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...

Friday handed traders another live lesson. Fed Chair Kevin Warsh stepped up for his first Jackson Hole keynote, and the wires lit up. He said this summer's PCE and CPI readings were better than expected, but they do not tell him underlying inflation has meaningfully improved. Translation for the tape: the door to a rate hike next month cracked open. Chips gave back most of Thursday's Nvidia pop, and the Nasdaq closed lower.

If you traded the first headline print, you probably got faked out. That was not bad luck. That is what a Fed day does.

Why does NQ whipsaw so hard around Fed speakers?

An event like a Warsh speech or an FOMC decision dumps a burst of information into the market in seconds. Algorithms react first, they react fast, and they often react in both directions before the tape settles. You get a violent push one way, a snap back, then sometimes a third move that finally sticks.

That first move is the least reliable bar of the day. It is a knee-jerk, not a decision. NQ i...

Recovery Mindset: How to Trade After a Blown Account

You blew your account. Or you took a drawdown that felt like blowing your account. Either way, you're sitting here wondering if you should quit.

Don't quit yet. But don't just reload and start trading the same way either. That's how you blow the next account too.

Recovery isn't about getting the money back. It's about rebuilding the process that prevents the next blowup. Here's how.

Step 1: Stop Trading for 7 Days

Seriously. Seven full days. No charts. No paper trading. No "just watching." Your brain needs a hard reset. The neural patterns that led to the blowup are still firing. If you trade tomorrow, you'll trade the same way you did yesterday.

During these seven days, journal. Write down what happened. Not the trades — the decisions. What were you thinking? What were you feeling? Where did you deviate from your plan? When did you know it was going wrong and keep going anyway?

Step 2: Audit Your System

After seven days, ope...

Everyone wants one clean result. One backtest that prints green top to bottom. One test suite that passes on the first run. One confident answer from an AI assistant that settles the question so you can stop worrying about it.

We think that want is exactly backwards.

A single good result is never proof. It's a starting point. And if you stop there, you're not managing risk. You're hoping.

Why Do Traders (and Builders) Trust One Good Number?

Because one clean number feels like relief. The backtest worked, so you move on. The code shipped, so you stop testing it. Claude gave you a confident-sounding answer, so you stop asking questions.

This month we walked you through real lessons from building HTA's tools and testing our own strategies alongside Claude. Our Edge & Strategy posts told you straight. We tested 47 strategies. Zero survived full verification.

Every single one looked good at some point. A clean equity curve. A promising win rate. One number that made us want to believe...

"If the tests pass, the tool works." That's the assumption almost everyone makes about AI-built software. We made it too. For about twenty minutes.

Earlier this year we had Claude build us a position-sizing guardrail tool. Something to catch us before we sized a trade too big. The first version came back looking sharp. Every test passed. The documentation read like a senior engineer wrote it on a good day. Our gut said ship it.

We didn't. And that decision is the whole point of this post.

What Was A "Perfect" Build Actually Hiding?

I (Reid) run point on our AI builds, so I was the one staring at that first version, ready to call it done. Then we did what we tell every student to do with a new strategy before it touches real money. We audited it instead of trusting it.

What we found wasn't a small bug. It was three of them, stacked underneath a shiny surface.

The tool was reading from a dead data file. A source that no longer existed in the pipeline it was supposedly checking. Run...

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 ...

Somewhere between 80 and 100 prop firms disappeared in 2024. Not “struggled.” Gone. If you were shopping for a funded account two years ago, a big chunk of the names on your list don’t exist anymore.

That sounds like bad news. We think it’s the opposite.

From roughly 2020 to 2023, the prop-firm world ran on a gold-rush script: cheap challenges, easy funding, big promises, a new firm launching every week. 2026 looks different. The industry now calls it the “operator era” — fewer firms, higher standards, and real weight on trust, risk control, and education. The market quietly repriced hype.

We watched the whole cycle from the coaching side here at Hawai‘i Trading Academy. And the consolidation confirms the thing we built this place around: durable skill beats hype every single time the tide goes out.

What actually happened to all those firms?

Two things, mostly. First, a lot of them were undercapitalized. They sold cheap challenges and paid out on the accounts that passed, quietly ...

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...