TopStep Review will look at the biggest and most well-known online futures trader funding company in the world. Patak Trading Partners wanted to give more traders a chance to get involved in financial markets. They created what now is a Trading Combine – trader exam with a reward of a live funded account upon completion.
TopStep will have paid out over $4,000,000 to funded traders in 2021 and established a 60+ employee operation in downtown Chicago. Huge amounts of trader capital were saved. Developing trading skills in a funded trader program environment is much cheaper compared to jumping straight into tackling financial markets in an online brokerage account with your own money.
The whole funded trader program world was born thanks to TopStepTrader’s innovation and inspiration. We are forever thankful. Heading into the 2022 trading year we take a look at where TopStepTrader Combine is with the rest of the industry.
TopStep Review vs Competition
We will go over the whole program Step1 of Trader Combine through the funded level.
Topstep has 3 future account sizes – 50k, 100k, and 150k buying power accounts.
Competitors typically have a higher selection of account sizes.
Conclusion: TopStep account size selection is sufficient and covers a good range of trading size options. Traders with very specific trader exam needs might be forced to look elsewhere.
Trading Combine Pricing:
Combines are prized $165/month for 50k, $325/month for 100k, and $375/month for 150k buying power account.
Conclusion: When comparing regular pricing without Special sale pricing, TopStep is one of the most expensive trader evaluations. Now when we factor in the fact that the rest of the industry runs much more frequent and aggressive sales, TopStep value is even worse in comparison.
Amount of profit trader is required to reach to receive funding.
TopStep requires traders to reach 3k for 50k combine, 6k for 100k combine, 9k for 150k combine.
Competition: Has roughly the same profit requirements for their trader exams.
Wait! That is just comparing Step1 of Trading Combine to the whole duration of the competitor exams, TopStep has 2 step funding process where the above liste profit target has to be achieved in each stage.
Conclusion: TopStep has the worst profit requirement out of trader programs that are worth considering. And it is not particularly close. If your trading system gained 15k in profit from the start of the program. In most other programs you will already have completed the trading exam and be sitting with $6k in profits. Meanwhile, at TopStep you would still be $3000 in profits away from qualifying for a funded account. Tough sell here for Topstep.
TopStep requires traders to complete a 2 step process to get funded.
Competition: Some funded trader programs require multiple steps, but there are more which are featuring a single-step process
Conclusion: TopStep is getting beat by the competition. For instance, a 50k Trader Combine account would require 3000 in profits in each step. There are programs where that amount of profits would get a trader two separate funded accounts.
Traders may not go down to a certain balance each day, failing to stay above that balance level will result in a rule violation. Daily drawdown is a great tool to teach traders discipline and prevent bigger losses.
Daily drawdowns are common around the industry. There are a lot of programs with larger daily drawdowns, or without daily drawdown requirements entirely. Having risk limits is very important, it is possible to set those limits on your trading software or risk manager. Daily drawdown can almost be considered a trap. Touching daily drawdown is considered a rule violation, thus taking away a chance for funding. This is what we considered a trap rule. Trader funding companies are in the business of making money, so, understandably, this rule is in place to maximize profits. If the daily loss limit was all about education and discipline it would make sense to lock the account for the day if the daily drawdown is reached or exceeded. If the punishment for violating daily drawdown is taking away the funding chance, might as well just learn from the experience of operating in oversized drawdowns and losing that trading chance anyway. Hopefully, an understanding of risk management is developed that way.
Conclusion: Daily drawdown offers no benefit as a rule to the trader. There are plenty of options without daily drawdown or with bigger daily drawdown options. The argument that this is about preparing traders for a real-world trading environment goes out the window when presented with the following case:
A trader is in a Combine account that has made $8900 over 3 days. On day 4 trader misreads the market and loses $3000.1. Now trader is up 5899.99 in the last 4 days. However, that is not good enough at TopStep and the trader fails out of funding opportunity program
Weekly Loss Limit:
In Step 2 of the Trading Combine, there is a weekly loss limit.
Competition: weekly drawdowns are very rare in the industry
Conclusion: Thumbs down TopStep. A bad Monday would sideline a trader for the rest of the week until weekly drawdown restarts. The fees are still running while the trader is forced to take 4 days off from learning to trade. No advantage to the trader looking to learn operating in the markets daily.
TopStep weekly and total drawdowns get adjusted EOD (end of the day)
Competition: Mixture. Many programs have a live trailing drawdown, which puts a trader at a significant disadvantage vs an EOD drawdown. Those programs are usually priced much lower.
Conclusion: Thumbs up Topstep, EOD drawdown is what we like to see.
In Trading Combine Step 2 traders have to reach a certain profit level to be able to unlock full leverage. A good rule for traders to learn and practice risk management. Avoid overleveraging early on. They have recently added a risk manager feature to instead of failing a trader out the program right away, the risk manager will try to restrict extra contracts. According to TopStep “This prevention is not guaranteed.” If the risk manager does not restrict maximum trading size there also is a “Scaling Plan corrected in less than 10 seconds will not break a rule”. Meaning if a trader realizes a mistake immediately, it will not be considered a violation. Exceeding the scaling plan for more than 10 seconds will result in rule violation and the account will need to be reset to keep trading.
Industry: Scaling plans are common, especially in EOD drawdown trading exams. Many programs allow maximum leverage from the first trade.
Conclusion: TST is best for new traders looking to develop structure and learn to scale up position sizing as profits are made. Experienced or aggressive traders wanting to attack the trading exams with full position size right away will have more favorable trading options.
Starting with step 2 in the trading combine, traders will be required to be flat around major news releases. TopStep organizes those releases for you to check in their major news release calendar.
Competition: Many funded trader programs have done away with the news trading rule, some still have it.
Conclusion: News trading violation is more of a trap than it is a rule to benefit the trader. For-profit business maximizing profit potential is perfectly fine, but this isn’t a rule made to benefit the trader. If it was so important to instill a news trading rule, why start implementing it in Step 2 and not the first step of the Combine?
Additionally, trading through the news by accident can be a valuable experience for the trader, while it happens in simulating low-risk environment of a Trading Combine, things that can go wrong while being caught off guard during news trade:
- Learn to react to surprise events whether flat and especially when in a position. “News bombs” happen all the time and are not always scheduled, it is important to develop skills set to deal with situations.
- Traders can see how their trading computer and platform perform during high volatility news events. Slower systems, slow connections, or platforms overloaded with high usage indicators can cause things to freeze.
- Learn to attempt to trade out of a bad trade or to close a position. Situations, where stop order can get, ignore
- Open order to fill a position with brackets for stop-loss stored locally. Market jumps on news entering a trade. If the spike is big enough and brackets it not submitted fast enough, the trader’s stop might not get triggered as it is submitted too late.
- Not knowing the difference in orders. Using stop limit order instead of stop market order can cause stop not to be filled on big news spike as the limit is never touched.
Let’s try this example: trader in 150k combine account reaches $17985 in profit between two steps and is $15 in simulated profit from achieving a funded account. Trader to be flat for a news release, the account can no longer receive funding until paying a reset fee and generating $9000 more in virtual profits, while following all the rules. News trading rules are bad for all traders.
TopStep has no requirement for profit consistency in the first step of the program. The whole profit goal can be achieved in one trading day. The second step introduces a 40% consistency requirement. The biggest trading day can not account for more than 40% of total profits. This rule seems more in place to protect TopStep than it is to benefit the trader. The program already features a two-step trader evaluation process, so they have a built-in layer of protection from having to fund one trade wonders. The 40% trader consistency rules forces trader to forfeit the upside potential and extend the duration of the qualifying period. Taking profits is of course very important, but if TopStep believes that stopping trading when in tune with the market and being profitable is important, that rule should be in place in Step1 and funded accounts, not just be featured solely in Step 2.
A great accomplishment for all traders, leveraging account fees into funded trader accounts. The automated system detects completion of the combine and funding program choice is presented to the trader after the RTH close.
Trade had to choose between Pro Account or Funded Account
TopStep Review: Pro Account
Pro Account – a way to avoid upfront costs as you keep developing trading skils
Quick start – can start the next trading day, sometimes it takes 2 business days to get Pro funded account running.
Lower Fees – can still trade using included trading platform licenses and do not need to pay exchange fees. Potential savings of up to $500 a month for traders trading across all exchanges.
Profit split – going through the PRO program will allow traders to keep the first 10K of total profits with TopStep before moving on to the 80/20 profit split. Very generous and a leader in the industry in a 100% profit split department.
Keeping $1,000 more of the first $10,000 in profits as well as fee savings will likely funnel every trader into the Pro Account. Even if a trader came into TopStep trading combined with intention of quick hit and run profits of under $5,000, the trader will be forced to reroute to the the Pro vs Funded Account route.
TopStep Funded Account
A Funded Account would take 7-10 business days from completion of Step 2 to get started, you will also have to have a trading platform license.
Now the big discovery comes – unless you have been digging through 4 layers of the FAQ you had no idea that Funded Account has Intraday drawdown calculation for the weekly and maximum trailing drawdown. This is the first time the Intraday drawdown is applied in the whole program. Company preaching consistency, developing a steady trading style has a trader deal with intraday drawdown starting with the funded level and completely by surprise. . A concept that does not exist anywhere outside the trader funding world and severely increases the chance of failure.
Top Step Trading Summary for 2022
They inspired an industry of funded futures trading, which is awesome. The industry however has passed TopStep by, they are not a leader in any single trader funding category anymore. While other trader funding programs are making improvements in favor of traders and providing more trading freedom over at TopStep they are making it more complicated for traders to profit from the process.
Everything has a price, TopStep can still be utilized during their sales, otherwise, you are likely to find better prices for better programs elsewhere. Important to be aware of how the inconsistent rules will impact your trading. Goal is to take away the best or risk management and become a profitable trader, not a Top Step rule trader.