In my opinion none of the companies that fund traders if they pass tryouts are "scams" they are just very intelligent and lucrative business models for the owners but from a trader (customer) perspective however what you do need to do is look at the real math of the value proposition in a straightforward manner and if you choose to move forward at least you have a full understanding of the math and what exactly you have the possibility of getting back in the way of risk capital funding should you indeed pass the tryout and get a funded account with the same math parameters as the tryout account
First with many companies the tryout sizes are marketed as $25,000, $50,000, $100,000, $150,000 - etc - nothing wrong there--they can certainly call the tryouts by whatever title or name they want for marketing purposes to catch your interest but please remember these tryout accounts are just virtual currency and the real funding to trade against on the tryout account is
a) your max daily loss limit
b) your max weekly loss limit (if applicable and if it is a higher number than the daily loss limit)
c) your trailing max drawdown amount
so as an example on a $50K Topstep Trader tryout the daily loss limit is $1,000, the weekly loss limit is $1,000 and the trailing max drawdown is $2,000
$1,000 and $2,000 ---That is the amount you are actually trading with (not $50K) because if you violate the $2,000 trailing max drawdown you fail. If you violate the $1,000 daily loss limit you fail. Same thing if you are funded (with the same math loss parameters as the tryout--which in most cases is the case at least at the start) - their risk capital on that particular account is maxed out at $2,000 (not $50K) - you start of day 1 in a funded account and lose $500 you have not violated the daily loss limit but you have lost $500, then day 2 you lose $600--well you didnt violate the daily loss limit of $1,000 but you did violate the weekly loss limit of $1,000 since you lost $500 on day 1 and $600 on Day 2 - you fail and your funded account is closed - their loss is $1,100 in risk capital against any tryout monthly fees you paid to them before passing the tryout and getting a funded acct (and any reset fees you may have paid to them before passing the tryout and getting a funded acct).
Lets say you only lose $100 per day starting day 1 - so obviously you never violated the $1,000 daily loss limit and there are 5 trading days a week so losing $100 a day for 5 days is $500 so you haven't violated the $1,000 weekly loss limit either. So for the fist month you lose $100 per day for the 1st 20 trading days and in total you lose $2,000 - you fail and your funded account is closed. Their loss is $2,000 in capital against any tryout monthly fees you paid to them before passing the tryout and getting a funded acct (and any reset fees you may have paid to them before passing the tryout and getting a funded acct).
Now lets say you start making profits day 1, in fact you never lose money on any trading day ever. You make $100 a day on average and at the end of 20 trading days you have $2,000 in trading profits. You make a withdrawal request for $2,000 and Topstep allows you to keep the 1st $5,000 at 100% and they send you $2,000 minus any applicable ACH or wire fee and your funded account is still closed--yes that is right your funded account is closed because you have violated the trailing max drawdown as you withdrew your $2,000 in profits and your account balance is now $0 (not $50,000) and because your account balance is zero you no longer have any trailing max drawdown amount left to trade against - meaning their is no risk capital left in the account despite the fact that you never had a losing day and only withdrew the profits.
so nothing wrong with any of the above - its just many prospective traders just dont take the time to look at the entirety of the math of dollars they pay in VS the true risk capital that they can possibly get back in return should they pass the tryout and also how exactly the math works on a funded account should you actually want to make a withdrawal of profits
Based on my limited time on this forum, I already know you'll get responses ranging from TST is a scam to TST is awesome.
I'm in a TST combine myself, and so far so good. I did a fair amount of research before jumping in myself. I've heard of plenty of funded traders, and withdrawing funds. It does sound though like the success rate is small, and that's where a lot of the "TST is a scam" talk comes from, when I think most of that is really people just couldn't stick to the rules and pass the combines. I can only guess but I'd say easily less than 10% of the people who sign up make it to funded, and probably have plenty of resets. Again my impression is they are just trying to do the slot machine model, and hail mary it and try and beat the combine as quickly and easily as possible, and that's where it's catching them and they have to reset. I'm the first to admit that was my approach for 2 resets, then I realized maybe i should take a slow and steady approach, and it's worked out far better.
Earn2Trade and SMB Capital seem to be the other 2 main ones that draw attention. I know E2T is active on the forums answering questions, although mainly they just end up getting a bunch of trolls critizing them saying its a scam, when again it's really just that people can't pass their gauntlet, get mad, and fire away online because its easy.
The general sentiment I've found for TST people is the ones who pass the combines and get funded stick with them for a little bit, then move onto their own accounts after withdrawing profits from TST because they don't want to do the 80/20 split, which is completely reasonable and exactly what I would do as well.
Hope that helps!
