I have been wanting to do this project for some time now, but for a number of reseason never started. Today that ends...
I keep seeing ads about prop trading firms and it's time to address the issue.
First, these prop trading firms are NOT in the market of finding the best traders to allocate their capital to.
What they typically do is offer a chance to be funded by adding unrealistic rules around their trading parameters in hopes that you (the trader) will subscribe and pay a fee to "test" your ability. Their hope is that you fail their test and keep paying to keep testing. They offer a chance to reset the account (for additional money). Their profits come from subscription fees, not from profitable traders.
While I do not suggest that you attempt to get funded through a prop firm, it is not impossible. But to get funded you have to beat them at their own game, you have to tighten up risk controls that can statically beat their unrealistic parameters to get funded.
To be clear I have no intention of actually getting funding from a prop trading firm, I prefer to trade on my own capital with my own predefined risk controls. But at the same time, I see these prop firms as a challenge, their risk controls are designed for you to fail in order for them to keep getting their subscription fee.
Let's break them...
The goal of this journal is to develop a trading system that will automate a trading strategy designed around Topstep ('s futures day trading rules. Frankly, I am not even sure if I will succeed at developing a system that can meet the combine rules, but hell let's try.
Here is my outline and goals for this journal.
First, barebone strategy designed around the risk parameters of the combine.
Tracking and trade stack for monitoring the system.
Next, base entry and exit rules.
backtest and optimize on out-of-sample "market replay" data for tick granularity.
Set MAE MFE stops and targets and other post-backtest rules.
Walk forward testing.
Cross validation and model Adjustments.
Starting a combine.
Will I pass or fail? Put your comments below if you think. The odds are stacked against me by design, however .. CHALLENGE ACCEPTED! :spy:
If I succeed, I will enjoy turning them down after I pass their combine. Again, getting funded is not the goal, the goal is to just see if I can do it.