What are your thoughts on the new 2% rule recently implemented by Topstep Trader on funded accounts?

Discussion in 'Prop Firms' started by StockTrader100k, May 20, 2020.

  1. What are your thoughts on the new 2% rule recently implemented by Topstep Trader on funded accounts?

    The new rule says Trading will be restricted at or around Daily Price Limits. Initiating or holding active positions within 2% of a product’s Daily Price Limit is not permitted (See CME Price Limits)

    See further details at : https://bit.ly/2WJ76gR

    While they can change/delete this new 2% rule at any time -- it can be a pain on days such as Monday 5-18-2020 when the markets (S&P 500 futures) open up gapping greater than 2% and continue higher all day - I could be wrong but I think that would mean you couldnt trade all day on 5-18-2020 on (S&P 500 futures) if that was the case.

    If you happen to start a trade and the market is under 2% and the market goes in your favor heavily - why would you want to prohibit traders from not continuing to profit more from a move that continues in their favor if the market increases (or decreases if you are shorting) more than 2%???



    Perhaps someone from TopStep Trader on this forum can clarify for everyone




    ----------------------------------------------------------------
    Funded Account®
    Please note that trading outside of these temporary parameters will result in the loss of your Funded Account.

    Futures Funded Account

    • $30K & $50K accounts will be capped at 2 lots. $100K & $150K accounts will be capped at 3 lots.
    • Trading hours will be restricted to between 5:30 PM CT and 3:10 PM CT on regular trading days (See the CME calendar for Holiday trading hours)
    • Crude Oil trading is currently suspended due to high volatility of the product
    • Trading will be restricted at or around Daily Price Limits. Initiating or holding active positions within 2% of a product’s Daily Price Limit is not permitted (See CME Price Limits)
     
    SimpleMeLike likes this.
  2. Overnight

    Overnight

    It's about time! DUH!
     
  3. Metamega

    Metamega

    Sounds to me like they mean 2% of its limit up/down threshold.
     
  4. Perhaps Im wrong about my interpretation of this rule but nevertheless this is how I understand it

    lets take the example from their website below - lets say the session starts at 2814 and you initiate a short position - bad news comes about about covid-19 or china and the market starts a steep and quick selloff - according to this you would have to take profits before 2730 hits or you are in violation and would lose your funded account even though you have a highly profitable trade. My point is if you have a profitable position it seems bad to me that you have to cap your profit and get out before 2730 when in reality it could trade down another 50 points (or more) on the bad news - 5% down is 2673 and 7% down is 2617.

    • Example 1: The Settlement Price for the ESM0 contract on 5/13/2020 was 2814.00. If you are trading when the Price Limit is 5% up and down you can make the following calculation to identify the levels that are within 2% of a Price Limit that you should stop trading at:
      • Level Above to Stop Trading: 2814*(1 + 5% - 2%) = 2,898
      • Level Below to Stop Trading: 2814*(1 - 5% + 2%) = 2,730
    How Do I Ensure I Do Not Violate Trading Within 2% of a Price Limit?
    One of the easiest ways to ensure you are not trading within 2% of any Price Limit would be to watch the % Net Change for the contract you are participating in via your trading platform quote board.

    • Example 1: Assume you are trading the ESM0 contract between 5:00 PM CT on 5/13/2020 and 8:30 AM CT on 5/14/2020, the price limit is 5% up or down. You should not be trading ESM0 if the % Net Change on the day exceeds 3% up or down (5% Price Limit minus the 2% Topstep threshold).
    • Example 2: Assume you are trading the ESM0 at 9:00 AM CT on 5/14/2020, the price limit is now 7% (down only). You should not be trading ESM0 if the % Net Change on the day exceeds 5% (7% Price Limit minus the 2% Topstep threshold) down.
    Another method to find your limits would be to calculate them based on the Settlement Price. You would need to know the previous day’s Settlement Price along with the % up and/or down that triggers the next Price Limit based on the time you are trading.

    • Example 1: The Settlement Price for the ESM0 contract on 5/13/2020 was 2814.00. If you are trading when the Price Limit is 5% up and down you can make the following calculation to identify the levels that are within 2% of a Price Limit that you should stop trading at:
      • Level Above to Stop Trading: 2814*(1 + 5% - 2%) = 2,898
      • Level Below to Stop Trading: 2814*(1 - 5% + 2%) = 2,730
    • Example 2: Again, the settlement price for ESM0 on 5/13/2020 was 2814.00. If you are trading when the Price Limit is 7% down, you can make the following calculation to identify the levels that are 2% within a Price Limit that you should stop trading at.
      • Level Above to Stop Trading: n/a
      • Level Below to Stop Trading: 2814*(1 - 7% + 2%) = 2673
     
  5. Overnight

    Overnight

    Wow, so TopStep got really freaked the hell out with those up and down limit moves, LAST MONTH, and are now getting around to implementing more restrictions.

    Maybe if they just tell you what your TRUE trading capital is, they'd get better traders. Like how on a 100K account you have only like $3K to work with or something. I cannot understand their logic.

    Oh, wait, they want people to fail, not succeed, because they make more money on failures than they do on successes. Gotta' feed the monkey?
     
    VPhantom, Turveyd and Axon like this.
  6. More restrictions from prop trading firms. :confused:
     
  7. WOW, I only trade Crude Oil and been in topsteptrader for 3 months, so sucks for me. Guess I go to ES.
     
    Last edited: May 20, 2020
  8. Metamega

    Metamega

    I think it’s reasonable to not want your money tied up limit up or limit down.

    Not sure why so many fight so hard for topstep. Save the money, get another job and make your bankroll. Not everyone can trade within their restrictions and I have no idea if the longevity of it. They want scalpers when the age of scalping is automated now.
     
    fan27 likes this.
  9. Overnight

    Overnight

    Imagine if you were a live cattle trader. You'd be limited to like 30 minutes per session, if that, on a good day.
     
    VPhantom likes this.
  10. Turveyd

    Turveyd

    You qualified ?? made any money yet ?? ie taken out ??

    Your the 1st, 1 if so I've heard of.
     
    #10     May 20, 2020
    SimpleMeLike likes this.