Topsteptrader

[ScalperJoe]

Last but not least, the 45% profitable days is not part of the target, but part of the rules you must not violate in order to have a refund or rollover. Failure to reach 5 profitable days means you have to buy multiple entries. That's very annoying. I thought only the risk and schedule rules had to be met to get free rollovers or a refund.

I don't think they do refunds/rollovers anymore, those were the old rules. Just like the Junior/Senior trader levels are now eliminated, plus the annoying 5k and 10k profit cushion you had to maintain before taking a check.

Although it's true regarding the "5 profitable days" comment, I guess you're referencing the 10 day combine. If you're in the continuous, then you can have more than 5 down days, you just have to maintain the same 50% win ratio overall. So the ratio is the same, but you're not restricted by 10 days of trading, thereby allowing more time to make up for any draw.

 

[ResonanceFx]

Hi Scalper Joe, Thanks for your reply.

Ill try to address some of the main points.

For example, let's say you want to open a futures account that requires a $1k minimum per lot intraday for crude, and you're starting with 2 lots maximum. The account you claim "in reality a $1,500 account," when passed and converted to a live account, is actually a $4,000 account, since you would require the $1k/lot minimum to maintain the account, PLUS your max draw of $2,000 in the live account. (I'm using AMP futures for comparison, since they require 1k per lot of crude minimum, and I'm using the maximum allowable draw on the "$50k live account" of $2,000, and a maximum allowable trade size of 2 lots).

Thats true, but I dont think it is really a plus. If your not allowed to open a $1,500 account, theres a reason for it. Because the minimum contract sizes cannot be traded using such a tiny account. It doesnt help that you can indirectly trade a 1,500 account using topstep. It just means you blow up even faster.

If you pass the "$50,000 combine" on crude then you're in essence getting the equivalent of a $4,000 retail crude account.

The 50k combine is still a $1,500 because that is the maximum initial drawdown you are allowed when you start live funded. All other factors do not really matter. The point is, if you lose $1,500, your account is gone, which from a black-and-white perspective, the accoutn is only $1,500 large. The other stuff is all secondary.

However, there are other factors to consider:

1. The costs of a combine vs. costs of blowing up a retail account when first starting out
2. The ability to trade larger lot sizes via the scale up plan, without having to place capital
3. The learning process of gaining the knowledge and discipline to trade in a more structured environment.

Point #1, I agree 100%, but the point I was making is that to most (if not all) prospective traders, they are mislead into doing that calculation using the large figures advertised (10k, 30k, 50k, 100k, 150k etc. When they use the 'true' account sizes the calculus changes.

Point #2, I disagree. "Ability to trade larger via the scale-up plan without having to put up capital" is again misleading. The fact is you scale up by creating a buffer between you and your maximum drawdown allowed. In other words you are generating alpha and being rewarded with a chance to "scale up without putting up capital". You already did the work necessary. You made money on the account. Of-course you should be allowed to scale up. If it was your own $3,000 account that you doubled to $6,000 you would still be able to trade larger. They are not doing you any favors, you make money, you can reinvest that money in the form of larger sizes. Thats obvious.

Point #3, might be true, but it is not really relevant. People dont get excited over topstep and similar programs because they view it as a chance to get education. If were being honest if they purely marketed it is education, very few people would cough up the $$ for combines. Its marketed as a chance to earn a huge account (ie be proprely capitalized). Which is misleading.

 

[ResonanceFx]

I guess the best way to realize what is going on with topsteptrader is to think about the following: Imagine you are a trader who is trying to raise some money from investors. Picture the following conversation:

You: "I'm a trader, Can you invest 1 million dollars with me"
Investor: "A million dollars is a lot of money, I dont want to lose it. How good of a trader are you"
You: "Im a decent trader, but it doesnt really matter. You will not lose ANY money"
Investor: "I dont understand, how can I not lose any money? Isn't trading risky?"
You: "Yes it is risky, but you will not lose any money. Guranteed"
Investor: "Can you explain"
You: "Well it works like this, You give me 1 million dollars, and I trade it. If I lose $20,000 dollars of that million, I will close the account immediately, and refund you your $980,000 and from my own money I will give you an extra $20,000.
Investor: "So if you lose 20k, I get my investment back, and you also refund me the amount lost using your own money?"
You: "Correct. So you have zero risk. But you have unlimited upside!! Why? Because if I start making money, we shall have a 80% to 20% split. You keep 80%, and I will keep 20% of all profits generated. Its a win win"


What is weird about this conversation? Even to the investor who doesnt know anything about trading, it would seem fishy.

For the trader, it would be a pointless scam to run. Why? Because there is zero point to have 1 million dollars, if you must close it after lose 20k (or 500k for that matter). Just like with topstep. There is zero point to having a "100k funded" account when you can only lose $3,000 of it. The only difference is that in this case topstep is risking that $3,000, not you. (But you can bet they have made enough money from failed combines to cover those risks).

For you as the trader, you must weigh your options when considering topstep with the understanding that you are paying real money to try and pass an absurdly unrealistic combine (8% return in 10 days? This is supposed to be "good education") ? And if you do pass, you are getting an account that is super super tiny. The struggles you will now face are the same as every other under capitalized trader trying to make a "living" using a $1,000 to $4,000 account.

Sure you could take advantage of the "higher buying power", but you now GUARANTEE that your account will blow up. You must understand these things when making your decisions.

 

[VPhantom]

Regarding SC vs. TST, why would you pay more for a sim account when the trades don't count? Unless you really like the charts and the ease of connection with your existing broker

Right now, I get my simulation in SierraChart, for dirt cheap compared to a continuous combine, knowing that all the effort I'm investing in configuring it and getting comfortable using its interface (quirks and all) will remain relevant with TST and IB in future live trading. Learning CTS would be specific to TST, and Ninja, well for now I'm staying miles away from .NET stuff so they're out. All I want is basic charting, efficiency and compatibility and SC provides that for me (cheaper than Ninja when you look at real-time data options, for that matter). As for "not counting", in learning intraday trading I feel that most days present tradeable opportunities, and that's not likely to end in my lifetime, so until I have a good enough track record in replay sim I don't see it as a waste not to be monitored by TST or anyone else.

They would have to allow that, or what is the point of the scale up plan? I think it's negotiable after the 11th day.

They still mention a daily loss limit in the day 11+ column, but you're right, instead of assuming I'll ask them in due time. They'd be no better than trading on my own if it didn't scale up with trade size.

I don't like that there's a weekly limit and 20% tougher targets in the $50K+ combines, but yeah if I took the $30K I'd have to ask for a looser daily limit.

About trading max size though, it's not much of an issue for me, except during live scaling up. For example in the $150K combine, my sizes are between 4 and 12, sometimes maybe an exceptional 15 lots. This is based on having room for 3 full stops per day, plus commission and slippage, within the loss limit, which in essence comes down to risking 0.6% of the virtual $150K per trade. In live trading however, I'd thus always trade 3 lots in the initial scale level. As I go up enough in levels, you'd start seeing less-than-maximum size trades, per my normal plan.

If you're in the 50k, and if you're max lot size in the live account is 2 lots to start, then my opinion is to only trade with 2 lots max in the combine, since that is what you'd have to trade in the live account, until you scale up.

I wouldn't limit it to 2 out of 5, because their 10-day objective is rather steep (+6%, except +5% for the $30K) so I would keep scaling according to risk in the combine as I intend to do live. The big picture for me is the size once funded and out of the initial scale, which aside from the "you can ask for more" note, is roughly the combine's max size. Their profit target is too steep at the initial live size, for me.

For now anyway, I'm still early in my sim track record, too early to have an accurate idea of my plan's profitability. The more profitable it is, the less I'm likely to try out TST for additional leverage vs my personal account. Right now it looks like I will, though.

I don't think they do refunds/rollovers anymore, those were the old rules.

Their "learn more" page still says "refundable deposit" to describe the combine's cost. Again, I'm looking at the 10-days, not the continuous ones. Hopefully that won't change, although since the profit target is a "rule" I don't think they issue many refunds at all.

 

[VPhantom]

A couple of points:

There is zero point to having a "100k funded" account when you can only lose $3,000 of it.

The maximum drawdown in the $100K combine is $6,000, not $3,000.

absurdly unrealistic combine (8% return in 10 days?

I agree that the target promotes aggressive tactics not suitable for live trading, however it's 5% for the $30K, and 6% for the higher 3 levels. The only other one is that weird continuous $10K which has a 10% target, yeesh. 5% though, I can see, that's 2.5%/week or 0.5%/day average. For day trading, that's not unheard of.

Sure you could take advantage of the "higher buying power", but you now GUARANTEE that your account will blow up. You must understand these things when making your decisions.

I think there's a sweet spot where it could be advantageous. I've run multiple scenarios of trading on my own vs through them, and initial growth is consistently about 5x faster at TST, for me personally. My plan's max daily drawdown matches theirs, so the overall max drawdown is the only one to keep an eye on, about 3 worst-case losing days in a row is actually not that much. Could happen; that's the part where you're gambling the combine entry "deposit" on market conditions.

And if you do pass, you are getting an account that is super super tiny. The struggles you will now face are the same as every other under capitalized trader trying to make a "living" using a $1,000 to $4,000 account.

The max overall drawdown, you mean? That's one main reason I'm mostly looking at the $150K combine: I can scale down the size of my riskier trades better there in relation to the safer ones, vs the small levels. So even though it's throttled to just 3 lots live initially, the max drawdown is a much more manageable $9K, which gives you much more time to get going if the start is rocky.

And with that perspective, it's not so tiny: taking a $9K hit would hurt too much in my personal account, whereas here TST takes this initial risk after I've invested in a few combines to make it live. Good tradeoff, for someone like me anyway.

 

[ScalperJoe]

Thats true, but I dont think it is really a plus. If your not allowed to open a $1,500 account, theres a reason for it. Because the minimum contract sizes cannot be traded using such a tiny account. It doesnt help that you can indirectly trade a 1,500 account using topstep. It just means you blow up even faster.

I don't think that's a correct way to interpret it. You only "blow up even faster" if you trade larger lot sizes, which you cannot until you scale up. The account is the same, but the cash outlay is less, since you aren't putting up the cash outlay for the maintenance, TST's backing firm is, and therefore in order to compare "apples to apples" you have to factor in the maintenance cost per lot, PLUS whatever the maximum allowable draw amount.

The 50k combine is still a $1,500 because that is the maximum initial drawdown you are allowed when you start live funded. All other factors do not really matter. The point is, if you lose $1,500, your account is gone, which from a black-and-white perspective, the accoutn is only $1,500 large. The other stuff is all secondary.

First, your numbers are off. The 50k live account has a $2,000 maximum initial drawdown, not $1,500. See the chart on the TST site for live account parameters. Second, "all other factors" DO matter and it isn't "secondary" because you have to compare your opportunity cost of having a retail account. Since you can't trade 2 lots of crude with a futures broker for $1,500, you have to factor in what it would cost to have an account with the same parameters elsewhere. No futures broker is going to give you an account with ZERO down and a $2,000 draw without putting any capital up!

Point #1, I agree 100%, but the point I was making is that to most (if not all) prospective traders, they are mislead into doing that calculation using the large figures advertised (10k, 30k, 50k, 100k, 150k etc. When they use the 'true' account sizes the calculus changes.

Those numbers are simply references to label each combine account, and I think most traders are savvy enough to figure out that a "$150k account" has no relation to an actual $150,000 worth of equity. I think we're in agreement that the account size is the total draw in the combine. And as I've said, the total real account value in the live account is the maintenance requirement for the product you trade multiplied by the total lot size, plus the maximum allowable draw. That is the "true" account size. All references to other amounts such as "50k" or "100k" are irrelevant, since they have no quantifiable value relative to the account.

Point #2, I disagree. "Ability to trade larger via the scale-up plan without having to put up capital" is again misleading. The fact is you scale up by creating a buffer between you and your maximum drawdown allowed. In other words you are generating alpha and being rewarded with a chance to "scale up without putting up capital". You already did the work necessary. You made money on the account. Of-course you should be allowed to scale up. If it was your own $3,000 account that you doubled to $6,000 you would still be able to trade larger. They are not doing you any favors, you make money, you can reinvest that money in the form of larger sizes. Thats obvious.

I see your point, however there has to be some decreasing amount of cushion as you scale up that provides value over having a retail account, or you have to begin questioning the 20% cut. In other words, the ONLY value to trade size is if you keep a lower cash outlay that is lower than a retail account, which it obviously is with the live TST account.

Point #3, might be true, but it is not really relevant. People dont get excited over topstep and similar programs because they view it as a chance to get education. If were being honest if they purely marketed it is education, very few people would cough up the $$ for combines. Its marketed as a chance to earn a huge account (ie be proprely capitalized). Which is misleading.

That's true if they had a requirement that you had to purchase education before getting the live account, but they don't! The access to the Squawk and private chat for live traders are offered at zero incremental cost, so it does become relevant to those who want a platform to bounce ideas and seek advice from other traders.

In any case, good discussions here. I still think the TST combine provides a more cost effective opportunity than opening a retail futures account, especially for those who have not traded live futures.

 

[ScalperJoe]

For you as the trader, you must weigh your options when considering topstep with the understanding that you are paying real money to try and pass an absurdly unrealistic combine (8% return in 10 days? This is supposed to be "good education") ? And if you do pass, you are getting an account that is super super tiny. The struggles you will now face are the same as every other under capitalized trader trying to make a "living" using a $1,000 to $4,000 account.

Sure you could take advantage of the "higher buying power", but you now GUARANTEE that your account will blow up. You must understand these things when making your decisions.

Since hundreds have passed, it surely doesn't seem "unrealistic" especially with the continuous option with no time limit. If one can't make $3,000 in a sim account over time with the "50k" combine, then it's probably best to find alternatives to making money vs. trying to game futures intraday in a live account, or at least have another side income. Personally, I prefer swing trading ETFs/options and investing in mutual funds for long term strategies, however for daily or weekly cash flow the futures market seems like a viable opportunity vs. trading equities intraday.

Yes, the "struggles" you mention are the same, however this depends if you're looking to build UP equity or bleed DOWN equity. With the live TST account, you're supposed to have used the skill set from the combine to hopefully have learned the discipline on how to build up equity since you're not placing the capital. With a retail account, if you're going in without some type of pre-planned structure, the odds are you are going to bleed down the equity, and thus "blow up" the capital in your account.

 

[ScalperJoe]

Their "learn more" page still says "refundable deposit" to describe the combine's cost. Again, I'm looking at the 10-days, not the continuous ones. Hopefully that won't change, although since the profit target is a "rule" I don't think they issue many refunds at all.

Ok, good to know. Perhaps they still do that for the regular 10 day combines.

 

[VPhantom]

Personally, I prefer swing trading ETFs/options and investing in mutual funds for long term strategies, however for daily or weekly cash flow the futures market seems like a viable opportunity vs. trading equities intraday.

I did a cursory examination of day ranges as a multiple of 3-minute bar Average True Ranges on a handful of stocks and futures, as a crude way to to see their potential for intraday trading, adjusted for volatility. I did this manually to exclude what I consider untradeable extremes, spikes, etc. My sample was small, but the tendency was consistent: the futures I studied offered roughly twice the potential for profit that the stocks did.

For example, the NQ gave me 10-20 ATRs on most days, whereas the QQQ in the same period was more around 5-15 ATRs (and that 15 was the exception, not the norm). The dull days, especially, seem to have better potential in the NQ than QQQ. I guess futures are more orderly...

I was looking for alternatives to futures with finer-grained position sizing. Looks like futures will remain my primary target for intraday trading afterall.

 

[ScalperJoe]

I was looking for alternatives to futures with finer-grained position sizing. Looks like futures will remain my primary target for intraday trading afterall.

Ya, futures are the way to go if you daytrade. Although there's a limited number of products vs. the potentially thousands of stocks, it's simpler to focus on just a few instruments and find the one that fits your style. Also, the move on 1 lot of ES is the equivalent of 500 shares of SPY, which costs over 100k of equity (using no margin), so a huge difference in capital outlay as well.