daily for zones, plus VWAP and a single momentum pane—to eliminate noise and speed decisions. Execution is ritualized: pre-trade scripting, hands-off for the first bars, quick journaling on outcomes, and strict walk-away rules after big swings. News and liquidity spikes are treated as special situations with bracket logic and reduced size, or skipped outright. Taken together, these habits turn a trader’s day into a controlled experiment: small, known losses, asymmetric adds to winners, and a calm, scalable process that can survive any market mood.
