Topsteptrader

No, you can take out money anytime you want after you pass that initial cushion. If you are OK with a 60% payout, you can take money out every week if you want. They're trying to give you an incentive to keeping capital in to build your equity.

The way this model is separate from the deposit firms is that the cost of entry is smaller. For example at Bright Trading, they want 50k up front. Most guys on ET don't have that. Even when his minimum was 25k most guys didn't have that. This method or style allows someone who is basically broke to come in and "work" their way up so to speak. The process of leaving equity in is common at almost all prop firms including salaried firms. It's called deferred compensation. They typically hold back 40% to 50% of your bonus payout for two years. If you take a hit in the meantime, you lose that. If you leave the firm, you also lose that money. So it also keeps guys from jumping around a lot. At TST however, if you decided to quit tomorrow and you have 8k in equity sitting there, they will pay you out 60% of that amount just as they normally would.

 

Thanks for answering and clarifying these points!

Then it seems it's "better" to just take the normal 60% cut and withdraw regularly. Do they allow the trader to withdraw every 2 weeks(assuming there's profit and regular steady profits). Or monthly withdraw.

In light of these clarifying points, it seems their backing isn't all that. I mean it's not too bad if you don't have any capital and wanted to trade with their money so speak.

So, how are their commissions? Is it better than IB or higher?

With futures you don't need that big of an account to start generating cash flow if you know what you are doing and prudent with risk management.

So, let me get this straight. The prospective traders pay a few hundred bucks just to enter a "contest" to be eligible to trade with the firm's money under all sorts of rules some of which are probably wise and others hmm..

TST collects all that money upfront(I know I heard something about reimbursements,etc.) Then once you jump through those hurdles they fund your account from $30K to $150K. But given daily loss limit and max loss limit you will be kicked back into the Combine. On top of paying $85 monthly fees and possibly higher commissions.

I don't see how this is any different than the various prop trading shops in the old days(probably still now) where traders put up money to trade and use leverage. Except for lower account balances you don't front the money. They front it. But if you want a higher cut then you build up risk capital which in essence is your deposit money anyhow.

Same game. Slightly different structures.

While many hopefuls feed the slot machine with trying out Combines. And the few salmons who made up stream has to pay a desk fee(exchange fees) + possibly higher comms.

Tell me if my assessment is wrong..



Thanks!

 

Mav,

Thanks for the clarifications. I've always respected your commentaries here on ET.

In that light, it makes sense. I guess if you are broke then maybe it offers hope.

But the broke/beginner trader still has to front the few hundred dollars to enter the Combine. Does that beginner trader keeps going back without paying the entry fee each time? Else the broke trader will become broker. hehe

Secondly, are their comms HIGHER than IB or other platforms?

What about the $85 exchange fees? Is that right? I know in IB it's not that high. But then again it's not under professional status or whatever.

So, it seems to be more optimal if get the 60% cut each time. Unless the trader gets really good and builds up that $30K cushion to collect 80% going forward.

But what's the difference between that and a prop shop where someone put down $30K and collect 95%-100% of their profits and pay a desk/exhange fee of $85 ?

I guess this one offers the opportunity to build up to $30K if you didn't have $30K coming in.. Is that what you are saying Mav?

 

Right, its a lesson in economics. It's all about opportunity cost. I could give Bright 50k if I felt I was getting more value for that 50k at Bright vs say TST. What if I felt I could optimize my current asset by investing that 50k in real estate and allocating $150 towards TST. Is the 50k worth more at Bright or more in real estate or whatever other alternative you are looking at. You have to calculate your economic costs in whole.

Also, at Bright now your capital is locked up for 12 months. You can't touch that money. So that has to figure in to your calculation. At TST, you most likely won't keep investing $150 over and over. If you qualify for the rollover then there is no cost going forward. And if you don't qualify for even the rollover, well my best advice is to spend time on the free sims that are out there and work on your approach. I mean you have to be able to at least become a scratch trader. And if you can't, then for the love of God, don't fund a real account with your savings and trade that way.

The other difference I guess is the futures vs stocks. Some guys like futures better, some guys stocks, some guys options. At Bright, you have to trade stocks. At TST you have to trade futures. Well, if you want to trade options, then you have to go retail. So that comes down to personal preferences.

 

I like FUTURES better than stocks! I'm not comparing Bright to TST. And you are right. No one should put $50K in Bright unless they think the ROI is higher on that $50K than the alternatives. I think a combination of long-term stocks/etfs/mutual funds allocated correctly is probably safer and offers better returns than $50K at a equity prop shop.

So, TST makes sense if you have next to nothing to commit. But you are at least a scratch trader and hope to build up your account over time. Makes sense.

what about the comm & $85 exchange fees?

 

I think the commissions are negotiable at some point and the exchange fees depend on what software you are using I believe.

 

It makes sense to take withdrawals regularly once you build the cushion, which varies depending on what combine you traded. You don't need to build 15k or 30k to take a withdrawal, those amounts are only for an increased payout percentage.

The profit objective is the minimum net account balance required to take a check as Senior Trader.

For example, once you reach Junior Trader, the account balance starts at zero. If you traded the 50k combine and you make Senior Trader, then at 2k you are eligible to take a check. On the 100k combine, it's 3k to make Senior Trader, which allows you to take a check. My understanding is the backer takes their cut only when you take yours, so it's a running forward balance until you either hit "zero" or take a check. Their rules even state that if you quit trading then they will automatically send you your cut.

The value of their backing is to eventually trade SIZE without risking your own capital. There are intangible benefits of trading other people's money. So the goal is to get Senior Trader status, where many factors become negotiable, including contract size, loss limits and products traded.

Of course, there is a cost, which may include increased mark ups on commissions, as well as exchange fees.

Your point about being "kicked back to the combine" is the most valid.

This is why there are repeated posts regarding the disconnect in TST's rules between the combine and funded Junior Trader.

If you're going to look for backing, then you must adapt to the Junior Trader rules by trading a combine to match THOSE rules, otherwise you're basically using the combine as a training tool.

My guess is most are looking at TST as a stepping stone to get backing, not simply as a fee-based sim account.

 

1) Instead of "locking up" your money with a prop shop, you might be "locked up" with TopStep in the form of having to sign-off on a non-compete agreement for some duration in order to get your funding. I don't know how "binding" such an agreement is. Officers of the firm and a few funded traders there will not talk openly about it. :eek:
2) There's no separate "desk fee" unless you occupy desk space at the CME/CBOT building.
3) I believe the total commission, at first, is ~$5 per round turn. Commissions and exchange fees might be reduced with higher volume and higher profit cushion.
4) If you trade your own money, you're not bound by someone else's rules. If you get TopStep money, ideally they will increase your buying power or account size rapidly if you trade profitably compared to you growing "organically" on your own.

 

It was interesting read. i have been doing my own calculation as to how build and maintain equity once on live account.
It is straightforward. I do not think it is good idea to increase size until there is at least $4000 cushion built. Then, size might be increased but the moment equity fells below $4000 size should be cut back to one contract and so forth. according to what I think it is arythmetical progression of equity and increased contracts. for example to move to 3 contracts trade should have at least $7000 cushion, 4 contracts $$11000 cushion and so forth however following same money management rule as soon as cushion equity drops under previous level position should be cut by a contract until cushion is built back.

 

as for my current Combine I started incredibly strong. Been trading one contract only this time cause I am on $30K Combines since now one. makes a lot of sense. Hit $1455 on my fifth day. My target has been $2000. To avoid trading freeze....
However had 4 days losing streak and hit trailing stop. Still my max DD was slightly more than $300. Looks like I got carried away and got a bit arrogant. Broke the balance between watching DOM and chart. I am still doing it. Just made my back testing and the last 2 days of combine I should stay within chart first DOM second when signal and in trade only. Otherwise I tend to over trade on DOM levels.
Current P&L is at $1155 . i would still like to hit $1500 in my last 2 trading days but already getting ready for my next Combine I am planning to start May 14.