It's truly a "funded" account for ten days once you go live, where there is ZERO risk to the trader since there is no day trade margin requirement or any risk to the maximum allowable draw. As you correctly stated, it's "your profit that assumes primary risk on every trade forward" (from day 11). The backer still funds the day trade margin requirement. If your lot size can increase over time, then the funding generates scale since you are not required to place any capital to correspond with lot size.
It is only "deliberate" in the sense that traders want to meet the performance metrics, which is understandable. I've stated repeatedly that a trader is better served by following the parameters of the LIVE account during the combine, since it will provide a better guidance to how you are able to navigate through the rules you will end up following anyways. Of course, market factors regarding volatility will still play an important part whether you're trading the combine, FTP or live account. If you're going to back someone with "real money" and "real risk" then doesn't it also make sense to back them with "real equity" that accurately corresponds with risk? TST is using a 2% daily risk for their 150k combine, but that is not realistic when the maximum allowable draw is $4,500, or 3%. A 2% risk on $4,500, which is the REAL equity, is a mere nine ticks. Most would "blow up" on a one minute candle, lol.
Let's take the stats of the S&P for this year. The market faced a 12% draw at the start of the year, but has since recovered. If you had a 150k professionally managed futures account that mimicked the market, it went red $18k before recovering (I'm referencing the S&P here). What is the acceptable draw that you believe is reasonable (i.e. if you were backing people with money)? We know TST has it pegged at 3%. What amount would you allow a trader to go down, 10%, 12%? Since TST wants a trader to make $9,000 on the 150k combine, the equivalent draw is 6%. For a backed day trading account, what would be your limit percentage wise on $150k of capital at risk?
Correction: I responded by writing that your profit is only at risk after day 10, however I read your post again and realized what you were stating. Yes, if you have a net positive balance, then obviously it's your profit even on days 1-10 (since the first $5,000 is paid out at 100%).
Man you are sooooo broken and negative. Yes trading outrights is very difficult, it's an elite profession. Come over to the darkside? You want me to spend my time bitching and moaning about TST, nah that's a negative and losing mentality.
I see a lot of this 'minimum wage' analysis on trading forums and I don't think it's helpful. People need to realise that trading is not like a regular job, it is an opportunity cost proposition. I see people come and go from the firm and the people who need to make their living expenses in the first 2 years are nearly always destined to fail. The ones that seem to make it have the mindset that it IS going to take 6 to 24 months at a prop firm to know if they are able to make money on a consistent basis. They need to input this time to give themselves a fighting chance. If they are surrounded by other successful traders and trade niche markets then I would say their chances are greatly increased. imo it really doesn't help for the trader to look back on time spent learning to trade in terms of what they could have earned in a $15ph job. Yes time absolutely has a monetary cost in terms of what that person could have been doing, studying, other career advancement et cetera. With trading you are submitting your time as your stake as a chance to make it in a profession where the best write their own cheque and have lifetime freedom i.e. what everyone is looking for. The living expenses whilst learning is an issue for the new trader. If I did this again and was back in my 20s I would have gone straight to a decent prop firm from outset and got my monthly outgoings to a minimum. I would then be at the prop firm 8 hours per day and worked saturday/sunday in a $15ph type job where I didn't have to think too much, purely as a means to paying my living expenses.
You left out a zero. It is more like 30%. You can't do accounting on an imaginary number like the stated value of the combine. And if the real account value is 5K (for the 30K Combine) and the allowed DD is 1.5K, then TST is fine with a 30% DD...
I can't really imagine backing other traders with my own money ... but for my own trading, whenever researching/testing potential methods, I instinctively and quickly reject anything which has a realistic chance of ever producing a 5% drawdown. (I didn't use to do that earlier on, when the amounts of money involved were much smaller, but after so many years, I'm now trading with enough funds to make that prospect too risky for me. Not sure that has anything to do with TST-style arrangements, though: they're in a completely different line of business from that of independent traders, in the ways that matter to this conversation, aren't they?).
It was purely a personal challenge, to take a decent cheque and post up the details here to get the negative nellies to shut up about TST.
The "stated account value" of each combine uses $10,000 as the equity required per lot traded. I agree that the "real account value" is based on the actual amount you require to place in a retail account is much less, however that is not how TST refers to the numbers. TST didn't pull these numbers out of a hat, they took a $10k base value per car, assigned it to each combine, and then multiplied that number for the maximum allowable lots for each specific combine. The daily stop amount (i.e. the amount of daily risk) represents 1.66% to 3% of the "simulated funds" in the account, depending on the combine. However, as you pointed out, if you're calculating using max DD value, then as a percentage the daily stop is huge. $3k of $4,500 on the 150k combine is roughly 67%. Here's what it says when you scroll over the question mark on the TST's site under "Starting Balance" : "The initial amount of simulated funds in your Trading Combine account." Logically, the only way to interpret that statement is equity in the account, even though it's simulated funds. In the live account, the starting balance is zero, so the daily risk is simply the maximum allowable daily amount, which is then adjusted for the maximum trailing DD. I think we're on the same page, since we agree the two values are separate. Apparently, some claim the posts here are "nonsense" and just recently Maverick made a reference that the posts are similar to "drunks shouting in the bar" lol!