Topstep is a well-known proprietary trading firm offering futures traders the opportunity to earn funded accounts through its Trading Combine®. While it has helped many traders succeed, some aspects of the program have drawn criticism or caused confusion among participants. If you’re considering taking on the Topstep challenge, here are the red flags and potential pitfalls to watch out for.
1. Strict Daily Loss Limit
- What It Is: Each account size comes with a daily loss limit that traders cannot exceed. For example, a $50,000 account has a $1,000 daily loss limit.
- Why It’s a Red Flag: The daily loss limit is absolute, meaning even a small breach—by as little as $1—results in automatic disqualification. This has frustrated many traders who argue that minor market fluctuations can unexpectedly trigger the limit.
- What to Do: Monitor your trades carefully and ensure you have ample buffer space between your current loss and the limit.
2. Maximum Drawdown Rules
- What It Is: Topstep enforces a trailing maximum drawdown during the Trading Combine® and funded accounts. The drawdown starts from your starting balance and trails your highest unrealized profit.
- Why It’s a Red Flag: The drawdown applies to unrealized profits, meaning even if a trade moves favorably but reverses slightly before being closed, it could affect your drawdown limit. This has caused complaints about the fairness of penalizing unrealized gains.
- What to Do: Close profitable trades strategically to lock in gains and avoid unnecessary drawdown adjustments.
3. Scaling Plan Restrictions
- What It Is: Topstep, a well-known prop trading firm, has a scaling plan limits the number of contracts you can trade based on your account size and current balance.
- Why It’s a Red Flag: Some traders feel the restrictions on position sizes are overly conservative and hinder their ability to meet profit targets efficiently.
- What to Do: Review the scaling plan before starting the Combine and ensure your trading style aligns with the contract limits.
4. No Refunds for Combine Fees
- What It Is: Topstep charges a monthly fee to participate in the Trading Combine®, and this fee is non-refundable.
- Why It’s a Red Flag: Traders who fail the Combine must pay the fee again to retry, which can add up quickly, especially for those attempting higher account sizes.
- What to Do: Be realistic about your readiness before starting the Combine to avoid paying for repeated attempts unnecessarily.
5. Restrictions on Trading Hours
- What It Is: Traders are prohibited from holding positions during certain times, such as major economic news releases or over market closures.
- Why It’s a Red Flag: Some traders feel these restrictions limit their ability to take advantage of profitable market movements, especially in highly volatile periods.
- What to Do: Check Topstep’s prohibited trading hours and plan your trades around these restrictions.
6. Consistency Rule
- What It Is: Topstep expects traders to demonstrate consistent performance, avoiding large profit spikes from single trades.
- Why It’s a Red Flag: Traders who rely on a few big trades to meet profit targets may fail the Combine due to this rule, even if they technically meet the profit requirements.
- What to Do: Spread your trades out and aim for steady profits rather than relying on one or two big trades.
7. Potential Delays in Funded Account Activation
- What It Is: After passing the Combine, some traders have reported delays in receiving their funded accounts or additional requirements before activation.
- Why It’s a Red Flag: Delays can be frustrating, especially for traders eager to start live trading. It may also raise concerns about the firm’s efficiency.
- What to Do: Contact Topstep’s support team promptly to address any delays or issues during the activation process.
8. Limited Trading Instruments
- What It Is: Topstep focuses exclusively on futures markets, offering a limited range of instruments compared to some other prop firms.
- Why It’s a Red Flag: Traders looking for forex, stocks, or broader asset classes may find the selection restrictive.
- What to Do: Ensure you’re comfortable trading the available futures instruments before committing to the Combine.
9. Subjective Evaluation of Trades
- What It Is: Some traders have reported that Topstep occasionally flags trades as “unacceptable” due to specific patterns or methods, even if they technically comply with the rules.
- Why It’s a Red Flag: This subjectivity can lead to confusion or unexpected disqualifications.
- What to Do: Clarify your trading approach with Topstep support beforehand if you’re using unconventional strategies.
10. Mixed Reviews on Customer Support
- What It Is: While many traders praise Topstep’s support team, others have reported slow response times or unhelpful answers during critical moments.
- Why It’s a Red Flag: Delayed or unclear communication can be a significant issue, especially during time-sensitive trading situations.
- What to Do: Test their support responsiveness by asking questions before starting the Combine and consider how they handle your inquiries.
Final Thoughts
While Topstep offers a valuable platform for traders to access capital without risking their own funds, the program comes with rules and potential pitfalls that may not suit everyone. By understanding these red flags and preparing accordingly, you can approach the Trading Combine® with a clear plan and avoid unnecessary setbacks.