Video Transcript:
All right, guys, Sterling here again,
back with another video. In this video, we’re going to cover the basic
requirements to become a prop firm-funded trader. I could spend all day on this
topic, but I’m guessing you don’t want me to do that. So, I’ll focus on one
prop firm as an example. Of course, there are many prop firms out there, and
each has slightly different evaluation processes, costs, and rules for trading
in a live environment. For this video, we’ll focus on TopStep because
it’s the firm that our head traders in the Funded Trader Academy primarily use.
It’s also the one our support team and I use most often, making it a solid
example based on our experience.
At TopStep, you can choose from three
account sizes: $50,000, $100,000, or $150,000. The profit targets for these
accounts are $3,000, $6,000, and $9,000, respectively. One unique aspect of
TopStep is how it handles maximum drawdown. For the $50,000 and $100,000 accounts,
the max drawdown is 50% of the profit target, or $2,000 and $3,000,
respectively. However, for the $150,000 account, the max drawdown is 66% of the
profit target, or $4,500. Interestingly, the $50,000 account offers slightly
more leeway in terms of drawdown, though the reason for this isn’t entirely
clear.
The drawdown is based on your high-water
mark, which tracks your maximum profit during the evaluation. For example,
if you start with a $2,000 drawdown on the $50,000 account and make $500 on your
first day, your max drawdown increases to $1,500 below your new balance. This
means your drawdown limit adjusts as your profit grows but never exceeds $2,000
below your starting balance.
TopStep also has rules about contract
size and the evaluation timeframe. On the $50,000 account, you can trade up to
five contracts. This limit increases to 10 contracts for the $100,000 account
and 15 for the $150,000 account. Additionally, the evaluation must be completed
in a minimum of two days. However, no single day can account for more than 50%
of your profit target. For instance, on the $50,000 account, you wouldn’t want
to make $2,500 in one day toward the $3,000 target, as this would violate the
50% rule. Instead, you could aim for $1,500 each day over two days to pass the
evaluation.
Once you meet these requirements,
TopStep will send you a link to activate your funded account. The activation
fee is $149. After paying this, your funded account will be live, and you can
start trading. Keep in mind that the rules for trading a funded account differ
slightly from the evaluation account, so you’ll need to adjust accordingly.
While this video focuses on TopStep,
other prop firms like Apex, FTMO, and others operate with similar frameworks.
The main differences typically lie in the drawdown limits, profit targets, and
evaluation costs. Despite these variations, the overall process is fairly
consistent across most firms.
That’s it for the basic requirements to become a funded trader. In future videos, we’ll dive deeper into strategies for passing these challenges and what to expect once you’re funded. Hope you enjoyed this video, and I’ll see you all next time!
