Hawai'i Trading Academy | Trading Coaching & Education

Two more prop firms shut their doors this spring. Nobody blinked.

That’s the strange part of what’s happening in the funded-trader world right now. The industry crossed 2 million funded traders and roughly $850 million in size, growing about 45% year over year, and at the same time it’s quietly shedding companies. Somewhere between 80 and 100 firms have disappeared since 2024. Growth and die-off at once.

We coach a lot of traders through this decision at Hawai’i Trading Academy, and the question we hear most is the wrong one: “Which firm has the cheapest challenge?” The right question is: “Which firm will still be here when I ask for a payout?”

Why are prop firms disappearing if the industry is booming?

Call it the Great Migration. Traders are moving away from loosely-regulated forex-style shops toward regulated futures prop firms, the TopSteps, Apex, and MyFundedFutures of the world, because futures clear through a real exchange and the rules are clearer.

That migration is brutal...

You know the feeling. A clean setup goes against you. The stop hits. And instead of walking away, you size up and fire another trade before the candle even closes.

That is revenge trading. And if you trade futures, it can gut your account in a single session.

The standard advice is "just be more disciplined." But discipline is not the fix. A system is. Here is why, and how to build one that keeps you from spiraling.

Why "Just Be Disciplined" Does Not Work

After a loss, your brain shifts into threat mode. The prefrontal cortex - the part responsible for rational decision-making - goes offline. Your amygdala takes over, and suddenly any setup looks valid because your brain is not analyzing the chart. It is trying to fix the pain.

Asking yourself to be disciplined during that moment is like asking someone mid-argument to calm down. The tool you need is the one your brain just shut off.

That is why willpower-based solutions fail. The version of you that made the trading plan this mor...

Our position-sizing tool sat quiet for 30 trades before we let it touch anything. It watched real trades come in. It logged what it would have told us to do. It changed nothing.

That wasn’t caution for caution’s sake. That was the plan from day one.

This is post one in a ten-part series on what we’ve actually learned building tools and testing strategies with Claude, Anthropic’s AI. Glenn and I aren’t AI developers by trade. We’re traders who started using Claude to build things we needed and couldn’t buy off the shelf. Some of what we built worked. Some of it didn’t, until we fixed how we were building it. This series is the honest version of that process. What to do, what not to do, no polish added.

Today’s post covers the do’s. Specifically, the three things that kept an AI-built risk tool from ever putting our account in danger, even while it was still rough around the edges.

What’s the One Rule That Comes Before Any Code?

I (Reid) handle most of the AI and content systems at ...

Max Loss Days: Setting and Enforcing Hard Stops

Every professional trader has a max daily loss. Most retail traders don't. This gap is why one group makes money and the other bleeds it.

A max daily loss is simple: you decide in advance, while your head is clear, what the largest loss you can take in a single day looks like. Then you enforce it. No negotiation. No exceptions.

Setting One That Actually Works

Your max daily loss should be based on your account size and your strategy's expected drawdown profile. A common starting point: 2% of your account. On a $50K account, that's $1,000. On a $100K account, $2,000.

But the 2% figure is a starting point, not gospel. Some strategies with higher win rates and lower average losses can handle 3%. Some volatile strategies need 1% or less. The key: it should be large enough that you can take 2-3 normal losses without hitting it, but small enough that hitting it doesn't put your account in jeopardy.

Why Enforcement Beats Willpower

Setting...

Tropical Storm Lala is heading straight for the islands this weekend. Forecasters have Hawaiʻi Island under a hurricane warning, with damaging wind, dangerous surf, and up to a foot or more of rain spreading across the state from Friday into Sunday. If you trade from Hawaiʻi, this is a live risk-management drill whether you asked for one or not. So here is the Hawaiʻi Trading Academy storm-day plan: how to protect your account, and your head, when the weather takes the decision out of your hands.

Why a storm is a risk problem before it's a weather problem

Trading is already the practice of managing what you can't control. A hurricane just says it louder. You can't control Lala's track, the rain totals, or whether your neighborhood keeps power Saturday night. What you can control is your exposure before any of that happens.

The mistake is treating a storm week like a normal week with a little extra weather. It isn't. Power flickers. Internet drops. Cell towers get congested right whe...

Correlation Risk: Why Your Diversified Trades Aren't

You have three trades on: NQ long, AAPL calls, and a TQQQ position. You think you're diversified. You're not. You have one trade on, three times.

This is correlation risk. It's the invisible killer that turns a manageable losing day into a catastrophic one.

What Correlation Risk Actually Is

Correlation measures how closely two instruments move together. A correlation of 1.0 means they move in perfect lockstep. A correlation of 0 means they're independent. A correlation of -1.0 means they move in opposite directions.

NQ and ES? Correlation typically sits around 0.92-0.97. They're basically the same trade. NQ and AAPL? Around 0.85. NQ and TQQQ? Around 0.98. If you're long all three, you don't have three positions. You have one position, three times the size.

Why This Matters for Futures Traders

Say your risk model allows 2% total account risk at any given time. You put on NQ at 1% risk and ES at 1% risk. Your model says you're a...

The 2% Rule Is Wrong: How to Size for YOUR Account

You've heard it before: never risk more than 2% of your account on a single trade. The problem? It's generic. It works for nobody in particular.

The 2% rule is a starting point, not a destination. Your real position size depends on four things: account size, strategy type, your actual win rate, and your psychological tolerance for drawdown.

Account Size Changes Everything

Say you have a $10,000 account and you trade a strategy that averages 50 pips on ES futures. At 2% risk, you're risking $200 per trade. That's 4 pips. Good luck executing that without slippage eating you alive.

Now say you have a $100,000 account. 2% is $2,000. That's 40 pips of wiggle room. The 2% rule doesn't account for the minimum viable risk unit in YOUR market.

Strategy Type Demands Different Sizing

Mean reversion? Tight stops, quick exits, low win rate (40-50%), but high reward-to-risk. You can size more aggressively. Breakout trading? Wider stops, longe...

We told you to wait 10 minutes. The data says that is not long enough.

Earlier this month we published a piece on the drawdown reflex, the biological panic response behind roughly 74% of prop firm breaches. In it we gave you a rule: after any loss, wait 10 minutes before entering a new trade. Let the cortisol drop. Let your prefrontal cortex come back online.

That rule was directionally right. The number was wrong. Here is what the revenge trading data changed about our thinking.

What does the revenge trading data actually show?

Revenge trading has a measurable signature. In journal data it shows up as a specific, identifiable trade: an entry placed within 15 minutes of a loss, at larger than normal size.

Filter for those two conditions and the numbers are ugly. Those trades won 22% of the time.

Sit with that for a second. Your strategy might win 55%, 60%, 65%. Our RVOL + VWAP mean reversion setup wins 64% across 4,672 backtested trades. The same trader, on the same day, trading ...

RVOL + VWAP Mean Reversion: 4,672 Trades and a 64% Win Rate

This is our most consistent strategy for one specific scenario: shorting overextended moves on Crude Oil.

The RVOL + VWAP Mean Reversion strategy combines relative volume analysis with VWAP deviation to find high-probability mean reversion entries. It’s Strategy 4 in our Edge Playbook, and it’s the one our students ask about most.

The Data

Across 4,672 backtested trades: Win rate: 64%. The highest of any strategy in our playbook. When you combine that with a favorable R:R, the expectancy is strong and the equity curve is smooth.

The strategy works because RVOL (Relative Volume) acts as a confirmation filter. High RVOL at VWAP deviation means institutional participation — and institutions mean revert. Low RVOL at deviation? That’s noise. Skip it.

How It Works

Setup: Price extends 1+ standard deviations from VWAP while RVOL is above 1.5x average.

Entry: First sign of reversal — a rejection candle, a momentum shift, or a ...

5 Types of Stop Losses and When to Use Each One

Not all stops are created equal. Most traders use one type — the hard stop — and ignore the other four. That’s like owning a toolbox with only a hammer.

Our Risk Management Playbook defines five stop types, each designed for different market conditions and trade setups.

1. Hard Stop

A fixed price level entered at trade entry. Non-negotiable. The platform executes it regardless of your emotions. This is your default — every trade should have one.

When to use: Always. Every single trade. No exceptions.

2. Structural Stop

Placed based on market structure — below support, above resistance, beyond a key level. The logic: if price reaches this level, your thesis is invalidated.

When to use: Mean reversion trades where specific levels define the trade thesis.

3. Trailing Stop

Moves with price as the trade goes in your favor. Locks in profits while giving the trade room to run. We use 3x ATR trails in our breakout strategies.

When to u...