The "trading challenge/combine" firms do offer value in my opinion and they can make you a better trader as there is "financial hurt" if you dont adhere to strict risk management as you will fail and have to pay a reset fee as well as possibly another monthly fee and in most cases that is still significantly less than had you traded the same contracts in your own live account and is certainly better than trading a demo account like TD Ameritrade's ThinkOrSwim where you certainly can practice on a demo account but there is no "financial hurt" if you fail and thus are you really learning anything that will apply in live trading if there is no downside risk at all. At least with the trading combines there partial downside risk which makes them more realistic and educational than just trading a straight demo account with no cost and no financial ramifications for failure.
Now that being said....... another question is -- are these companies really set up to help the trader achieve long term success or are their risk parameters and scaling plans really set up to induce failure and thus the trader has to start over and over
Most of the prop forms such as Topstep, Earn2Trade, OneUp and others have very flawed models as far as "scaling up" when you look at the overall picture of scaling plan increases max lot size but keeps risk parameters the same.
(One exception to this is FTMO - they will increase your account size which in turn allows you to trade more contracts but they also increase your max daily loss and max loss the same percentage as they increase your account SEE
https://ftmo.com/en/scaling-plan/ ---unlike all the other firms--as explained below)
The problem in my opinion with most of the trading combine/challenge firms is as follows:
Say for example you take the $150K challenge at TopStep Trader, Earn2Trade and OneUp Trader (the one up pne with 80% payout that is $350 a month so it is comparable to TopStep $150K 80% payout and Earn2Trade $150K challenge with 80% payout)
Generally speaking these 3 plans are similar in the fact that they allow the trader to have max size of 3 lots to start and as their account size grows the trader is allowed to scale up and now start trading as many as 12 to 15 contracts total if their account hits a certain amount of profits
The problem for the trader is --even though you can now trade as many as 12 to 15 contracts----
(basically 3X up to 5X your original max size of 3 (or 4) contacts at the start) - this scaling plan actually makes things much more difficult for the trader (if they trade max size 12-15---or really even anything over 3 contracts)
....WHY?
Mainly because the starting max daily loss and trailing max drawdown that these companies give you (that does not increase with the scaling plan) is really only realistic for trading 1, 2 or at max 3 contracts---all the scaling plan does it put the odds much more in the company's favor that you will overtrade take too much risk VS the unchanged and un-enlarged max daily loss limit and trailing max drawdown
Because your max daily loss, max weekly loss(if applicable--I think only Topstep uses max weekly) and your trailing max drawdown --all remain the same amounts as when you started and could only trade a max of 3 contracts. So now if you indulge yourself and start trading for example 8 contracts or 10 or 12 or even 15 - you are putting yourself in a huge risk position as your max daily loss and trailing drawdown have not been increased at all.
In reality the starting max daily loss and trailing max drawdown that these companies give you with the $150K challenge is really only realistic for consistently trading 1 or 2 contracts or at max 3 contracts---if these companies really wanted you to succeed long term they would actually increase your max daily loss and max trailing drawdown when the increase your max # of contracts you are allowed to trade
EXAMPLE: Earn2Trade $150K mini gauntlet
https://www.earn2trade.com/gauntlet-mini
TopStep and OneUp's $150K challenges have similar scaling plans and max daily loss and max trailing dawdown to Earn2Trades $150K challenge
Profit Goal - $9,000
Trailing Drawdown - $4,500
Daily Loss Limit - $3,300
Max Position Size - maximum 4 contracts to start
when your profit is $1501 to $3,000 your max contract size is increased 50% from original 4 lots to now max being 6 lots - however your trailing drawdown has not been increased 50% and is still $4,500 and you max daily loss has also not been increased 50% and is still $3300. What they really should do is if they increase you max contract size 50% then the starting Max Trailing Drawdown of $4,500 should be increased 50% as well to $6,750 - and the starting Max Daily Loss limit of $3300 should also be increased from $3300 to $4,950
When your profit is $3,001 to $4,500 your max contract size is increased 100% from original 4 lots to now max being 8 lots - however your trailing drawdown has not been increased 100% and is still $4,500 and you max daily loss has also not been increased 100% and is still $3300.
What they really should do is if they increase you max contract size 100% then the starting Max Trailing Drawdown of $4,500 should be increased 100% as well to $9,000 - and the starting Max Daily Loss limit of $3300 should also be increased from $3300 to $6,600
When your profit is $4501 or more your max contract size is increased 375% from original 4 lots to now max being 15 lots - however your Max Trailing Drawdown has not been increased 375% and is still $4,500 and you max daily loss has also not been increased 375% and is still $3300. What they really should do is if they increase you max contract size 375% then the
starting Max Trailing Drawdown of $4,500 should be increased 375% as well to $16,875 - and the starting Max Daily Loss limit of $3300 should also be increased from $3300 to $12,375
Now in reality it is probably more important that they do this in your funded account as that is when they are getting their 20% cut in real money
They also could put additional requirements to increase you max contract size allowed in funded accounts to give them more assurance that you know what you are doing on a consistent basis such as tying increases to certain other metrics being met or consistently growing account size over time - etc.
They could even just keep things the way they currently are as the standard combines but also offer for an additional fee--enhanced combines that increase max daily loss and max trailing drawdown the same percentage as max contract size being increased in scaling plan and if you pass that it stays the same in your funded account
