I was agreeing with him, not being intimidated. It's really best to look at the official sources, at least first.
As to the data fees, CME Group now includes CBOT, NYMEX and COMEX as well as "CME". So it's the CME as a group that is setting the data prices for the "products" of those "exchanges". So yes, you could be paying several hundred dollars altogether, depending on what "products" you want to trade. The CME professional fee is $85, but there's a separate hit per "exchange" -- which means you could be paying four fees depending on what you wanted to trade and where it was traded.
Note that ICE (Intercontinental Exchange) is a separate outfit, and their data fee is $110 (as of 4/1/16). So if you wanted, you might pay $85 times 4, plus $110 = $450.
As to "the data feed is actually coming through TST" -- I said, or at least meant, that I assumed they would set you up with a feed. How that is managed, in detail, I don't know. This would be a good question to send to their support.
TST is the feeder organization for its prop firm. The prop firm has the account, and you trade it. They want you to come with a trading platform, one that they are set up to work with (they need to exercise loss control if your losses get out of hand.)
They also want you to pay the exchange data fees. As far as I understand, they connect you with a data provider, and you will have to furnish a credit card for the fees to be charged.
Again, this is the overall shape of it. If you need more info, I suggest asking their support, which has been very good in my experience.
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I guess somebody should have written to the originator of this thread then and told them it was useless because we have the TST site to get all of our answers. They should have just had one post with the link to the site then.
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I have also signed up to Combine and am looking forward to the challenge.
Pretty much the only issue that I have with their rules is the one requiring me to be flat at or before daily market close. It does interfere with my trading style and although I'm confident I will get through combine, I believe it will have an impact on my results (sometimes requiring me to stay in a trade for more than a day to really milk a trend, which is what any non-scalper will do).
I understand this rule for markets without globex session, but for any 24 hour market such as ES this rule seems unnecessarily restrictive.
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TST is giving an opportunity for a lot of traders to earn what they deserve. But in the end, they need to protect what is theirs. Their capital and they have to look for what's good for them.
Let me explain why this rule is a necessary for a TST even though they might not have divulged the information, this is just my theory on how TST works. Again, big fan of TST and have been trying big combines for a while now.
Anyway, here's the theory. According the norms by the SEC or whichever that governs the future trading in USA, a contract may hold 5K in margin from your account to trade. For now, lets take ES and lets consider it to be 5K....
So, you trade a contract, then you hold it beyond the close of the session that day, then it is necessary for you to have 5K in your account to hold it on.
As we know, many brokers offer intraday trading on ES with just 500 dollars. Now, TST is brilliant. Why...?? This is why. TST has made friends with brokers and told them that they want their brokers to code certain rules into their trading or execution system so that when TSTs traders violate, the account gets locked and they have promised them many many accounts as time goes.
The brilliance comes here. Since, TST has asked all it's traders to close out positions before the close of the days trading, it means they do not need to have 5K for a contract in the account. Now, if a trader gets funded, lets consider 150K account for the sake of example here, he can trade a max of 20 lots after a certain profit, but before that, he needs to follow the scaling plan. So, what TST does now is, they have forced trader to start with 3 lots on a 150K account. Basically, cos of the rules of 3K max daily loss for 150K and 4.5 Max dradwown, TST needs to have a max of 7.5K in the account for you to be able to trade the Funded Account initially. Now this 7.5K is because if the trader hits 2999 and 2999 loss limit on the first 2 trading days of live account only but you are still left with 1 dollar for the max daily loss on the second day and you can still open a 3 lot position which is why the rest of 1.5K needed. Now, as the account grows, the scaling plan is allowed, we are building our own capital and TST is pushing us into risking what we have made and their capital becomes safer and safer with our profits. So, say at end of 10th day, a trader has made 5K... Now TST's rule is this 5K shouldnt become 0. When it does, you are stripped off your funded account. So, 5K is what you have made and 5K is what you get to lose and TST gets to lose nothing.
So basically, TST does not need 5K for a contract since it's intraday trading. And since its intraday, TST can have like 500 dollars per contract for you to trade. Since the max drawdown is 4.5K and there are chances that a funded trader might lose on the first two days itself, the only time they are at risk is when a trader loses money on funded account on the first 2 days and this will be max 3K each day or max of 4.5K in 10 days... But once a trader is successful, TST keeps getting returns for many many many many days for just this 7.5K initial startup capital. But in fact we will be feeling like we are trading an 150K account but in real, the actual balance is 7.5K or max 10K in the account and because of the scaling plan, we earn our buying power from our profits. Not TSTs capital. And the returns for this are huge. Returns for such a small capital, if a trader makes 1K, its 200$ and I have a friend who makes 2 - 5K on TST and thats 400 to 1K return daily for a capital of 7.5K.... That is why, TST is one of the best companies in the world and something that will survive for as long as trading exists. Also, TST is a hedge fund in the backbone, considering this business model, they almost have the ability to fund lacs of traders and the startup capital for 150K account is negligible for a hedge fund. 7.5K and many many traders are getting funded lesser than this. Most are 50K Combines. For a lot of you out there this might come as a relief because you all want such a brilliant company to thrive and do good for all its clients. Again, if this is not their business model, then I guess I just hit the bullseye at conceptualizing the best business model.
Hence the close before the end of day and also close before any news on the Live account. I dont think TST will appreciate what I have written here but but I am still a big fan, this is just a theory. May be I am totally wrong. Entirely. But if I were TST. This is how I would have worked out with the Brokers and NT.
Last edited by pavanb15589; April 23rd, 2016 at 07:39 AM.
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I would say that your post has hit on some good points, but it is a little complicated.
It might be best if Michael, @TopstepTrader, or John Hoagland, @Hoag, could step in on questions of the TST business model. It's their model, after all.
Just a few comments, for whatever they may be worth:
TST is essentially looking for traders for its prop firm (you can't really call it a hedge fund .) Proprietary trading firms operate in similar ways: they give their traders access to a certain amount of the firm's capital, and impose very tight risk management to protect that capital. They have a percentage split for the profits (TST's split of 80/20 is very good.) They may have restrictions about day trading -- TST does -- or not. In an overall sense, TST is not really that unusual, although the Combine idea for finding traders is an innovation, as far as I know, and their particular policies are, of course, their own.
The balance in the trader's account with the firm is not really what is securing the trades, as it would be in your or my individual account. The firm will have a certain amount of margin in its account with its broker, which, as you said, is between the firm and the broker, and the trader gets to use a certain number of contracts, essentially based on his/her record of success with the firm, up to the firm's risk limit. The trader does not have to maintain any particular balance in the account to support the size he is trading -- unlike in an individual account -- but does have to have a sufficient cushion against losses, which is a matter of his judgment, not a margin requirement or a firm requirement. (But he can't go negative after the first 10 days and keep the account, so good judgment is required.)
So yes, the trader is actually trading a portion of the firm's capital, not just trading based on his account balance or his accumulated profits, which may not still be in the account, if he has been taking them out.
To make it simple, if I take some profit out of my personal account, my allowable contracts go down because my margin has gone down. If a funded TST trader takes some profit out of his firm account, his allowable contracts do not change, because his size limit is not based on the present account size. The balance in the trader's account is not the margin that is used to secure the positions he is taking -- the firm's capital with its broker is. The trader will never know, and will never care, what that balance is, and will not need to know. The trader's account balance starts out at zero, and develops a balance only as the result of his cumulative P&L, less withdrawals, and does not include a margin deposit.
(Edit: If I lose money in my personal account, my margin and therefore my allowable contracts also go down. If a trader loses money in a TST funded account, then based on what the balance becomes, TST may reduce his allowable contract size also -- but not because he has less margin, but because they are less willing to take on the risk of his trading a certain size. While if he withdraws money from a TST funded account, his allowable contract size does not change. It's a matter of how risky it is to keep backing him as a trader, not how large his account is. Sorry, this does get complicated, but that's how it's done. )
Much of the misunderstanding that sometimes comes up on this point is due to people mistaking what is true for an individual account -- that your present balance is what is backing your trade size -- with a trading account with a firm, where the firm's overall balance, not just your account's, is what is providing the margin that is backing your trade size, as well as everyone else's who is trading with them. What they are willing to allocate to you in particular is based on their standards of whether it is a good risk to do so.
As to the day-trading question, yes, the margin requirements for "overnight" trades are set by the exchange, and the day-trading requirements are set by the broker (basically, how much risk it is willing to take on, since the broker will have to make good on all its customers' trades at the end of the day.) So there are margin-related reasons for preferring day trading, as there are for you and me. And TST has elected to only do day-trading, at least for now. For trading strategies that do involve holding overnight, TST is not presently a good choice.
I think that once the differences between the proprietary trading firm model and the individual account model are understood, the complexity goes away and things get simple again.
(If I got anything of substance wrong here, I would be grateful if @TopstepTrader or @Hoag would correct me on it.)
I hope that this will prove useful to someone who has had questions about it all.
Thank you Pavanb and Bob.
This does make sense of course.
I did contact them directly and was told that the reason I cannot hold overnight trades is because they need all accounts to be flat in order to run their trade reports. If accounts weren't all flat, there would be inaccuracies in the reports as obviously there is floating PnL involved.
They did not mention any other reason. To be honest the increased overnight margin shouldn't really be an issue, as it shouldn't in ones personal account.
Or put differently: If you can't afford the overnight margin, you're trading too many contracts for your account size.
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Yes. You are correct. Once you are up in the scaling plan, the buying power does not decrease. But the whole point of my article was to tell that how little capital TST actually allots for a funded trader. Lets go over it again. Say the intraday margin required for 1 contract is 1K and the funded account is 150K...
Scaling plan. The trader scales up and he has the buying power of 20 contracts. Initially he started with 3 contracts and that initial startup capital in the funded account is all explained in the previous post. But once you are up at 20 contracts buying power, your buying power does not decrease. Correct. But this is where everybody is tricked but here is how it works.
When funded your account balance is 0. TST needs you to be positive by the end of 10th day of trading in live. Now lets say you have made 20K by 10th day. Your buying power is now 20 contracts. You choose to withdraw 15K. Your account balance is now 5K but your buying power is still 20. This is because TST has added the required margin to the Funded Account to increase your buying power. But when you are trading, you still cant let your account have a daily drawdown of 3K.
Now lets say your buying power is 20 contracts and your account balance is 5K after all the withdrawal. Now, you lose 2999 ( assuming you did not want to reach the loss limit) the next day of withdrawal. You are left with 2001. Again, the next day after, you can still lose 2999 but by the end of day, you need to be above 0. That means you need to bring the loss down to 2K to be positive but unfortunately this isn't possible and when you close the account at 2999 minus, your total balance is -1K and now you are stripped off your Funded Account.
So, Scaling Plan is just making traders avoid reckless and luck trading. Once scaled up, TST is trusting enough to put more capital to give you more buying power. Now the above scenario is just 1, The worst scenario for TST can be this. Say the withdrawal of 20K was 19999 and then the next day, you lost 3K. Your buying power is still 20 contracts but the next day you lost 3K and your account is -3K and you are stripped off your account.
So, this is the general flow chart.
Trader is funded - Scaling Plan - Maintains positive balance after 10th day - Needs to maintain positive balance thereon - Makes more and more profit - Proves his worth - Gets more buying power which is not related to his profit.
So a trader can ask for 50 contracts buying power and if he's made 50K in the account, he can withdraw it all or lose it all. But after all that profit, max TST will lose is 3K when the account comes down to 0 and then you close below 0 the next day at maximum loss.
Hope this makes it clear.
Last edited by pavanb15589; April 25th, 2016 at 04:46 AM.
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