THE LIVE ACCOUNT, FUNDED

Lesson 65 of 72 · 7 min read · Stage 10 · Optional: First Tiny Live Trades · Updated Oct 21, 2026

STAGE 10 — Optional: First Tiny Live Trades · Prerequisite: THE READINESS AUDIT: EVERY GATE, ONE CHECKLIST

TL;DR

The account is a CASH account. Stage 2’s reasoning stands with money attached: no borrowed money, no interest clock, no forced sales — the worst day in a cash account is bounded by what’s in it, and this course’s structures never needed the trapdoor.
Fund the tranche, not the figure. Stage 0’s certified figure is the ceiling on everything; the first live phase runs on a slice of it — the example moves $5,000 of $25,000 — chosen so the protocol’s worst pre-committed outcome (Lesson 4’s −$426 floor) is a small share of the slice and a smaller one of the figure.
No top-ups, ever, mid-protocol. Adding money after losses so ‘the percentages work’ converts a bounded tuition into an open-ended commitment and destroys the block’s data in the same motion. If the tranche’s triggers fire, the experiment ends and a review — not a transfer — decides what happens next.

A cash account, an honest application, and one transfer: the certified figure is the ceiling, the tuition tranche is what actually moves, and nothing gets topped up mid-protocol. Stage 2’s account mechanics — with real money now attached. Think of it as a research grant, not a bank balance. A lab doesn’t hand a new experiment the institution’s whole endowment; it releases a tranche, sized to the experiment’s design, and the experiment reports back before anyone discusses more. The rest of the money isn’t ‘idle’ — it’s the institution’s safety, and its distance from the bench is what lets the experiment stay honest: nobody in the lab is tempted to fudge a result because the rent depends on it. Your certified figure is the endowment. The tranche is the grant. The protocol (Lesson 4) is the experiment — and it reports to the review, not to your hopes, before any second tranche is even a conversation.

THE LIVE ACCOUNT, FUNDED — annotated chart (Funding diagram — certified figure, tuition tranche, and what stays behind) — Funding diagram · EXAMPLE — the course’s example learner · Stage 0 certified $25,000 as the figure whose total loss changes nothing (Stage 0, Line 4). Of that, a tuition tranche of $5,000 moves to a cash account; $20,000 stays where it was. The tranche is a funding decision, not a risk budget — Lesson 3 does the sizing sums — and the protocol forbids topping it up: a refill mid-block rewrites the experiment and the risk contract in the same motion. Your figures are your worksheet’s; the proportions are the lesson.

THE TAKEAWAYS

The account’s shape: cash, at a broker you already know from the paper phase — Stage 2’s selection questions still apply (fees published, Rule 606 reports available, fills reported properly). Margin is not applied for and not enabled: Stage 8 priced a vertical’s buying-power effect at roughly its maximum loss, so the course’s structures fit a cash account’s collateral logic. Whether a cash account at your broker may hold defined-risk spreads is the broker’s stated policy — read the account’s options agreement BEFORE funding; if cash-account spreads aren’t permitted there, that is a broker-selection fact, never a reason to switch on borrowing.
The application, honestly: trading options live means an approval level, assigned by the broker from the application’s answers — experience, finances, objectives. This stage needs only the level that permits defined-risk spreads. Inflating the answers to unlock more is disqualifying in this course, and not as etiquette: the application is the first live trade of the stage, and it is graded like one. A trader who lies to a form to reach more risk has announced their process before the first fill.
The money moves once: one transfer of the tranche, from the account where the certified figure already lives. Expect Stage 2’s mechanics with money attached — transfers take time to arrive and settle, new funds may be held before they are tradable, and in a cash account purchases run on settled money: the good faith violation stops being a quiz answer and becomes a real way to bruise a new account. Fund on a quiet day, not on a morning a setup is calling. The first trade waits for settled funds and a written plan card, in that order.
What the account now produces: real confirmations for every fill, real statements, and after the year turns, the tax package built around Form 1099-B (Lesson 6). Read the first confirmation the day it arrives — price, fees, the works — against the journal entry for the same trade. That reconciliation, started at trade #1, is the cheapest records habit in the stage; discovering in February that your journal and your broker disagree about October is the expensive version.

RUSTY’S RULE

Cash account, honest application, one transfer: the tranche moves once, and the protocol — never a losing week — decides if it ever moves again.

WORKED EXAMPLE — STEP BY STEP

The figures, from the example’s worksheet: certified figure $25,000 (Stage 0, Line 4 — money whose TOTAL loss changes nothing). The tranche: $5,000, one fifth. Why a fifth is the right neighbourhood: Lesson 4’s block floor is −$426, which is 8.5% of the tranche and 1.7% of the certified figure; and $5,000 covers one contract’s buying-power effect — the $142 maximum loss of the block’s structure, Stage 8’s measure — thirty-five times over, so collateral never pressures a decision inside the block.
The application: cash account; options approval requested for defined-risk spreads; the experience answers state the plain truth — paper trading under a written curriculum, first live phase. The approval that returns is the spreads level. Nothing else is requested, and nothing else is needed by any lesson on this course’s main path.
The transfer: $5,000, once, from the savings account holding the certified figure. The remaining $20,000 does not move, is not linked for instant top-ups, and appears in no sizing sum in Lesson 3 — percentages there are computed against the certified figure, while the account balance governs only what can be collateralised, which at one contract is never the binding constraint.
The first week with the account open contains NO trade. Its jobs: confirm the funds have settled; read the account’s options agreement once, slowly; find where confirmations and the fill report live (Stage 2’s geography, real this time); and pin Lesson 3’s sizing card where the journal lives. Trade #1 of the protocol happens only after all four — the account is a room you inspect before you work in it.

FUNDING BY MOMENTUM

The losing variant funds the whole certified figure ‘to keep it simple’ — and simplicity turns out to mean that every percentage in the block is now computed against money actually sitting in the account, and a bad week is a larger event in the learner’s life than the design ever intended. Its sibling is the top-up: two losses in, $2,000 arrives ‘so the position sizes stay proportional’ — and with that transfer the block stops being an experiment with a floor and becomes an open account being fed. Neither move looks like a trade, and no quiz in the earlier stages names them. That is why this lesson grades them as the stage’s first trades: the funding decisions are where the risk contract is actually signed.

WHAT CHANGES THE DAY REAL FILLS EXIST

Stage 4 named the three gaps no simulator closes; this account is where the first two stop being theory. FILLS: a real order queues, can fill partially, and pays the spread that actually exists at that second — Stage 2’s mechanics with money attached. The fill report, not the chart, is the trade’s true price, and the journal records the report. FRICTION: paper charged friction by the log’s convention (enter at the ask, exit at the bid); live replaces the estimate with actuals — at Stage 2’s published example schedule ($0.65 per contract per side, Fidelity’s), opening and closing a two-leg spread is four contract-sides: $2.60 in contract fees alone, before any spread toll — 1.8% of the example structure’s entire $142 maximum loss, on every round trip. FEELINGS: the third gap gets Lesson 5 to itself.

COMMON BEGINNER MISTAKES

Enabling margin ‘just in case.’ The case never comes in this course — the structures are defined-risk — and the trapdoor’s rent and forced-sale clause come free with the switch (Stage 2).
Funding the full certified figure. The tranche isn’t timidity; it is what makes the block’s floor a rounding error in your life instead of an event in it.
Topping up after losses. A refill is a new risk decision disguised as bookkeeping — and it falsifies the block’s record of what the first ten actually cost.
Trading the morning the money lands. Unsettled funds in a cash account is how a good faith violation (Stage 2) becomes a first live memory. The account gets its inspection week.

CHECK YOURSELF

Q1. The example learner’s certified figure is $25,000. The amount that moves into the live account for the first phase is…

Q2. Mid-block, after two losing trades, the account ‘feels small’ and a top-up would restore the percentages. The protocol’s answer is…

Q3. On the options application, rounding your experience UP to unlock higher levels is…

DO IT — ON PAPER: THE FUNDING PAGE

Write the funding page of your protocol (Lesson 4’s card carries a panel for it) before any real application exists: your account type (cash); the broker, with the two Stage 2 facts you verified about it — its published contract fee, and where its Rule 606 report lives; the approval level you will request and the honest experience sentence you will write on the application; your certified figure from Stage 0’s worksheet; your tranche — the amount, and the one-line reason its size is right; and the sentence ‘No top-ups during the block’, initialled. If any line can’t be written from an artefact you hold, it routes back to Lesson 1’s audit. Nothing is opened, funded or applied for by this exercise — the page is the deliverable.

Download this lesson’s cheat sheet (PDF)