If you’re looking to become a funded trader and gain access to capital without putting up your own funds, TopStep offers one of the most reputable and popular programs in the industry. But before you dive into the world of TopStep funded accounts, it’s crucial to understand the rules and regulations that come with them. These rules are essential for ensuring you can progress through the challenges successfully and ultimately gain access to a funded trading account.
In this comprehensive guide, we will cover all the key aspects of the TopStep Funded Account Rules, including the requirements, evaluation process, risk management guidelines, and more. Whether you’re a beginner or an experienced trader, understanding these rules is paramount to your success in the TopStep trading program.
What is a TopStep Funded Account?
A TopStep Funded Account is a trading account provided by TopStep, a leading proprietary trading firm, to traders who successfully pass through its evaluation process. Traders can manage the capital provided by TopStep in exchange for a percentage of the profits they make. The idea behind this model is to allow traders to trade with larger amounts of capital, increasing their potential returns while limiting their personal risk.
TopStep offers two primary stages to qualify for a funded account:
- The Trading Combine – A simulated trading phase where traders must meet specific profit goals while adhering to risk management rules.
- The Evaluation Phase – A more advanced stage where traders demonstrate consistency and the ability to manage risk effectively under real market conditions.
Once you pass both phases and prove your skills, you gain access to a funded account where you can start trading real capital with TopStep taking on the risk.
TopStep Funded Account Rules: The Essential Guidelines
Understanding the TopStep Funded Account rules is critical for success in this program. These rules not only guide you through the evaluation process but also help ensure that you’re trading responsibly and minimizing unnecessary risks.
1. Profit Targets
To successfully progress through the Trading Combine and Evaluation Phase, you must meet specific profit targets. Here’s a breakdown of how these targets work:
- Trading Combine: You are required to achieve a set profit goal, typically $3,000 for a $50,000 account. This target must be reached within 30 trading days, but you can trade in a more flexible manner. Keep in mind that you must not exceed the maximum daily loss limit and the overall loss limits, which are discussed below.
- Evaluation Phase: During this phase, the profit target increases, typically to around $6,000. You must continue to trade within the risk management limits set by TopStep.
While meeting the profit target is crucial, the risk management rules are just as important. The main objective is to prove that you can make consistent profits without exposing the account to excessive risk.
2. Maximum Drawdown and Daily Loss Limits
TopStep is a risk-averse firm, which means they impose strict drawdown and daily loss limits to protect both their capital and your trading career. These rules are designed to prevent traders from overexposing themselves to market risk.
- Maximum Drawdown: The maximum drawdown is the maximum loss that a trader can incur before being removed from the evaluation process. For example, if you’re trading a $50,000 account, the typical drawdown limit is $4,000. If your account balance drops below this threshold, your evaluation is terminated.
- Daily Loss Limit: The daily loss limit is the maximum loss you can incur in a single day. For example, for a $50,000 account, this limit is usually set at $1,500. If you exceed this limit on any given day, you will be immediately disqualified from the evaluation.
These loss limits are non-negotiable, and consistently adhering to them is essential to pass the evaluation and receive a funded account.
3. Trade Size and Position Limits
To ensure that you’re trading within safe parameters, TopStep enforces limits on your trade size and position size. These limits are put in place to help you manage risk and prevent over-leveraging.
- Trade Size: Traders in the Trading Combine and Evaluation Phase must follow the maximum contract size based on the account size. For example, if you’re trading a $50,000 account, you might be limited to 5 contracts of the asset you’re trading, such as futures contracts.
- Position Size: Position size is closely tied to risk management, and TopStep limits your position size to prevent massive losses. These limits ensure that no single trade will result in a catastrophic loss.
4. Consistency and Trading Days
While there is no minimum number of trading days, TopStep values consistency in performance. Traders who show consistent profitability over several trading days are more likely to succeed. Therefore, taking breaks or skipping trading days may prolong your path to a funded account.
You’re encouraged to trade regularly to prove that you can handle the ups and downs of the market and maintain a steady approach to managing risk and achieving profits.
5. Trading Hours and Weekends
It’s essential to be aware of the trading hours when participating in the TopStep program. TopStep allows trading in the major global markets, but there are restrictions on trading outside of market hours. For example:
- You must avoid holding positions over the weekend unless explicitly allowed by the program.
- Trading outside of normal market hours (after market close or during illiquid times) may violate program rules if it results in significant losses.
These guidelines help ensure that trades are executed during periods of high liquidity, reducing the risk of significant slippage and losses.
6. No Hedging or Scaling In
One of the critical rules for TopStep Funded Accounts is that traders are prohibited from hedging positions or scaling in and out of trades. Hedging, which involves opening opposite positions on the same asset to offset potential losses, can complicate risk management. Therefore, TopStep requires that traders use a clear-cut approach to managing their trades without relying on hedging strategies.
This rule ensures that traders demonstrate their ability to manage risk directly and avoid strategies that could potentially mask poor risk management.
Benefits of Joining the TopStep Funded Account Program
1. Access to Capital
One of the most attractive features of the TopStep Funded Account program is access to a substantial amount of capital. Traders who succeed in passing the evaluation can manage real accounts, ranging from $50,000 to $150,000, without needing to risk their own funds.
2. Professional Growth
The TopStep program allows traders to refine their skills and grow as professionals. The experience gained during the Trading Combine and Evaluation Phase can be invaluable for developing strong, disciplined trading habits.
3. Profit Sharing
Once you are assigned a funded account, you’re entitled to a percentage of the profits you generate. The typical profit-sharing structure is around 80% for the trader, with TopStep taking the remaining 20%. This structure is a great incentive for traders to perform at their best.
Final Thoughts on TopStep Funded Account Rules
The TopStep Funded Account program offers an excellent opportunity for traders to manage capital and access the resources they need to succeed in the markets. However, it’s crucial to be aware of the rules and ensure that you’re trading within the limits.
By maintaining strict adherence to the profit targets, drawdown limits, and position size rules, you can successfully navigate the evaluation process and work your way toward becoming a funded trader. Remember, consistency, risk management, and discipline are key to excelling in this program.
For those looking to take their trading career to the next level, TopStep provides a structured and rewarding path toward achieving financial success without putting up your own capital.
For more information, visit: TopStep Funded Account Rules