TopstepTrader is one of the biggest proprietary trading firms in the world. And it's open to anyone around the world. TopstepFX is part of TopstepTrader and designed to let traders join a forex funded trader program. In 2019, TopstepTrader funded 1,764 traders - offering traders the ability to trade TopstepTrader's capital without risking personal funds.
At the time writing my TopstepTrader review, I was a bit disappointed that it was only possible to trade Futures Contracts there. In the beginning of 2018, TopstepTrader introduced the brand-new Forex Trading Combine. In August 2018 the company officially announced TopstepFX as a way for forex traders to earn proprietary capital.
So, how does TopstepFX work, and what is the difference between TopstepFX and TopstepTrader, besides the fact that currency pairs are traded instead of Futures? This TopstepFX review answers these questions, alongside with some first hand information from their founder and CVO Michael Patak.
Transparency: When you buy certain products from some of the sites which we link to, we may earn a small share of the revenue.
It is really a big pleasure for me that Michael Patak, the founder of TopstepTrader, was willing to answer my questions.
TopstepFX - The Funded Trading account
TopstepTrader belongs to the fastest growing companies in the United States. What is the main reason why your customers are so satisfied with your products and services?
It's amazing that traders - myself included when I started - think that you can learn to trade and compete with professionals at major banks around the world from day 1. Everyone would realize how silly it is to try to make the NFL without having played American football before.
But with trading, we all think we can profit consistently from the start. You only realize after you try and fail that there is so much that goes into being successful - the most important of which may be your emotions and mentality. We have been able to grow so quickly because we meet a need in the market.
So many traders have been burnt out by brokerage accounts where they lose thousands of dollars without learning any lessons. And they have this passion and want to do better. While we aren't perfect for every trader, we are perfect for them.
Behind The Scenes
Would you, please, be so kind as to give us a look behind the scenes and to tell us a little bit more about the similarities between the most successful traders who are trading the funded accounts?
We did a study of our traders in 2017 to answer this exact question. The short answer is that the successful traders allowed themselves more opportunities to profit from markets - and never lost too much in one day. (Check the Blog for more information)
First, we ask traders when they enter a Funded Account what their personal daily loss limit will be. While we have a maximum daily loss limit (for example, $1,000 in our $50K Trading Combine), we also allow trader to set a more strict daily loss limit. Of the traders that were profitable in 2017, 20.5% of them violated their personal daily loss limit. Of the traders that were unprofitable, 49.3% violated their personal daily loss limit.
Second, 40% of traders who were unprofitable had an average losing day GREATER than an average winning day. Think about that for a second. They lost more on their average losing day than they made on the average winning day. That is not a recipe for success.
Finally, as it relates to losing days, the unsuccessful traders also let themselves lose 22% more on their largest losing day than the profitable traders. The takeaway from all this: it all comes down to risk management. It's a clichÃ©, but it's true.
What is the main benefit using TopstepFX and TopstepTrader compared to a normal brokerage account?
Trading is an incredibly challenging endeavor. There's no question about that. But traders come to TopstepTrader for different reasons. Some would like to be full-time traders. Others are just exploring a passion.
The most significant difference between trading with TopstepTrader and somewhere else is the amount of money it takes to learn and get started. In a brokerage account, you're putting $5,000 or $10,000 at risk at a minimum. At TopstepTrader, you can learn the same lessons for $165 per month.
TopstepFX At a Glance
Can you, please, tell us the main reasons why TopstepFX has been created?
Forex is an entry-level market where a lot of traders have their first experiences. But it often doesn't work out. A French regulator did a study that suggested that the average retail forex trader loses $13,000 trading forex with a broker.
Worse: they do so without learning a thing. We're trying to fix that - and forex is a place that a low-risk trading solution is greatly needed. We believe that being able to instill good risk management practices from the beginning will be incredibly helpful to them throughout their trading career - whether with TopstepFX or their own brokerage.
So far, your in-house trading platform TSTrader and some 3rd party platforms have been used for trading Futures. Which trading platforms may be used for trading currencies with TopstepFX?
Traders use MetaTrader 4 in TopstepFX - the most popular forex trading platform in the world.
How many currency pairs can I trade by using TopstepFX and is there any difference between trading currency pairs with Trading Combine and with using a Funded Account?
You can trade 22 pairs, including the eight major currency pairs, as well as many of the currency cross pairs. Currently, we do not allow traders to trade some of the more exotic pairs. With the wide spreads and low liquidity, they just may not be a fit for our account. Traders can trade any of these currency pairs in the Trading Combine and the Funded Account, so there is no difference there.
TopstepTrader vs. TopstepFX
What are the most significant differences between the traditional TopstepTrader program and the TopstepFX program everyone should be aware of?
The largest difference is that in the futures Trading Combine, traders need to be flat each day at 3:10:00 PM CT. They can reopen positions at 5:00:00 PM CT. In the forex Trading Combine, traders can hold positions overnight and do not have to go flat until the end of the week - by 3:45:00 PM CT each Friday.
The forex Trading Combine also does not have a day requirement, but instead requires you to place a certain number of trades, depending on your account size. What we are trying to get at here is consistency - so in futures, that's measured by trading multiple days.
In forex, because you can hold positions, we changed the requirement to be a certain number of trades. But the goal is the same: to identify consistently profitable traders.
New Powerful Features
Do you plan any other significant updates for the near future and could you, please, already tell us a little bit more about them in advance?
As I mentioned, in 2019, we are focused on making the TopstepFX Trading Combine the best place for someone to trade forex. That will include some enhancements to the metrics that we track on the trader dashboard, as well as insights that we can offer for how each user, on an individual basis, can improve their trading. We think that will be really powerful.
After all, we are all working towards the same goal - to make money consistently from the market. And the more we help you reach that, the more we can differentiate ourselves from the alternative places to trade forex. Of course, we also always listen to traders. So if there are any things that you want to see, please reach out to our Trader Support team and let us know.
Michael, thanks a lot for this valuable first-hand information! This was my interview with Michael Patak, the founder of TopstepTrader.
About Michael Patak
Michael, please, tell us a little bit more about you and your career and TopstepTrader.
It's great to talk with you. I got my start trading like so many traders out there. I was incredibly passionate, but not very good. Frankly I had no concept of risk management, and that's why when I first started trading, I promptly lost $90,000 in three separate accounts.
It was only after I joined a proprietary trading firm and was put on a trading simulator that it started to click. I needed to make rules around my trading - things like don't lose too much on a given day or week or when and what products I could trade. Fast forward, I found my niche trading Dow Futures on the trading floor in Chicago.
But I never could shake the idea that there has to be a better, less expensive way to learn the trading lessons I spent $90,000 learning. No one should put their life's savings or child's college fund in danger because they want to trade. And TopstepTrader was born from that idea. We put rules around what it means to trade well, become your accountability partner and then provide you with trading capital when you meet the objectives.