Topstep is a proprietary trading firm known for its structured evaluation process and emphasis on disciplined trading. To ensure fairness and maintain consistency, Topstep has established a set of trading rules that traders must follow during both the Trading Combine® and in funded accounts. These rules are designed to promote responsible risk management and protect traders from excessive losses. Here’s a detailed breakdown of what is allowed and what is not in Topstep’s trading practices.
General Rules for Trading with Topstep
Topstep, a leading prop trading firm, enforces specific rules to ensure traders demonstrate consistent, responsible, and professional behavior. These rules apply during the Trading Combine® and funded account phases.
1. Daily Loss Limit
- What’s Allowed: Traders can lose up to a specified amount per day, depending on their chosen account size. For example, a $50,000 account has a daily loss limit of $1,000.
- What’s Not Allowed: Exceeding the daily loss limit, even by a small margin, will result in the immediate failure of the Trading Combine® or suspension of the funded account.
Key Tip: Always monitor your losses throughout the day and stop trading if you approach the limit.
2. Maximum Drawdown
- What’s Allowed: Traders must keep their total account losses within the maximum drawdown limit. For example, a $50,000 account typically has a drawdown limit of $2,000.
- What’s Not Allowed: Violating the maximum drawdown threshold results in disqualification, even if the profit target has been met.
Key Tip: Plan your trades carefully and avoid risking too much on any single position.
3. Consistency Rule
- What’s Allowed: Traders should aim for steady profits without relying on one or two large trades to meet profit targets.
- What’s Not Allowed: If the majority of profits come from a single day or trade, it may not meet the consistency standards required to pass the evaluation.
Key Tip: Diversify your trades and aim for gradual growth instead of taking unnecessary risks.
4. Scaling Plan
- What’s Allowed: Funded traders must adhere to position size limits based on their account size and equity. For instance, a $50,000 account might initially allow a maximum of 3 contracts.
- What’s Not Allowed: Exceeding the scaling plan limits is a violation and could lead to account suspension.
Key Tip: Refer to the scaling plan details in your account dashboard to ensure you stay within the allowed limits.
5. Trading Hours
- What’s Allowed: Traders can execute trades during normal market hours and participate in active trading sessions.
- What’s Not Allowed: Holding positions over major news events or trading during restricted hours (e.g., market closures or holidays) may violate Topstep’s rules.
Key Tip: Check the economic calendar and avoid trading during high-volatility events unless explicitly permitted.
6. Stop Loss Requirement
- What’s Allowed: Using stop-loss orders to manage risk and protect against significant losses.
- What’s Not Allowed: Trading without a stop loss or failing to place one after opening a position is a violation of risk management protocols.
Key Tip: Always set stop-loss orders when opening a trade to comply with the rules.
7. Prohibited Practices
Topstep strictly prohibits certain trading practices to ensure fairness and professionalism:
- What’s Not Allowed:
- Scalping Extreme Small Timeframes: Rapid opening and closing of trades in milliseconds may result in account termination.
- Trading Outside Allowed Instruments: Only trade the instruments permitted within your account settings.
- Copy Trading and External Automation: Using trade copiers or automated systems not explicitly approved by Topstep.
- Revenge Trading: Overtrading or taking excessive risks to recover losses.
- Account Sharing: Letting someone else trade on your account is strictly forbidden.
8. Profit Targets
- What’s Allowed: Meeting profit targets within the specified timeframes during the evaluation phase. For instance, a $50,000 account requires a profit target of $3,000 in Step 1 of the Trading Combine®.
- What’s Not Allowed: Failing to meet the profit target within the timeframe or taking excessive risks to achieve it.
Key Tip: Focus on steady progress and avoid rushing to meet the targets.
9. Payout Rules for Funded Accounts
- What’s Allowed: Funded traders can withdraw profits as per Topstep’s payout policy. Traders keep 100% of the first $10,000 in profits, with a 90% profit split thereafter.
- What’s Not Allowed: Violating withdrawal schedules or payout rules may lead to penalties or account review.
Key Tip: Plan your withdrawals and ensure you’re meeting all active trading requirements.
10. Psychological and Behavioral Expectations
Topstep values professional conduct and responsible trading behavior:
- What’s Allowed: Maintaining a disciplined approach, managing emotions, and adhering to trading rules.
- What’s Not Allowed: Emotional or reckless trading, such as overtrading, revenge trading, or neglecting rules under stress.
Consequences of Rule Violations
Breaking any of Topstep’s rules, whether during the Trading Combine® or in a funded account, can result in:
- Immediate disqualification from the Trading Combine®.
- Suspension or termination of funded accounts.
- Loss of eligibility for refunds on evaluation fees.
Final Thoughts: Why Topstep’s Rules Matter
Topstep’s rules are designed to promote disciplined trading and risk management. While the restrictions may seem stringent, they are intended to simulate the conditions of professional trading and prepare traders for long-term success. By adhering to these guidelines, traders can not only pass the Trading Combine® but also build sustainable trading habits.
This guide provides an overview of Topstep’s rules to help traders navigate the platform effectively. For more details, visit Topstep’s official rules page.