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Anybody heard of topsteptrader (review)


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Anybody heard of topsteptrader (review)

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  #511 (permalink)
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missionatsea View Post
I would like to see a platform/brokerage offer a pay for real time simulated account, at a nominal fee

You can get IQFeed or Kinetick for that, or you can fund an account at a brokerage and pay zero or close to zero for data. What more could you want?

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  #512 (permalink)
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Thanks Mike. Will do my homework. Appreciate the forum and quite honestly, do not know how you keep up with it.

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  #513 (permalink)
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missionatsea View Post
Thanks Mike. Will do my homework. Appreciate the forum and quite honestly, do not know how you keep up with it.

No one else knows either, but we're grateful for it.

Bob.

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  #514 (permalink)
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I apologize if this has been addressed already, but I didn't read through all 50 pages.

What is the employment relationship with the sponsoring company if you become a funded trader?
W2? 1099? Something else? Is the trader earning an income or are they capital gains? Do they offer benefits, etc.?

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  #515 (permalink)
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EnsoTrader View Post
I apologize if this has been addressed already, but I didn't read through all 50 pages.

What is the employment relationship with the sponsoring company if you become a funded trader?
W2? 1099? Something else? Is the trader earning an income or are they capital gains? Do they offer benefits, etc.?

You're an independent contractor. You get a 1099. There are no benefits: you're not an employee. As to whether it's straight income or not, TsT has always said, "Consult with your tax professional." (They aren't giving tax advice.)

The FAQ's on their website are pretty good, and give these answers: TopstepTrader Help

Bob.

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  #516 (permalink)
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EnsoTrader View Post
I apologize if this has been addressed already, but I didn't read through all 50 pages.

What is the employment relationship with the sponsoring company if you become a funded trader?
W2? 1099? Something else? Is the trader earning an income or are they capital gains? Do they offer benefits, etc.?


bobwest View Post
You're an independent contractor. You get a 1099. There are no benefits: you're not an employee. As to whether it's straight income or not, TsT has always said, "Consult with your tax professional." (They aren't giving tax advice.)

The FAQ's on their website are pretty good, and give these answers: TopstepTrader Help

Bob.

Being a 1099 it should be seen as income. The money your earned was earned as income, you did not put up the principal that is being invested. Having talked to my CPA she stated it is earned income and should be taxed as such.

But as bob noted, seek your own tax professional for advice into your situation.

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  #517 (permalink)
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Thanks guys.
That's what I expected, but couldn't find anything on their site that addressed it.

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  #518 (permalink)
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Hi guys, I wanted to get some feedback to help me try to understand something a little bit better.

A funded account has a maximum draw down limit. If you hit that draw down, you lose the account.

10,000 account, maximum drawdown is $1,000
30,000 account, maximum drawdown is $1,500
50,000 account, maximum drawdown is $2,000
100,000 account, maximum drawdown is $3,000
150,000 account, maximum drawdown is $4,500

It uses a trailing stop style feature where if you build up your account, you can create some cushion. In otherwords, if you generate $10,000 in the account, you can lose that $10,000 and still stay funded. You just cannot bring under the certain amount (example, 50k account has 2k draw-down limit. If you ever get under $48,000, you will lose the account)


----------------------------
The Rub
----------------------------

Ok, so now lets discuss something. We all know the rule that we should risk a maximum of 1-2% of our equity on any trade idea. Futurestrader71 did a full video discussing this topic and i'd advice people to watch it if they havent.

Lets take the $50,000 account provided by topsteptrader for example.

1% of $50,000 = $500.
But TopStep only allows you a maximum draw down of $2,000. So if you risk 1% of 50,000 you will lose the account if you make 4 wrong trades. So its like you are risking 25% of your account. To avoid this, one would want to reduce this risk back down to the 1%-2% level.

So logically what this actually means, is that the 1% rule should be applied not to the total account size, but to the maximum draw-down that they allow you.

So 1% of $2000 = $20

One contract on the ES is ($12.50). Add another $4-5 for the transaction fees and your looking at $16.50-17.50 lost every trade you put on. Add a little bit more because of slippage and you can basically round it off to $20 per round turn. So you cannot even trade 1% of your max drawdown, because you lose 1% every trade you take with 1 contract. So you have to trade at least 2%.

So my question boils down to this. What is the point of working so hard to get "funded" with places like topsteptrader or any propshops that let you trade their money, when in reality you don't have access to the full capital. You only have access to your maximum drawdown.

Granted one can argue that the maximum drawdown is a trailing one. But that doesn't really change much in the grand scheme of things.

If you make $25,000 on your $50,000 account, you have made 50% (which might seem achievable)

However to make that $25,000 using good money management (ie risking 1-2% of your max-drawdown because that is the size of your account in reality), you would need to make 1150% ($2000 + 1050% = 25,000)
When you look at it like that, it no longer seems realistic.

So my question is what is the point of even trying to get a "funded account" with topsteptrader? When you factor in the restrictive rules (eg you cant swing trade because you cannot hold through closes), and the fact that the equity-partner is taking 20% of the profits you make, wouldn't it be more logical to simply open your own tiny account and trade with leverage?

So instead of going through all the hastle of trying to get "funded", just open your own tiny account. You would be able to trade a $2,000 futures account with the same money management rules as you would for a 50,000 "funded" account, because the funded account's true value is simply its maximum drawdown.

But the more I think about it, the less sense it makes. What am I missing here? I don't think people quite realize that if you plan on trading with realistic money management, these funded accounts are nothing more than tiny undercapitalized trading accounts where someone else takes 20% of the profits.


Is there something I am missing here?

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  #519 (permalink)
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Sufyan View Post

So my question is what is the point of even trying to get a "funded account" with topsteptrader? When you factor in the restrictive rules (eg you cant swing trade because you cannot hold through closes), and the fact that the equity-partner is taking 20% of the profits you make, wouldn't it be more logical to simply open your own tiny account and trade with leverage?

So instead of going through all the hastle of trying to get "funded", just open your own tiny account. You would be able to trade a $2,000 futures account with the same money management rules as you would for a 50,000 "funded" account, because the funded account's true value is simply its maximum drawdown.

But the more I think about it, the less sense it makes. What am I missing here? I don't think people quite realize that if you plan on trading with realistic money management, these funded accounts are nothing more than tiny undercapitalized trading accounts where someone else takes 20% of the profits.


Is there something I am missing here?

Have you ever traded live cash? I am not talking about a micro forex account. But a fully funded account with $10k or so trading the ES or similar product?

Having lost and made money trading in my personal account, I will gladly 'pay' 20% in profit to trade someone else's capital.

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  #520 (permalink)
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tturner86 View Post
Have you ever traded live cash? I am not talking about a micro forex account. But a fully funded account with $10k or so trading the ES or similar product?

Having lost and made money trading in my personal account, I will gladly 'pay' 20% in profit to trade someone else's capital.

Largest account i've traded is a 5k forex account.
Unfortunately it was down to $200 in a few months. Luckily i've had much more success in recent months, but that that is neither here nor there.

My question is do you agree that in reality the maximum drawdown is the actual value of the account you are being funded, not the quoted value.

In other words, instead of them saying "were funding you with a 50k account", it would be more accurate to say "were funding you with a 2k account" (because if you try to trade account amount, rather than trade the drawdown amount, you will blow up very fast)

I was just curious as to whether my reason was wrong. Sometimes we work something out, but there is a mistake in our reasoning. So I wanted to know (for my own personal decisions, rather than to bash any company) whether I am correct in my line of thinking.

Thanks

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