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Correct, but if you want a "real" $50k account, you can trade 10x$150k accounts simultaneously, let's say with only one contract per account.
So your drawdown amount for each account remains the same as well as your profit goal.
Of course you should ask yourself if you want to fork out $2,970 (at least for one month) for 10 accounts, or just fund your own brokerage account with that amount.
On the other hand, with 10 $150k accounts, you have a "real" amount of $50k at hand and can trade them e.g. with a one lot per account.
And as this applies to all these companies, the max. drawdown never increases accordingly in relation to your chosen evaluation size, but the profit goal always does....
"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much." - Jim Rohn
I want to be totally clear that my questions are not directed at Apex but the model used by them and other companies offering this service.
I am only trying to understand the reasoning behind the parameters that they have set up.
Now, it can be said that the parameters are tight to prepare the user for real trading. However, you need to ask yourself if you think that is best for the trader or the company?
To your point about risk management, the best chance you have is to trade micros.
Unfortunately, I'm sure the average person who attempts the evaluation for the first time does not think of this.
it's best for both
a trailing drawdown is a type of consistency rule
so it's keeps the trader aware to respect reasonable loss limits
if profit target is 3k, and trailing drawdown is 2.5k
that looks very reasonable to me, not tight at all
it allows for an equity swing that's whopping 80% of the profit target.
That should never need to happen in the first place.
if you have 15 days for your evaluation, that's an average 200 profit per day.
Say that's also your loss limit. Then you need a losing streak of 13 days to reach your drawdown
You need to properly size your trades, it probably can be done with 2-4 micro's.
Know your risk parameters and chose the appropriate evaluation, or take none.
there's not much more to it.
You're aware that it's a trailing drawdown on unrealized profits, right?
What this means is that you can fail a Combine with your account being positive and even with a 100 % win rate.
Let's say you're up 2.5K on your Combine and you take on a trade that goes 1.25K in your favour, but quickly drops back to breakeven. You know only have 1.25 K of unrealized drawdown left even though you didn't lose any actual "money" on the trade.
Your account is still at 2.5K. Let's say you repeat the same mistake on your next trade. 1.25K of unrealized profit and then it drops back to breakeven.
You just failed the Combine even though your profit is at 2.5K and your win rate is 100%.
The way I manage my "intraday swing trading" I will often stop out trades for a small profit/loss aiming to capture bigger moves. This means drawdown on unrealized profits. It would not work well with a Combine like this.
For my scalping approach where I usually/ideally take profits on a high P&L with limit exit orders put in advance I could work with this rule.
Note: I'm not saying it's unrealistic to pass these evaluations. If you''re smart and good as a trader you can do it, but I maintain that it's a stupid rule when you can effectively lose a positive account that's making money.
Yes, I'm aware
I finished the eval and am now in the funded account.
The rule is simple.
Let's take your own example. You find it acceptable that
- you make 50% of your total profit-target only on one daytrade
- for an evaluation that lasts 10 days.
- you allow a trade that is +1250 to retrace to breakeven, therefore giving back 50% of your total profit target in 1 trade.
I don't think such a risk-savvy approach has longevity. Your exposure in trading has to be properly aligned with the size of the combine and allow for a string of losers or loss days.
I totally agree you have to be smart and well aware in trading and a lot of people will fail.
Question is what to blame: this rule or the traders' inability to properly manage risk.
As I stated in an earlier post, this rule allows for a whopping 80% drawdown of your profit target,
which in my opinion shouldn't at all happen in the first place.
My example was a bit extreme, but not too far off from reality assuming a string of trades where you give back unrealized profits. There could be a price spike that quickly reverses on you before you have time to act giving back lots of unrealized profits. There's no loss on the account; just loss of unrealized profits. That's the key thing here.
Personally, I think this rule can be circumvented by using low leverage and making sure you aggresively trail your stop for exiting OR use limit orders to exit. More of a scalping approach.
If Apex had a diferent withdrawal policy I would have done it again, but that's the dealbreaker for me, i.e., not being able to take out my profits in due time.
Having a string of giving back unrealised profits won't have any effect on your account, only the first one will.. the drawdown will stay in place since it only moves after you hit a new equity peak.
So you can win and give back a 1000$ for as many times as you want.
The payout scheme is the immediate result of the evaluation being not tight enough. Too many people can make it by luck because of a lack of a real consistency rule. The only rule that more or less requires some kind of consistency is the trailing drawdown. So therefore you have to trade for a longer time in the funded account before payout. Advantage is that you only have to stay in the eval for 10 days instead of 15, so first 5 days of effort in the funded account are already a win
This is kind of a disadvantage in comparison to for example topstep, with their more immediate payout. However, on a closer look, they have a double combine. Also, they also try to trick you into synthetic accounts (Proaccount/livesim etc.) and they also have requirements for payout (at least 5 win days, you have to stay above initial 5k or you get paid nothing etc.) At oneup you can get fast payout but they will only payout small percentages of your profit. Only after several months in they pay you the advertised 80%, when most people already will have busted their accounts.
There is a minimum balance threshold, which in my opinion is practically a second combine
Caveat: you first have to trade up to a minimum account balance. I have 150k account, so I have to trade up to 155k, I can only pay out the amount that surpasses this 155k.
So this 5k generated profits permanently needs to stay in the account.
This 5k practically can not be payed out.
So in effect, once you're funded and the 5k is added, but never paid out, you have assured the funding company of no possible loss. You are only risking your profits.
It seems to me that these prop companies' business model is a scam in the same way insurance is a scam. I'm still undecided on both, lol. has the right of it wrt the risk per trade. It is higher than what any of us should be risking in our own accounts, on a percentage basis. Clearly, the ES is not advisable. It is a MUCH higher risk than I'd be willing to take in my own account with so little capital. The MES is viable, but then even for the 25k account, Apex's goal of 1500 is a lot to ask of the MES unless you have a proven strategy already. I'm not saying it can't be done, but if you average $10 profit (2 ticks) per trade and have a 1:1 r/r and win half the time, you need to do 300 contracts. That's very possible, but if you can do it, you're better off doing it in your own personal account.
Essentially, they extract a premium in exchange for limiting great potential loss... just like insurance companies. That being said, State Farm has way more of my money than what they've had to pay out on my behalf.
I'm still on the fence about these "prop" firms. But I'm probably going to limit myself to about another $1000 dollars loss in my own account before I give one of them a try. Mostly it's just a way for me to straddle the fence between paper trading and full on live trading my own money. I still don't have the confidence I think I should have.