Prop Goes the Trader · Michael Katz

Market Evolution & Company Structure

• Michael Katz, CEO of Trade the Pool, joined the podcast to explain the shift from traditional brick-and-mortor prop firms to online funding platforms emerging around 2015 and accelerating during the pandemic.
• Trade the Pool is a subsidiary of Fiveers; Fiveers focuses on Forex/CFDs/indices, while Trade the Pool focuses on U.S. equities.
• The firm is headquartered in Israel (20 minutes from Tel Aviv) but employs 80–100 staff globally, with a significant portion of the support and live-streaming teams based in the U.S.
• While originally open to U.S. traders, Trade the Pool now accepts participants from every country, including India, Japan, Brazil, and Europe.
• Trade the Pool plans to expand its equities offerings beyond U.S. markets to include European and Asian exchanges soon.

Value Proposition for Traders

• The core attraction is access to large capital with limited risk exposure; traders risk only the evaluation fee (e.g., $50–$500) rather than their personal capital.
• This model aims to decouple capital from emotion, allowing traders to make logical decisions and trade larger position sizes without the stress of risking savings.
• Higher fees compared to Forex prop firms are attributed to operational costs, including exchange license fees, Level 1/2 market data feeds, and platform infrastructure.
• The firm is building a full ecosystem beyond funding, including a trading journal, trade ideas section, education hub, and live daily streams to support trader development.

Trading Environment & Execution

• Evaluations are conducted on simulated accounts, but funded traders may be moved to live accounts based on risk profiling.
• Trade the Pool utilizes a hybrid "C-Book" model where specific traders or orders are routed to the live market while others remain in-house, a decision made by a dedicated risk team.
• Risk teams categorize traders based on KYC, risk tolerance, asset class, and trading frequency to determine if their orders are suitable for live execution.
• Not all orders from funded traders are executed live; specific high-risk or illiquid assets (e.g., specific share counts of Apple vs. Tesla) may be handled differently based on profile.

Performance Statistics & Trader Behavior

• Approximately 20–25% of traders pass the evaluation, significantly higher than the 2–5% success rate typically seen among individual retail traders using their own capital.
• The average trader requires 3–5 attempts to pass the evaluation, utilizing the process to learn platform rules and adjust their mindset to trading with firm capital.
• Once funded, approximately 85% of traders successfully reach a payout phase on their first funded account.
• About 15% of funded traders fail their funded account, often due to changing strategies post-funding or taking excessive risk to achieve immediate payouts.
• Traders who stay funded for multiple accounts (e.g., Mark, who passed four times) typically employ a "cushion-building" strategy, starting slow to accumulate capital before scaling position sizes.
• Successful long-term traders often specialize in a small number of tickers (e.g., 2 stocks) to master nuances, while younger traders tend to favor shorting penny stocks and small caps.

Risk Management & Rule Evolution

• Rules are derived from risk management and consistency requirements, not a business model predicated on trader failure.
• The "50% consistency rule" prevents a single lucky trade from meeting the target; traders must demonstrate multiple trades to prove skill.
• Trade the Pool has adjusted rules based on data, such as removing the 30-day time limit on evaluations (now unlimited) and reducing the holding period requirement from 60 seconds to 30 seconds for scalpers.
• Payouts are denied if traders break specific rules, such as trading before a stock halts or violating the "one-trade" consistency rule, even if the trade is highly profitable.
• The firm is exploring the potential for free evaluations in the future, relying on other revenue streams like education and tools to offset the loss of evaluation fees.

Future Developments & Product Roadmap

• A "copy trading" feature is in development (launching within two weeks) to allow automatic trade replication between multiple account tiers without manual execution.
• Algo trading integration is scheduled to launch soon, allowing traders to connect algorithmic strategies for automatic order placement.
• The firm aims to increase brand awareness in the equities sector, noting that unlike the crowded Forex prop market, few competitors currently offer direct U.S. stock access.
• Katz emphasizes that the firm is actively listening to trader feedback to refine rules and features, viewing the prop firm model as an evolving educational tool.