PTA, Gauteng
Trading Experience: Advanced
Platform: Self built + Sierra + TWS
Favorite Futures: Stocks and Options
Posts: 1,036 since May 2012
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Just a few comments regarding the new rule changes:
Make sure you do the maths behind every rule change. Don't just take emails like this at face value thinking it 'sounds good' or makes things easier.
Case in point, one of the new rule changes is to implement the minimum balance clause detailed here
In summary, your maximum drawdown trails your maximum end of day account balance until such time as you've reached your maximum drawdown in profits. Only then do you start building more of a cushion. eg:
In a 50k combine your maximum drawdown is $2000. Under the current rules if you were to end day 1 of trading up $1000 your balance would be $51 000. You then have a 'cushion' of $3000 until you reach your max drawdown. ie: $51 000  $3000 = $48 000
Under the proposed rules, in the same combine after being up $1000 at the end of a day your balance would still be $51000. BUT,..your minimum now trails your max balance and remains at the original $2000. Meaning that your new maximum drawdown is now $51000  $2000 = $49000. This continues until such time as you've made more than your max drawdown in profits.
What this results in, is essentially instead of being able to build a 'cushion' straight away by moving away from your max drawdown. You actually remain extremely close to your max drawdown until you've made that amount in profits. Only then do you start building a cushion.
Another recent example of where most traders seemed to take rule changes at face value instead of doing the maths behind it was the change from a 'minimum number of days' format to a discreet format, eg:
Using a 50k 20day combine as an example, under the previous rules you had to trade a minimum of 20 trading days in a 60 calendar day period. In 60 trading days there are typically +42 trading days. The profit target was $5000. So you had 42 trading days to make $5000. An average of 5000 / 42 = $119 per day.
Under the current rules since the change to a discreet format, you only get 20 trading days in a 60 calendar day period (ie: not a minimum of 20 trading days, but a discreet amount). Using the same 50k 20 day combine example, the profit is now $3500. Most traders seemed to think this was great because they took it at face value. Do the maths. An average of $3500 / 20 days = $175 per day is now required.
Both the prior rule change and this one are making the combine incrementally more difficult (and in my opinion more removed from simulating a live trading environment. The rules should better simulate live trading which was the case a few months ago  but that's another discussion). Do the maths on all rule changes.
Diversification is the only free lunch 
