Passed the SMB Futures tryout in 15 days

trade2020 said:
"I always thought balance and drawdown limit resetted after each withdraw."

Yes that is what I thought as well--however that is not the case with TST or E2T

On TST or E2T (either one can post here and correct me if I am wrong) my understanding the way they currently handle funded trader accounts is as follows

To keep this simple we will use 1 example for both (keep in mind Topstep doesnt take a 20% cut on the 1st $5,000 and E2T does take 20% on any amount withdrawn and doesnt offer a 100% threshold for withdrawals like Topstep does with the initil $5,000 in withdrawals)

*****Also please keep in mind that Earn2Trade (E2T) uses funding partners such as Helios for the funded accounts so where it says E2T above as well as below in the examples it really could mean Helios (or whomever the funding partner is) and not E2T******

Say you took the $150K combine challenge and that has a $3,000 daily loss limit and a $4500 max trailing drawdown. You pass and you get your funded account offer and it has the same $3,000 daily loss limit and $4,500 max trailing drawdown. Now you have passed and are trading live in your funded account.

Week 1 of your live funded account you never violate the daily loss limit and you actually generate a net profit of $5,000 (after commissions) in your account for the week. You want to pay some bills so you put in a withdrawal request.

Let now review what happens next based on the amount of your withdrawal request:

Withdrawal option 1) Lets say you need to withdraw all $5,000 to pay your mortgage and some other stuff, you are thinking surely if I withdraw all $5,000 I will still have my daily loss limit and max trailing drawdown of $4,500 and if I withdraw all $5,000 it will be going back to just like it was day 1 of my funded account---and that is where you would be wrong. Since it is a "trailing" max drawdown it trails from the peak equity meaning once you pass $4,500 in profits generated the $4,500 trailing max drawdown goes away and now your challenge is to not let your account balance drop to zero whether it is through withdrawals of profits or from trading losses .
so the bottom line is that if you generated $5,000 in profits the 1st week and you sent a withdrawal request in to withdraw all $5,000 then your funded account with either company would be closed as you would have no more drawdown left

Withdrawal option 2) Lets say you only need to withdraw $1500 for the weekend to go out partying. You send in a withdraw request for $1,500. For the moment we will forget about the difference in how Topstep and E2T do their 20% cuts on withdrawals and to keep it simple we will say that in either case--the company takes its 20% cut out of $300 and sends you the difference of $1200 (minus any service fee for ACH or wire). You know have $3,500 left in your account. Now when you start week 2 of trading you still have your $3000 daily loss limit however you only have a $3,500 max drawdown and not $4,500 max drawdown like you did when you started week 1 because it is a trailing drawdown and not a fixed drawdown.

So essentially --after you have an equity peak in your acct of $4,500 or more you need to leave $4,500 of net profits in the account at all times (after their 20% cut is factored in) in order to continue to have a $4,500 max drawdown.

So as an example with Topstep Trader if you initially generated $5,000 in net profits in month 1 you can take out a withdrawal of $500 and leave all $4,500 in the account. They don't take any cut on the 1st $5,000 in profits you generate. Then lets say in month 2 you generate $5,000 in additional profits - now there is $9,500 in your account ($4500 from month 1 left over plus $5,000 in new addl profits). You withdraw $5,000 and they take their 20% cut and you get the remaining balance of $4,000 (minus any applicable ACH or wire fee). and you left $4,500 of your previous profits in the account so you could continue to have your original max trailing drawdown of $4,500 intact for trading in month 3

So as an example with E2T if you initially generated $5,000 in net profits in month 1 - E2T will take out their cut of the $5,000 whether you take a withdrawal or not. Let's assume you take no withdrawal - E2T takes 20% of $5,000 which is $1,000 and now your account balance drops from $5,000 to $4,000. You no longer have a $4,500 max trailing drawdown--all you have now is a $4,000 max trailing drawdown to trade from at this point as it is based now on the buffer you have in your account above $0 meaning you need to generate enough additional profits and not withdraw them that after E2T takes its 20% cut of the new profits that the amount left over is $4,500 or more and you leave that amount in the account to have your max drawdown back like you had at the start in wek 1 of the funded account

Hopefully at some point in the future TST and E2T will either make adjustments to these programs or come out with a revised program

My suggestion would be for the trader who passed the combine tryouts to be given a choice of funding such as:

Option A- our standard 80-20 deal with a trailing max drawdown that works like the above examples

Option B - instead of the funding partner taking a 20% cut and the trader getting 80% - under this new option the trade gets 70% and the funding partner gets 30% however 2 things are different

a) the drawdown is now a fixed drawdown and not a trailing drawdown so the trader can withdraw to zero as often as they like and still have the max drawdown to trade against just like day 1 (and for affording that privilege to the trader the investor now gets 30% instead of 20%)

and

b) the trader is given defined metrics to reach or surpass in order to get guaranteed increased funding (higher max fixed drawdown and higher daily loss limits) over time with proven results
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TST is running a scam with the "first $5,000 belongs to the trader". There's absolutely nothing at the website that indicates that an account would be closed if that $5,000 was withdrawn. Thank you for the clarification. I think this is an issue for the CFTC.
 
The statement is basically true--the 1st $5,000 belongs to the trader either way even if they close your acct but I agree that they need to clarify (or at least emphasize more) how the trailing drawdown works in the funded account ---if I had to guess I would say that it probably is on their website somewhere but they dont really explain it in plain english
 
trade2020 said:
The statement is basically true--the 1st $5,000 belongs to the trader either way even if they close your acct but I agree that they need to clarify (or at least emphasize more) how the trailing drawdown works in the funded account ---if I had to guess I would say that it probably is on their website somewhere but they dont really explain it in plain english
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Well here's a solution: After the account is closed when you withdraw the entire $5,000, have your wife or one of your kids open another account. You trade the account, make another $5,000 and withdraw. Rinse and repeat with different sign ups. If you have 10 signups and they all make $5,000, that's $50,000!
I am going to ask the CFTC about this - I know someone there who will review their website.
 
Here is where it is on their website-


https://help.topsteptrader.com/hc/e...ke-a-withdrawal-and-what-is-the-profit-split-

-it pretty much says it but doesnt really explain what it means with an example

Once the withdrawal request is processed, the Trailing Max Drawdown will be automatically set to the starting account balance (the trader cannot allow the account balance to reach or go below $0 after a withdrawal).


How can I make a withdrawal and what is the profit split?


Traders can request a withdrawal from their Funded Account® at any time by contacting our team at support@topsteptrader.com. Once a trader requests a withdrawal, we will work with our brokerage partners to remove the funds from the trader’s Funded Account. Once we have confirmation that the funds have been moved at the brokerage, we will begin the transfer process with our banks to disperse the funds. Withdrawals are generally dispersed to the trader within seven (7) business days.

We can process withdrawals using the following methods:

  • Checks: We can send any trader a paper check in the mail for the amount requested. Checks sent outside the US will likely take significantly longer than 7 business days, and we do not provide an estimated delivery date for physical mail.
  • ACH Wire: Bank wire available for traders with a US-based bank account (the trader does not need to be a US resident). There is no transfer fee for ACH wires.
  • Standard Bank Wire: Bank wire available for traders with banks based outside the US. Traders living outside the US must submit their bank information using SWIFT format to ensure a successful transfer of funds. For standard wire transfers under $500, a $50 transaction fee will be applied. There is no transfer fee for wire transfers over $500. The standard wire is the quickest and efficient method available to make withdrawals for traders outside the US.
We are unable to process withdrawals via PayPal, and we cannot transfer funds from the Funded Account to a personal trading account held by the trader.

Traders will receive 100% of the profits from withdrawals, up to a total of $5,000. After the first $5,000 of funds have been received by the trader, the profit split will become 80/20, with the trader receiving 80% of withdrawals and TopstepTrader retains 20% of the requested withdrawal.

Once the withdrawal request is processed, the Trailing Max Drawdown will be automatically set to the starting account balance (the trader cannot allow the account balance to reach or go below $0 after a withdrawal).




ZTrader888 said:
Well here's a solution: After the account is closed when you withdraw the entire $5,000, have your wife or one of your kids open another account. You trade the account, make another $5,000 and withdraw. Rinse and repeat with different sign ups. If you have 10 signups and they all make $5,000, that's $50,000!
I am going to ask the CFTC about this - I know someone there who will review their website.
More...
 
It looks like Earn2Trade does about the same thing. I just went on their Chat and tried to extract an answer from the person. Practically impossible - clear as mud. I copied the transcript. These companies actually take no risk at all - the traders are funding their own accounts. Totally misrepresented at their websites.
 
trade2020 said:
Here is where it is on their website-


https://help.topsteptrader.com/hc/e...ke-a-withdrawal-and-what-is-the-profit-split-

-it pretty much says it but doesnt really explain what it means with an example

Once the withdrawal request is processed, the Trailing Max Drawdown will be automatically set to the starting account balance (the trader cannot allow the account balance to reach or go below $0 after a withdrawal).


How can I make a withdrawal and what is the profit split?


Traders can request a withdrawal from their Funded Account® at any time by contacting our team at support@topsteptrader.com. Once a trader requests a withdrawal, we will work with our brokerage partners to remove the funds from the trader’s Funded Account. Once we have confirmation that the funds have been moved at the brokerage, we will begin the transfer process with our banks to disperse the funds. Withdrawals are generally dispersed to the trader within seven (7) business days.

We can process withdrawals using the following methods:

  • Checks: We can send any trader a paper check in the mail for the amount requested. Checks sent outside the US will likely take significantly longer than 7 business days, and we do not provide an estimated delivery date for physical mail.
  • ACH Wire: Bank wire available for traders with a US-based bank account (the trader does not need to be a US resident). There is no transfer fee for ACH wires.
  • Standard Bank Wire: Bank wire available for traders with banks based outside the US. Traders living outside the US must submit their bank information using SWIFT format to ensure a successful transfer of funds. For standard wire transfers under $500, a $50 transaction fee will be applied. There is no transfer fee for wire transfers over $500. The standard wire is the quickest and efficient method available to make withdrawals for traders outside the US.
We are unable to process withdrawals via PayPal, and we cannot transfer funds from the Funded Account to a personal trading account held by the trader.

Traders will receive 100% of the profits from withdrawals, up to a total of $5,000. After the first $5,000 of funds have been received by the trader, the profit split will become 80/20, with the trader receiving 80% of withdrawals and TopstepTrader retains 20% of the requested withdrawal.

Once the withdrawal request is processed, the Trailing Max Drawdown will be automatically set to the starting account balance (the trader cannot allow the account balance to reach or go below $0 after a withdrawal).
More...

Your wife or whoever is going to open an account with them will need a separate bank account for deposit. Not hard to do. These guys have a nice scam running.
 
I think they do have it somewhere on their websites --it is just not thoroughly explained in plain english on the websites where most traders can reasonably understand the full ramifications of it--but probably for legal purposes they explain it enough to pass legal muster and thus there is nothing anyone can really do about it---except stop participating in combines and paying them until they make changes to make it more appealing and realistic for making a recurring trading income by allowing withdrawals down to zero and still have your max drawdown to begin trading again


ZTrader888 said:
It looks like Earn2Trade does about the same thing. I just went on their Chat and tried to extract an answer from the person. Practically impossible - clear as mud. I copied the transcript. These companies actually take no risk at all - the traders are funding their own accounts. Totally misrepresented at their websites.
More...
 
The bottom line is they're not funding anyone. The trailing draw down protects them from loss. If you're in a trade and you hit that draw down, I presume they exit the trade for you so as not to incur additional loss. Not at all transparent.
 
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