And there's the risk element. If you made $2000 profit to my $1000 profit by trading 15 contracts while I traded 2 contracts in a simulated environment, the overall risk to the account will be greater for you in a live trading environment, not to mention the difficulty flying "under the radar" trading larger size in thinly traded instruments.
This is a very good assessment. I keep scratching my head trying to figure out why the fascination with Topstep. If you really have an edge, trading futures will easily build up your account. With many brokers allowing for trading futures with even less than 1k per contract, I would imagine that within a week you could double this, and then double this again, thereby allowing even a trader with only a few thousand to play with be able to get into the game. (I'm of course not suggesting you can always double to infinity, but trading 1 contract, then 2, and then 4 with a method that is profitable for at least a few points a day for 4 out of 5 days lets say is certainly within reason). As for the black swan protection, I really don't think this is a huge issue if you religiously use stops. Perhaps something can happen at 4:15 when the market closes, or between the Friday to Sunday close, but most day traders wouldn't hold a position after hours. And if your funds are limited, then you probably don't even have the initial margin to hold outside the RTH anyway. If lets say some drastic event happens during RTH, slippage might be a few ticks, maybe even a few points, but getting out of a few contracts shouldn't be impossible. About the only scenario I can come up with is an attack on the CME that shuts it down without warning. You might have your stop in place, but because of an instant outage, you're still in your trade. Then when the market opens, the gap might be huge, and your stop could of course have a fill hundreds of points away, thereby making your small account extremely negative. But this would incredibly rare, and I'm not sure what sort of backup systems the CME would have to prevent such a thing, but perhaps there are backup systems in place that if a main server goes down in one building, trading can continue at another location. Of course the psychological relief of knowing you can't lose your own 10K might be of help if you're trading for Topstep, but if this is an issue for you, then you perhaps would never be in a position to pass a combine anyway.
It's when I read statements like this, in the thread, that I start understanding why TopStep no longer reply to this thread, in spite of sponsoring this part of the forum: it's not easy to respond to comments like that without asking you what planet you live on, Stewie. I promise I'm not trying to offend you, but if you imagine that people can safely and successfully start trading futures successfully with $1,000 and within a week double it, and then double it again, honestly we live in different universes. One thing's clear, anyway: TST is not for everyone.
Can we go over the math? So lets assume a $500 margin per ES contract. 1 point is worth $50. If you have a solid strategy, what do you suppose your win rate could be? How many times can you be a wrong in a row? I see guys using 2-3 point stops. To lose $500 dollars, you would have to lose 10 points (there is also commissions and slippage of course). I have seen many calls in the ES thread where guys are risking 2-3 points and making 5-10. Its not impossible to be positive every day. If you risk 3 points per trade, you would have to be wrong 3 times in a row to lose 9 points. Certainly this is possible with an acceptable win rate. I'm sure that some traders have a high enough win rate that hitting 3 stops in a row is highly unlikely. Once you get past the initial start, then you have enough of a buffer. Yes its possible to hit 3 stops in a row, but I know traders out there who this is very rare for. Now of course a new trader might not have impressive stats like this, and having a robust strategy as this would more than likely mean that you have more than enough money in your account, and hence don't need Topstep. But my point is that mathematically, it isn't impossible to have a 1k account, with a 500 initial margin, and double this in only a few days, and repeat this once you are able to trade 2-3 contracts. Yes you have to be lucky in some ways that you don't start with a streak of 3 losers in a row if you use a 3 point stop in the ES, but as said, these are odds that for experienced traders are more than acceptable/attainable.
Not with me; sorry. I used to have discussions like that, in forums, years ago. No more. I wanted to make the point that if you imagine that people can safely and successfully start trading futures successfully with $1,000 and within a week double it, and then double it again, then we live on different planets - and I've already done that, thanks.
No worries. I agree that doing it successfully would be rare, and safely is even more difficult given that we are dealing with statistical odds. But it is by no means impossible or unrealistic given the right individual and strategy.
Somebody missed the point. No, the point was, everything else was the same (numbers of used contracts) except the time of achieving the same profit... And so it has been practically for the last 3 years, this is just the first time they acknowledged it...
It looks like you may be making the assumption that stops always trigger and that they fill near their level. Neither point is guaranteed: 1. CME stops aren't true "market-if-touched" orders like we usually think of stops. I forget the exact wording, but basically the CME will not trigger a stop if the market is "too far through it". I suppose that's neat for slowing things down during a huge run, flash crash, etc. but for the small, leveraged retail investor, in such an event it means cancelling the stop and going to the market manually to finally get filled. I have no experience with currency futures, but I'd assume that some of the news releases cause moves large enough to fit the CME's definition of "too far" once in a while. 2. A black swan event is, by definition, something big and unpredictable that catches a lot of traders with their pants down, so to speak. A nuke goes off in Saudi Arabia and crude oil doubles within 10 seconds of the news breaking Reuters, for example. It's very, very unlikely, but not impossible if you happen to be on the wrong side at that precise time, your $30K futures account leveraged at 5:1 can become a -$150K account in those same 10 seconds, which no stop can protect you from. That'd be instantaneous bankruptcy for many. The only exceptions to repaying the broker are some market-makers (a.k.a. "bucket shops" but I don't mean it pejoratively) like Oanda who take the other side of some of their customers' trades, who have been known to reset negative balances to zero in extreme circumstances (i.e. the CHF last year). So regardless if it's because of 1 (missing the CME's failure to trigger a stop) or 2 (true black swan event), you are never asked to replenish negative equity at TopStep: it's their risk. That's valuable insurance for us mere mortals who can't afford to trade futures with zero leverage. If there's one thing I dread, it's some dumb mistake or bad luck making me owe my broker.
Although SL's, slip wildly at times, never had a really bad 1 so far, maybe 30pts rather than the 10 it's supposed to be, which hurts enough nearing 10% account. But I agree with Stewie, even with a lowly funded $3K account as that seems to be the min opening balance, a GOOD Trader which is ofcourse the requirement not Joe loser ofcourse, chould and should even be able to turn a small account into a large living off account. Black Swans are a worry, obviously others will be on the right side of the black swan and make 500K from a small account in 2mins, look on the bright side
In risk management, I always plan for the worst case scenario and ignore the best case completely. Still being in business next year, in 10 years is more important to me than daydreaming about lucking out on one lottery ticket of a trade.