Take Profit Trader is a proprietary trading firm offering futures traders the chance to manage funded accounts. To qualify, traders must pass a structured evaluation that tests their risk management, consistency, and profitability. However, understanding the rules of the challenge and funded accounts is critical to avoid common pitfalls. Here’s a detailed guide to Take Profit Trader’s rules, with insights into potential drawbacks and considerations for prop trading firms.
The Challenge: Steps to Earn a Funded Account
The Take Profit Trader Challenge consists of a one-step evaluation. Unlike multi-phase evaluations seen in other prop firms, this approach simplifies the process, but strict rules apply.
1. Profit Target
- Rule: Traders must achieve a 6% profit target to pass the evaluation.
- Why It Could Be Challenging: While the target seems reasonable, traders must hit it while adhering to strict drawdown and risk limits, which can be restrictive during volatile market conditions.
2. Maximum Daily Loss
- Rule: Traders cannot exceed a daily loss limit of 3%.
- Drawback: This absolute limit applies to all trading days and doesn’t account for strategies involving calculated risk-taking during high-volatility sessions. Breaching the daily loss, even by a small margin, results in immediate disqualification.
3. Overall Drawdown
- Rule: The maximum overall drawdown is capped at 4%.
- Why It May Not Be Ideal: The trailing drawdown is applied to unrealized gains, meaning profitable trades that temporarily pull back can impact this limit. This discourages traders from allowing trades to breathe or run to full profit potential.
4. Minimum Trading Days
- Rule: Traders must trade for at least five days during the evaluation period.
- Consideration: This rule ensures traders demonstrate consistency, but it could disadvantage those with fewer high-quality trading setups.
5. No Time Limits
- Rule: There is no time restriction to complete the evaluation.
- Benefit: This flexibility allows traders to progress at their own pace without the pressure of deadlines, which is uncommon in many prop firms.
6. Eligible Instruments
- Rule: The evaluation is limited to futures contracts from CME Group, including indices, commodities, and currencies.
- Potential Drawback: The lack of variety in asset classes could be restrictive for traders accustomed to forex, stocks, or broader markets.
Funded Account Rules
Once traders pass the evaluation, they gain access to a funded account. However, maintaining the account requires strict adherence to additional rules.
1. Profit Split
- Rule: Traders retain 80% of their profits, with the potential to earn up to 90% based on consistent performance.
- Why It May Not Be Ideal: The starting profit split is lower than some competitors, which offer splits starting at 85% or higher.
2. Scaling Opportunities
- Rule: Funded accounts can scale based on consistent performance, allowing traders to manage larger capital over time.
- Benefit: This encourages long-term discipline, but scaling is tied to strict profit milestones, which may slow down growth for some traders.
3. Payout Schedule
- Rule: Withdrawals are processed every two weeks.
- Why It Could Be Challenging: Traders must wait for the payout window, which may delay access to funds. Some firms offer faster, more flexible payout schedules.
4. Risk Management
- Rule: The same risk management rules from the evaluation (daily loss and overall drawdown limits) apply to funded accounts.
- Drawback: The continuation of strict limits can feel restrictive, especially for traders aiming to capitalize on high-conviction setups.
5. Holding Trades Overnight
- Rule: Trades can be held overnight but not over weekends.
- Why It’s Important: While overnight positions provide flexibility, the weekend restriction could limit strategies reliant on longer-term trades.
6. Platform and Technology
- Rule: Traders must use supported platforms such as NinjaTrader or TradingView.
- Consideration: While these platforms are popular, traders accustomed to other platforms like MetaTrader may face a learning curve.
Key Considerations and Potential Issues for Prop Trading
While Take Profit Trader offers an accessible path to funded trading, some aspects of their program might not suit every trader:
- Trailing Drawdown: This rule ties the drawdown to unrealized profits, which can unfairly penalize trades that temporarily pull back before moving in the intended direction.
- Limited Instruments: Restricting trading to CME Group futures contracts may alienate traders accustomed to a broader market selection.
- Payout Delays: Bi-weekly payouts can be inconvenient for traders needing quicker access to their earnings.
Why Take Profit Trader May Still Work for You
Despite its limitations, Take Profit Trader stands out for its one-step evaluation process, lack of time limits, and reasonable profit targets. Traders who thrive in structured environments and focus on futures contracts may find this program an excellent fit.
Conclusion
Understanding the rules and potential challenges of Take Profit Trader’s evaluation and funded accounts is crucial for success. By adhering to their strict risk management policies and planning trades strategically, you can maximize your chances of passing the evaluation and thriving as a funded trader. However, be mindful of the program’s limitations and assess whether its structure aligns with your trading style and goals.