The secrets of

Trading Funded
Accounts
A S T E P B Y S T E P P L AY B O O K T O

S E C U R I N G T R A D I N G C A P I TA L

W W W. TA K E P R O F I T T R A D E R . C O M
Let’s get straight to
the point

The goal of this playbook is to show you how to get funded as a trader.

So, instead of trying to teach you how I trade, I will show you some
statistical trends that we have seen over and over and over again at Take
Profit Trader (and many years before that).

I will not dive deep into where to enter and exit trades, or any specific type
of trading strategy.

The reason for this is simple:

I don’t know what market you are trading, or your timeframe.

With that said, if you need a trading strategy, you can use mine. I will
make a free course inside the Control Center (dashboard) for members of
Take Profit Trader. There you will be able to access the videos and learn
how I trade the markets.

Depending on when you’re reading this, it may already be done. Most of

my strategy was tailored around getting funded because I lost too much
of my own money starting out. I needed funding, and if you’re reading
this playbook, I bet you do too!
The reason I know this
stuff is because I’ve
been there.

My name is James Sixsmith, I’m one of the founders and CEO of

Take Profit Trader. If you stick with me for a second, you will realize
that this is not about me, but about you. In fact, I’d be willing to bet I’m
like you in many ways, though our professions are most likely very
different. I was a professional hockey player when I was starting
trading, looking to transition into something that would allow me to
earn the same or more, without being owned by a corporation.

I respect your time too much to fill this playbook with “fluff” or
some annoying story about me (that nobody cares about), but bear
with me a second because part of my story is important in regards
to what I’m about to teach you.
The short version of my
story is this...

I was terrible at trading when I started. I lost nearly $150,000 in my first

year of trading because I was naive. Have you ever heard the saying “you
don’t know what you don’t know”? Well, that was me (and probably you).

What ended up saving me as a trader was luck. I found someone who

believed in my passion to make trading work, who was willing to invest
some money in me. This forced me to learn discipline, accountability,
and most importantly, how to manage losses. The trading capital was
a tremendous help and I vowed to pay it forward someday, which
brings this full circle.

After I had some success in the markets, I started a small company

(Trade Context) to show my roadmap (and get funding) to other traders.
Knowing that trading capital was an extremely important piece of the
profitability puzzle, we made it a requirement that our traders get funding.
The synergy of strategy and supplying the accounts for our traders
landed us in major publications like CNBC, Entrepreneur, Business Insider,
MSN, Money, Forbes, USA Today and many more.

So, while Take Profit Trader opened its doors in late 2021, the trends
in this guide are not anecdotal. They are backed by statistics from
millions of data points across thousands of traders that I’ve seen with
my own eyes.
Two things to know before we start:

Trading is hard
The things I will explain here are simple in theory, but not easy in practice.
Even after you are equipped with your new knowledge (after reading
this), it’s likely that you’re going to make mistakes.

Remember to not beat yourself up about mistakes. As famous hedge

fund manager Ray Dallio once said, “I believe anyone who has made
money in trading has had to experience horrendous pain at some point.”

Don’t change you

I think it goes without saying, but I’m not telling you what to do, nor am
I giving you investment advice. I’m happy to share general trends that
we have seen over the years, but you should take the information and
make it yours. Do not change who you are as a trader, just add a piece
or two to your toolkit.
The two main faults

If you’ve ever traded at a prop firm before, you know that the aptitude
tests are difficult. They almost feel like they are rigged against you.

I’ve even heard people call them “carnival rules.”

While I understand the frustration of traders, it’s important to understand

what a proprietary trading firm (prop firm) is trying to achieve.

The MAIN goal of any of these firms, Take Profit Trader included, is to
ensure that traders can manage risk. We want to know that if a trader
passes the test and gets a live account, the money is in good hands and
not going to be traded recklessly (gambled).

We do this by dangling a carrot, so to speak, over the trader’s head to see

if they take the bait.

The really good news about the two faults is they are correlated. When
you have one of the faults, you usually have both.

However, when you fix one, you usually fix the second, automatically.
FA U LT # 1

Trading Too Large

The biggest problem we see across the board is traders simply

trade too large for their account size. Again, this is true for “non-prop”
traders too. And there is only one thing that is certain in trading - if you
trade too large, your risk of ruin is 100%.

Let’s say for example purposes you want to get a $50,000 funded
trading account. Below is an image of a $50,000 futures test at
TakeProfitTrader.com. The FIRST numbers you should look at are the
daily loss limit and EOD trailing drawdown. Those numbers tell you how
much money you can lose before the test would be deemed unsuccessful.
Personally, I always start with the smaller number, the daily loss limit.
I trade the E-Mini SP500 (ES), which is simply the futures version of the
S&P 500 index. The point value of one contract in the ES is $50. That
means that for each one point move in the S&P 500, the same one point
move in the ES is worth 50X that of it’s SPX (S&P 500 cash) counterpart.

The math is simple: If I have $1100 to lose on any given day, trading ONE
contract in the ES gives me 22 points of risk (22 points X $50 = $1100),
before I hit my daily loss limit. Now let’s go to a chart showing the
“average” range for a day in the ES.

If you look closely at the image, the bottom panel is the “Average Range”
of the ES over the last 14 days. I’m not a huge fan of averages, but for
example purposes, it does the trick. What this chart is telling us is that
over the last 14 days, the ES has moved 78 points per day, on average.
If we go back to the math, remember I said that I only had 22 points
of risk? Well that is less than a quarter of the average daily range in this
market. We will get to the % of the range part in fault #2, but first I want
to point your attention back to the original picture.

Remember when I was talking about “taking the bait?” This is what
I mean. I talked earlier about the 22 points on ONE contract, but you
have the ability to trade up to 6 contracts. However, the 22 points of
risk doesn’t change. That means if you trade the maximum amount
of size allowed (6 contracts) you have just 3.666 points of risk
(3.666 points X 6 contracts= 22 points).

You can probably already see where this is going. If you’re giving
yourself 3.5 points of risk (ES moves in .25 increments) in a market
that moves 78 points on average in a single day, your chance of
succeeding is almost 0.
To illustrate this point, I can simply open up our risk software at any
point in time and filter the accounts for poorest performing that day.
As I am writing this, I pulled up the software…

Some of the account numbers are blurred for privacy purposes, but
these are the biggest losing accounts for the day, as I type. The thing
that most of these accounts have in common (and it’s the same EVERY
day) is they are using a large percentage of their maximum size.

The reason the account number is visible is to show you the trades
associated with this account. This trader happened to be trading a
$150,000 account, therefore had 15 contracts to trade at his/her
discretion, and a $3300 maximum loss (the loss ended up being bigger
by the time the software liquidated the position). You can see from the
image that the trader was trading 10 contracts, broken up into two
orders of five contracts.
To the untrained eye, this looks
like a trader who doesn’t know
how to pick the direction of the
market. Professionals, however,
will tell you that NO ONE can tell
where the market is going in the
next few minutes, and trading
is all about managing your risk.
There is simply no way this
trader can survive, long term,
by trading 10 contracts with
a $3300 risk limit.

By trading large sizes (in relation

to your account parameters),
a trader is forced to trade one
specific kind of strategy. These
strategies are often referred to
as ‘scalping.’ While it seems
logical that trading with smaller
stop losses and targets is the
easiest way to make money and
manage risk, it turns out it’s
exactly the opposite.

This leads us right into fault #2.

FA U LT # 2

Scalping

The best way to explain fault #2 is to walk through the if-then statements
that most traders make when they start out. It goes something like this:

If I want to limit my risk, then I must go for small gains and losses. While
this sounds perfectly logical, this strategy KILLS traders. The reason,
backed by statistics from thousands of traders, is due to the randomness
of the markets on the shorter time frames. Put simply, the closer you are
to the market, the harder it is to predict what will happen next. Now, I’m
not advocating that you take on gigantic risk and let losses get very large,
but I am advocating that you give your trades some room to work.

Traders generally do better looking at 5 minute bars than 1 minute bars.

Those same traders do even better by looking at 15 minute bars than 5
minute bars and so on. We have seen hundreds, if not thousands of
traders have better results by moving further away from the market
(to a 15 minute bar from a 5 minute bar), than the opposite (to a 5 minute
bar from a 15 minute bar).

Another very important point to note: The difficulty and randomness of

the smaller time frames appears to be getting worse over the last five
years. One possible explanation is that the computer algorithms and high
frequency trading (HFT) funds own this space. Their infrastructure and
tech advantages make it very difficult to compete on these timeframes.
If we go back to the math, remember I said that I only had 22 points
of risk? Well that is less than a quarter of the average daily range in this
market. We will get to the % of the range part in fault #2, but first I want
to point your attention back to the original picture.

If you look at the chart, you will see that the trader was forced out of
the trade very close to where the market turned around. If I had a penny
for everytime I have seen this occurrence, I’d be a billionaire. That’s
an obvious exaggeration, but you get the point. The market has an
uncanny ability to take out poorly positioned (and overleveraged
traders) before it turns.
It may even seem that I “cherry picked” this example, but I can assure
you, I see this same story every single trading day. Instead of making
these same mistakes, let’s make a plan on how to easily avoid making
these mistakes, so you can become a funded trader and enjoy some
success as a trader.

“The definition of
insanity is doing
the same thing
over and over again
and expecting
different results.”

Albert Einstein

Okay, so now what?

So now that you know what NOT to do, let’s talk about the Secrets to
Trading A Funded Account.
SECRET #1

Trade the biggest account size that you can

The reason behind this secret is simple: the largest account gives you the
highest loss limit. This allows you to have more “point” risk. For example,
a $3000 loss limit is 60 points in the ES, while a $2000 loss is 40 points in
the ES. Bigger accounts allow for more mistakes and more flexibility.

SECRET #2

Don’t trade more than 25% of your available size

This secret could have been called “don’t take the bait!” It’s directly
related to fault #1 that we discussed earlier. Instead of giving one
example, I will show you a table of my recommended trading sizes for
each account at Take Profit Trader.

Account Size Allowed Contracts 25% Size Rule

$ 25,000 3 1

$ 50,000 6 1

$ 75,000 9 2

$ 100,000 12 3

$ 150,000 15 3

Notice for the $25,000 account that the 25% rule cannot apply because
the lowest we can go is 1 contract.
SECRET #3

Take Your Time

This one is more obvious, so let’s keep it brief. The rules state that
you need to trade a minimum of 10 trading days to complete your
trading test, so why try to reach the profit target on day one? Rushing
to get to the profit target puts traders into this negative feedback loop.
It goes something like this.

Put on too much size ― fail the test ― reset account.

If that sounds familiar to you, try to remind yourself that trading is YOUR
business, it’s going to take some time. Don’t be in a rush.
Let’s rewind for a second

To wrap this up, I want to go back to the trader who blew out their
account today, and show how it could have been different. By following
the “secrets” in this playbook, I wholeheartedly believe this trader
would have had a profitable day.

I made some annotations on the chart, showing what the trader would
have done, in regards to trading size, by following our 25% secret.
I’m not implying that this trader would have taken profit at the highest
point of the day, this isn’t hindsight trading. I’m simply saying by trading
less size, the trader gives him/herself a chance! By trading maximum
size, you fall victim to randomness.
Remember, fixing the size often
fixes many other problems in
trading.

It will keep you on the right side

of the market more often and
keep you from going down rabbit
holes thinking that you need to
change your strategy.

I often see days, months, and

years wasted looking for the holy
grail of trading.

The holy grail is not some

indicator or strategy, it’s making
sure you are sized correctly and
understanding the time frames
you can compete on.
What’s next?

With this new information, you are ready to go out and get your very
own funded trading account. There are many places to go for funding,
but my biased opinion is that Take Profit Trader is the best out there.
We offer things others don’t, like instant withdrawals. With instant
withdraws (see image below) you don’t have to wait around to take your
profits out, once funded. Withdraw at any time, directly to Paypal or
your bank account. We are also going to offer all asset classes so
you can trade futures, stocks, cryptos, or forex.
For taking the time to make it this
far in the playbook, I’d like to offer
you a 25% discount for trying
us out at TakeProfitTrader.com.

Simply go to TakeProfitTrader.com
create an account, then enter the
promo code:

SU4VI870

to receive 25% off your first month.

I hope you found this helpful, and

I hope to see you at Take Profit
Trader soon.

J a m e s
James Sixsmith
Founder and CEO Take Profit Trader
W W W. TA K E P R O F I T T R A D E R . C O M