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

  #1101 (permalink)
Providence, Rhode Island/USA
 
Trading Experience: Beginner
Platform: Tradovate
Favorite Futures: MES
 
Posts: 11 since Feb 2020
Thanks: 3 given, 2 received


bobwest View Post
I'm not @TopstepTrader, who probably will answer as well, but it has been answered, I think a few times (the thread is long and hard to read, so it's no surprise that it wasn't easy to find.)

You as a trader would be an independent contractor, and the funded account is not your account, it's the firm's. You just get to trade it. Since it's not your account, the funds in it aren't yours, and the profit isn't yours either. So "you" didn't make 10k in actual profit, the firm did. Under the profit split agreement, they will pay you, on request, 80% of the account's profit, which is reported to you as income on the 1099.

So it's not as if you had your own account with a 10k profit, which would be taxable to you. You are a contractor who is paid, in this case, 8k as income. The firm keeps the remaining 2k. You never had 10k.

Another note -- and I am not a tax specialist or an accountant, so you would need to consult your own tax professional -- if the funds were yours, in your personal account, the profits would not be taxed the same way. You can check the 60/40 rule, which makes the tax treatment very different for derivative trades (such as futures) compared to ordinary self-employed income. This is all self-employed income.

I believe this is all accurate, but again, I am not TopstepTrader and don't represent them. If you want to be sure, and if there is no response from them here, I suggest you email your question to their support to get an official response.

Bob.


Thanks Bob! This all makes complete sense. It is pretty much what I was thinking was the case, but I just needed some verification. I am seriously considering signing up, so I wanted to make sure I was not going to be taxed on money I would not see (the 20% TopStep keeps). Thanks again!

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  #1102 (permalink)
Valencia (SPAIN)
 
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ONE MORE PIECE OF NEWS BY TST:
Because of the volatility created by the covid19, now you have more restrictions.... basically you buy one contract at 8:40 and you have lost your account.
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Last edited by SamJames; March 30th, 2020 at 05:42 PM.
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  #1103 (permalink)
Providence, Rhode Island/USA
 
Trading Experience: Beginner
Platform: Tradovate
Favorite Futures: MES
 
Posts: 11 since Feb 2020
Thanks: 3 given, 2 received



SamJames View Post
ONE MORE PIECE OF NEWS BY TST:
Because of the volatility created by the covid19, now you have more restrictions.... and they care sooo much about their traders that if you break one of the new rules, they just get rid of you.
This is how much they care!! basically you buy one contract at 8:40 and you have lost your account.
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My question is, why 8:45, and not 8:30? The market opens at 8:30CT/9:30EST, what is the point of waiting 15 minutes after the open?

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  #1104 (permalink)
Valencia (SPAIN)
 
Trading Experience: Intermediate
Platform: SierraChart
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MrGreen1 View Post
My question is, why 8:45, and not 8:30? The market opens at 8:30CT/9:30EST, what is the point of waiting 15 minutes after the open?

well, I guess is to make sure you don't trade with size during high volatility, normally the first 15 minutes are quite volatile.

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  #1105 (permalink)
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Sarasota FL
 
Trading Experience: Intermediate
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Posts: 5,507 since Jan 2013
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@SamJames already posted about TST restrictions on funded accounts during this volatility. Here's the rest of the new changes, including non-funded Combine accounts, as well as "Swing" (micros) and "Pro" (see their site for description.)

Personally, I think trading just one contract as your personal max is a good idea right now, unless you are a truly good, long-profitable trader who has a lot of experience in dealing with high-risk periods, but perhaps that's just me. I would do the same in a Combine, but maybe that's just me too. Control risk and you will be able to trade again would be my motto.

The reference to market limits being reached would be (I'm assuming) when futures go limit up or down. This seems to be giving their trade simulation problems in Combine accounts.

As to the 8:30 to 8:45 period, look at a chart. It can be a meatgrinder then. I would suggest observing this in your own live accounts and even in Combines. There is money to be made now, but accounts will be blown up too. Be careful, all.

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