A Deep Dive into Topstep

In this series, we will be examining and dissecting the challenging world of prop trading firms. Beyond attempting to pass the proprietary firm challenges, we'll also evaluate the pros and cons of each company while addressing one vital question: Are these firms truly interested in you trading or merely out to collect challenge fees?

Disclaimer: The blog post contains affiliate links to Topstep. They are unaware of my review, so their thoughts haven’t influenced the content.

In today’s episode, we focus on Topstep, and I will detail my experience passing their $150,000 challenge, the highest amount on offer, and my continued engagement with them.

Pros of Trading with Topstep

A Company With a Strong Track Record

One of the main attractions of Topstep is its track record. Having existed since 2012, its longevity indicates a firm with robust risk management in place. If major issues with payouts existed, it’s highly likely news would have reached me during my preliminary research.

A Focus on Futures Trading

Topstep is a day trading firm specializing in futures - not Contract for Differences (CFD). There is nothing wrong with CFD’s but I like that I am trading future contracts on one of the oldest exchanges.

I personally appreciate the freedom to enter and exit trades on longer-term charts like hourly charts, though a more extended swing trading period would’ve been ideal.

Wide Range of Futures and Robust Community Building

The CME library available to traders is vast, presenting an array of futures options to trade. Furthermore, Topstep is fostering a vibrant community, highlighted by a very active Discord server and daily live streams that attract thousands of viewers.

Seamless Payment Process and Competitive Pricing

Topstep adopts a seamless payment process facilitated by Stripe integration. Taken alongside its relatively cheaper pricing – $150 on a $150,000 account – Topstep makes a compelling argument for aspiring prop traders. However, remember there is an activation charge of $150 irrespective of account size.

Cons of Trading with Topstep

Restrictions on Swing Trading and Trailing Stops

For a longer-term trader such as myself, the firm’s restriction on swing trading comes as a significant downside. This limit could be due to the difficulties in managing risk in the overnight hours. Another point of note is the concept of PNL trailing stops, where the stop-loss rises in equal proportion to the gains. In essence, a profitable day followed by a bad day leaves a trader worse off. This mechanism seems to encourage trading consistency, which may not sit well with everyone.

Tight Time Limit and Payout Structure

There’s a time limit for your challenge with Topstep that you have to be particularly conscious of despite the costing. Similarly, while upfront and transparent, the payout structure is a tad confusing: ensure you clearly grasp it before commencing.

Limitations on Contract Trading

Another disadvantage lies in Topstep capping the number of contracts you can trade initially at three. This restriction applies to both mini and micro futures, thereby limiting customizability.

Daily Stop Out

"Having a risk manager to make sure you don’t do anything crazy is a heavy, heavy pro."

Topstep integrates a daily stop-out in its trading system, the benefits of which can’t be overstated - especially for novice traders. You essentially get your trades stopped if you engage in reckless trading, forcing you to cool off and rethink your strategy.

Wrapping Up

After rigorous testing and analysis, I believe Topstep’s mission is not to merely collect challenge fees but to build up a trading firm with competent traders. They've implemented measures aimed at fostering consistency and responsible trading, even as some of their structures might be seen as trading restrictions.

Before you dive into trading with Topstep, it’s important to be cognizant of the trailing loss feature and to fully understand how futures trading works. Unlike equity or CFD firms whose risk calculation is straightforward, each futures contract has a unique value per tick. Therefore, always ensure you’re clear about the P/L for each stop loss and profit target, and remember your stop loss is an ever-moving target trailing behind your gains.

If you're interested in being a futures trader and want to give TopStep a try, Click [Here] to join and remember to always remain disciplined and never swing for the fences.

I hope this review provides the insights you need to make your decision. I’d love to hear your thoughts on this review series, suggestions for the next firm to review, or any questions you wish me to answer about Topstep in the comment section below.

Wishing you good luck in your trading journey!