Topsteptrader

You're totally missing the point. And it's a point which has been addressed and explained repeatedly throughout this very thread. (If you look at it in terms of the number of lots/contracts you're allowed to trade, the hugely significant difference between the effective positions yourself and someone with a $3k account are in start to become glaringly obvious.)

Your perspective on all matters related to this subject seems to be an entirely erroneous one of imagining that TST themselves are taking very little risk indeed over funded accounts. This isn't true. If a trader qualifies via the $150k Combine, trades a funded account with 3 contracts and starts off by losing nearly $3,000 on each of their first three days, then TST is nearly $9,000 down on the arrangement. If I were running that risk, with other people trading with my funds, I'd want some pretty hefty safeguards in place. Wouldn't you?

 

TST is running a realistic simtrading business. If they weren't we would know how much of their income comes from the 20% they get from their share of profits from funded traders compared to how much comes from the hopefuls who buy their little 'combines"

 

C'mon Xela, I thought you'd be familiar with the rules by now, lol.

A trader cannot lose $9,000 "by losing nearly $3,000 on each of the first three days", because he's capped at $3,000 weekly. He would then be restricted from trading until the following week. BUT...he's also capped at the trailing max draw of $4,500, which means he cannot lose more than $1,500 starting the second week.

Regarding equity, Pekelo mentioned the screen shot where the trader asked if it's only $3k of equity on the 100k account. In order to assess a value of the live account, it must be compared to the substitute, which is a retail account.

Since most trade CL, we'll use that as the example:

(Day trade margin x maximum cars) + maximum allowable draw

The max cars to start is 3, so that gives you $3,000 for the day trade margin ($1,000 per lot x 3), PLUS the start of the maximum trailing draw, which on the 100k account is $3k.

All traders start at a "$0" balance in the live account, but that doesn't mean it's $0 equity, since you have to account for the starting maximum number of contracts allowed, plus the maximum allowable trailing draw. Therefore, if you were to start trading using the SAME value as the 100k live account, it's $6,000 of actual equity if it was a retail account. However, in the retail account, you MUST add day trade margin for every added car in addition to the $3,000 trailing draw, whereas in the TST live account, you place ZERO capital. THIS is the value of the live account. The trader gets to "build up" equity with ZERO risk, unlike a retail account.

Remember, TST is using a base value of $10,000 of equity per car to calculate the percentage of daily risk. The $3,000 figure is based on a 15 cars max account on a 150k account, and thus $3k is a 2% risk of equity ($3,000 divided by $150,000 is 2%).

Obviously, when you start the LIVE account, the backer is not providing you with $150,000 of equity. They are providing you with the ability to trade 3 cars to start, and allowing the account to go against you $4,500 within the first 10 days, as long as you abide by the live account rules. That is the risk they take for each live trader on the 150k account.

Let's say a trader puts $7,500 of capital in their AMP account, and they want to trade 3 lots of crude each day with a maximum allowable draw of $4,500 (the "blow up" of the account, meaning they would not go below the 3k required to trade on the last day, they would close the account). Here, 3k is allocated to the margin, and $4.5k is allocated to the maximum draw. If you risked $3k on your first day, then you are allowing for roughly 67% of your maximum allowable draw ON DAY ONE, which is a tremendous amount of equity to risk per account value.

You would never do this on a live retail account (unless you're ready to blow it up fast), but you CAN do this on the TST live account, because they are using the $150k number to define the percentage of risk. If you plan on trading every day of the week, then the added safeguard is the weekly loss limit, which if divided by 5, is actually net $600 loss per day. If you don't plan on trading each day of the week, then yes, $3,000 is the allotted amount you can lose in ONE day.

But here's the catch: you are going to try and maximize the account equity value once you are aware that you only have TEN DAYS to do it, so you MUST take the risk of adding cars as you build up the equity, otherwise you will end up with a piker sized account.

So if you're wondering why traders "blow up" their live accounts, see above.

 

The "largest ES trader using 20some cars" is impressive. The P&L movement is equal to 10,000 shares of SPY, which means lots of risk vs. reward.

It would be interesting to know how the trader navigated the first 10 days of the live account. Were the trades taken during extreme periods of volatility? How was the "scale up" utilized to the trader's advantage? What was the equity balance on day 11? What equity balance is used currently to execute a 20 lot ES trade, etc.?

Obviously this trader not only has the discipline to adhere to the live account rules, but also has the ability to continue trading with size.

 

ah more likely its bullshit. TST , it is clear by now, are a nasty little organisation. THis madeup trader doing 20 cars a trade does not EXIST, I guarantee it. OR some real trader did a combine for a laugh and is not using their (all but)non-existant funding and is using his own money.

You've been taken .

 

Oops. Regarding my last post I just noticed TST are a vendor here in ET.
That gives them some value..

 

Why? You can trade 20 cars intraday with a 15K account. And that should be the take away info from all these webinars:

1. After 6 years of existence TST's biggest trader is still using a 15K account.

2. Most of the Live traders end up with a less than 3K cushion/account at the end of their live 10 days.

If you wonder how do I know #2, it is called basic math. Most Combiners pass the 50K, so if you made 3K (profit target) using 5 cars on a sim, chances are you will make less using 2 cars Live during the same period. Even if we do the math for the 150K, we end up with the same cushion:

Making 9K on the sim using 15 cars is equivalent or less to making 9K/5= 1.8K using 3 cars Live. The projected cushion of the average combiner is below 2K, but I was nice and gave it a little range up to 3K.

I welcome TST to correct my math if I got it wrong....

 

You're mistaken, Joe: the theoretical example I offered, to demonstrate a more important and rather significant point which explained Pekelo's illogic would apply to one-day-a-week traders. The "first three days" means the first days on which the person chooses to trade: they don't have to be in the same week. As you might know from TST's blog, some of their target market are people currently employed, trying to develop an additional income-course, and some of them do indeed trade one day per week (on their day off, perhaps?). The precise details don't matter much, however, to the point I'm making, which is that TST is exposing funds to greater risk than Pekelo appreciates, as indeed is clear from his repeatedly erroneous comments and criticisms throughout this thread.

I don't think so, Joe - doesn't the trailing maximum drawdown now apply only for the first week of funded accounts? I seem to remember we discussed this exact point a few months ago, when that changed? I may be wrong ...

 

The first post did not state the trader would be trading "off and on" within his "first three days." Any reader will conclude your first post meant "in the first three days of a week." However, since you clarified it, let's go through your new example:

Here are some of the Funded Trader Rules from TST's site:

"The Weekly Loss Limit (if applicable) and Trailing Max Drawdown are eliminated after 10 trading days."
"Maintain an Account Balance greater than $0 after a minimum of 10 trading days."
"Do not allow your Account Balance to hit or exceed the Trailing Max Drawdown."

The "Trailing Max Drawdown" on the 150k live account equals $4,500 for the first 10 days of trading, even if those 10 days spanned over a month.

Remember, the starting balance of ALL live traders is "$0." This means if you start to go negative from the first day of trading, the maximum trailing loss is $4,500, since that is the "Trailing Max Drawdown" for the 150k account.

If you start negative on day one with $1,000 loss, then TST will allow another $3,500 draw before you reached the "Trailing Max Draw" of $4,500.

If you start positive on day one with $1,000 gain, then TST will allow $4,500, it just means TST would go "in the red" by $3,500.

The key point is the 10th trading day (whenever that occurs), since your trailing max draw is eliminated. However, you MUST maintain a positive equity balance after the 10th day. If you are at plus $1,000 after the 10th trading day (whenever that occurs), then THAT becomes your new "Trailing Max Draw" because you can no longer go BELOW the "$0" starting balance.

So again, the MAXIMUM exposure of risk for TST on a 150k live trader is $4,500, not $9k as you originally stated.

Yes, it's a bit confusing, but TST does post the rules on their site, here's the link:

https://topsteptrader.desk.com/cust...es/1964617-definitions-#Trailing-Max-Drawdown

 

Correct Joe.

I also would like to add that if you are trading a funded account and are positive after the 10th trading day, the max daily draw down rule is still valid.
However if you hit the max daily draw down you will not go back to trading a combine but trading will be blocked for 24hrs, not sure about the weekly max draw down.

Edit: weekly loss limit is eliminated after 10 days, so the only rule left after 10 days is the max daily draw down.