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TopstepTrader's Michael Patak (Founder) - Ask Me Anything (AMA)
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TopstepTrader's Michael Patak (Founder) - Ask Me Anything (AMA)

  #1061 (permalink)
Chicago Illinois
 
 
Posts: 19 since Jun 2019
Thanks: 4 given, 6 received


RDK91 View Post
Yes, funded traders are considered professionals by the exchange, so you have to pay professional fees. However there are alternative firms out there who will pay the exchange fees for you or take them from the funded balance so you don't have to pay them upfront.

The equity you get with the $150K account basically is $4500 since this is your maximum trailing draw down, this might not be enough to cover the 15 contracts but you also have to adhere to the scaling plan in the funded account, you can only start with 3 contracts and only when you get over $4500 profit you can trade the 15 contracts. At this point the equity of the account still is $4500 because of the trailing stop, you went from $150,000 up to $154,500 but your trailing stop also went up from $145,500 to $150,000, from here on the trailing draw down does no longer trail and so you can start to build your equity.

$6000 margin at AMP still is a lot more money to lose than the $375 fee for a combine if you fail, in some cases a funding company like TST or others can make sense. Each trader should make this op for his/her own case.

I understand what you're saying. I was over thinking and looking at this setup in a different way. I will just need to all there to clearify more. Thanks!


bobwest View Post
It's hard for me to understand the question, so I may have gotten what you are asking wrong. Sorry if I did.

The reason it's hard to understand the question is because if you have a funded TST account, you don't actually have a separate account with a broker -- you actually have a sub-account of the trading firm's main account with its broker. You aren't responsible for the margin, because it's not your account; the required margin is between the firm and the broker, and you're out of the picture. The firm just gives you a number of contracts you can trade against the total margin in its account (which is backing other traders as well.) This is why the funded account balance is always initially set to zero, not to 150k, and the subsequent balance, whether plus and minus, is entirely due to your trading. (It can only go so far into the minus before the firm closes you out, to protect itself.) Your account balance is a balance with the firm, not with the firm's broker.

The Combine account is given a sim balance of 150k, just as any sim account has a sim balance, but it's entirely different with the funded account.

If I didn't understand your question, I apologize. But it seems like you are concerned with maintaining sufficient margin in the account with the broker, which would be a concern for your own personal account, but not for the funded account with the trading firm, which is not a separate account with the broker. Your account is one of many which, in total, are being backed by the total margin the firm has with its broker. So any margin requirement of any of the firm's brokers is not something you have anything to do with.

I hope this makes sense and addresses what you are asking.

Bob.

Yes, you're fine. Thanks for the help. Both of your answers clarified somethings for me.

I am confused because a while back when I spoke to their forex side. Their "$500K" funded account was truly just the margin buying power, something that was really just $5000(can't remember exactly), but was $500,000 buying power in leverage(Uk based broker they have a partnership with up to 100:1 leverage I think?).

Anyways, the 150K is really irrelevant? Up to 15 contracts, utilizing their rules, and keeping 80% after the first $5k profit is all that matters lol. My main concern was how much personal equity is comparable to their program to which their program is no longer beneficial?

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  #1062 (permalink)
Sarasota FL
 
Trading Experience: Intermediate
Platform: NinjaTrader, Sierra Chart
Favorite Futures: ES, YM
 
Posts: 4,854 since Jan 2013
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TickTick View Post
I understand what you're saying. I was over thinking and looking at this setup in a different way. I will just need to all there to clearify more. Thanks!



Yes, you're fine. Thanks for the help. Both of your answers clarified somethings for me.

I am confused because a while back when I spoke to their forex side. Their "$500K" funded account was truly just the margin buying power, something that was really just $5000(can't remember exactly), but was $500,000 buying power in leverage(Uk based broker they have a partnership with up to 100:1 leverage I think?).

Anyways, the 150K is really irrelevant? Up to 15 contracts, utilizing their rules, and keeping 80% after the first $5k profit is all that matters lol. My main concern was how much personal equity is comparable to their program to which their program is no longer beneficial?

It sounds like you are wondering how to determine an equivalence between the funded account and a person's comparable individual account. If that's the question -- and it's a good one -- the answer depends in part on the margin that would be put up for the individual account, plus, of course, on the amount of risk you are willing to take. The Combine/funded account only has a risk of the Combine fee; the personal account has your personal money at risk. The risk issue may be the most important for many. (Of course, a person may end up paying the fees for many Combines.)

But the margin question is easier:

The CME exchange has a requirement for trades held overnight. You can check with CME for the particular contract/product you are interested in. It will be several thousand dollars per contract, for any futures contract.

For trades that are opened and closed within the same trading day (as all TST trades must be), the CME sets no requirements -- it's up to your broker. Some brokers have margins for ES (S&P futures) as low as $400/contract. Many set it at $500/contract. Numbers this low are regarded by many traders as insane, because when a change of one point in ES is worth $50 per contract, then 10 points of ES movement against you will amount to $500, wiping you out. This could be just a few losing trades (or one very big losing trade. ) When margins are optional with low minimums, it is unwise to take the lowest number.

So, if I understood your concern, it's basically not answerable, because it depends on your individual loss/risk tolerance.

As far as the Combine/funded account goes, all that matters is the number of contracts you are given to trade with. In the funded case, the number can be increased in time if you have a profitable performance, so there is some flexibility there.

Is the Combine and then a funded account a good choice for a particular trader? Not necessarily. Someone with limited money, or someone who may want to work on his game in a limited-risk situation, may find it a good idea. Someone else may not benefit at all. Also, given the newly-introduced micro emini contracts for equities -- and the micro contracts for currencies -- there are other limited-risk choices that may be better learning opportunities. Again, up to the individual.

Bob.


Last edited by bobwest; July 10th, 2019 at 10:48 PM.
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