Very good analysis, "In my opinion the only real funding is provided by TS is at the beginning of your newly funded TS funded account" That is assuming you pass the "test" with min attempts. as each test cost you money For everybody's benefit how do other "similar" firms stack up? apples to apples?
About risk parameters at TST. Not very clear but ... After making the initial 5K, You can ask for more risk tolerance. What and how much IDK I am soon at combine #2 Hope to get funded within 4 weeks. I’ve heard that setting up the funded acc can take up to 2 weeks. After reading you guys I feel like making 5K then leave them.
I understand your analysis and you're probably right. However, there is nothing at their website that indicates that they would close your account if you withdraw all your profits. I copy and pasted your analysis into their Q&A thread. However, no one has bothered to reply yet. If what you say is true, then Topstep lacks total transparency IMO. I might ask the CFTC what they think about that. These companies seem to be making a bundle on monthly subscriptions. But I wonder why they're allowed to get away with this type of cover up. Thanks for your post. Will be interesting to see if they ever reply to my post in their Q&A thread.
It's combine #1 but I guess it works the same for the real account. If you make 5K your trailing Max Drawdown is going to be around 150K. If you withdraw 5K from 150K your account balance falls to 150K so you don't have margin to trade.
How can you withdraw $5,000 from a $150,000 account? That's the total amount of the account that they funded. If I made a profit of $5,000, the account balance would be $155,000. The first $5,000 is supposed to belong to the trader. If you withdraw it, you're back at $150,000. Can't have a trailing max drawdown of $150,000 - that's the total value of the account (although I seriously doubt that they fund a trader at that level). Again, there's nothing at their website that they close your account if you withdraw to the initial amount "funded". TopStep doesn't answer questions on their Q&A thread. That makes me suspicious of their transparency.
Because if you pass the TS combines and qualify for your "funded" account it is not a $150,000 account. They do not fund your "funded" account with $150,000 cash. The $150K figure is simply a marketing thing for the virtual tryout accounts only. In my opinion the only real funding is provided by TS is at the beginning of your newly funded TS funded account because at that point if you are a terrible trader and and never even generate daily profits then yes TS is on the hook for at least the daily (and weekly) loss limit of $3,000 if you violate that--or potentially on the hook for as much as $4500 if for example if you lost $500 per trading day and lost $2500 in the 1st week of trading (so you never violated the $3,000 weekly loss limit) and then in the 2nd week if you continue to lose $500 per day for 4 additional days and then your total loss for week 2 is is $2,000 and added to your loss on week 1 of $2500 now you have lost a total of $4500 and your account is closed. However--if you generate profits your trailing max drawdown goes off of equity peak so you are actually penalized for profitable trading under a trailing max drawdown scenario ("penalized" when compared to a fixed drawdown scenario) So ask your self this question --if you are a consistently profitable trader--wouldnt you make much more money under a 50-50 scenario that offers increased funding up to a $25,000 max fixed drawdown VS a trailing drawdown of $4,500 Lets say with a $25,000 fixed drawdown (fixed drawdown means you can empty the account of all profits to zero and you still have the max drawdown of $25K in place) you are trading 5 times as many contracts as you are with TS with your $4500 trailing drawdown Going back to the example used before you generate $5,000 a month in your TS account (over and above the initial month that you generated $5K in profits and kept all $5K in their to keep your drawdown) - TS takes their 20% cut and you are left with $4K net each month With the $25K fixed drawdown you trade 5 times as many contracts as you do in the TS account with only the $4500 trailing drawdown so you make 5x the profits, in this account you are generating $25,000 a month in profits and they take out their 50% and you are netting $12,500 per month VS the TS account where you are only netting $4K per month so you are netting triple the profits each month and you can withdraw all profits down to zero as often as you like and still have the full $25K max drawdown to trade with VS TS you have to leave $4500 in the account at all time and only can withdraw those profits over and above the $4500
so far the only firm that I can find that offers 1) trading on futures 2) max fixed drawdown (not trailing drawdown) 3) provides the math upfront on possible increased funding scenarios should you be consistently profitable over time is SMB Capital FTMO also offers fixed drawdown and increased funding math upfront on consistent profits over time but they are forex only and do not offer futures trading
So TSTs break even point is initial risk of $4500 per trader - whatever combine test fees they can extract! and TST does NOT take any risk beyond the above amount...! Does marketing clearly state that? I doubt? Same way $150,000 account does not mean they put $150,000 real cash in to the account! Which would mean huge buying power For day trading ES at $500 margin! Trader's break even point is = whatever no of Test fees he/she fork out before getting funded for a potential gain of $5000! and may be some ready made risk management nothing else
The benefit of TST and similar is basically someone holding you accountable at a cost to you. You could put $4500 in an account with Tradovate and set the same risk parameters as far a daily loss limit and tailing max drawdown - etc The difference is you can always log into your Tradovate account and change the risk parameters (or turn them off altogether) - whereas with TS and others you are "forced" into complying with the rules as you cannot change them and it potentially cost you money (and time) to start over with them. So in my opinion there are benefits to having it be a 3rd party but you could essentially accomplish the same thing if Tradovate was willing to not let you log in to change the risk parameters once they were set--I dont know if Tradovate would do that with an individual acct
Yes so only value / advantage is some forced risk management stopping you from changing your own rules (as you explained( By the way when you say Tradovate you mean any broker and own account ! correct Tradovate is just an example By the way Tardovate does not seems to offer any span margin for Futurs to Futures spread and no Options on Futures trading