Funding Secured

Making this post just a day after completing TopstepTrader's funded program requirements. In one of my previous posts, I talked about switching from the $50K Day Trading Combine to the $10K Swing Trading Micros Combine.


Long story short, I did make the jump and I think that this was probably the best decision that I made. The one-liner explanation is that the Swing Trading Micros Combine provides a better opportunity to manage trades while having a full time job.

The daily risk limit of the $50K Combine is $1,000. To trade the equivalent e-mini S&P futures, each tick value is $12.50. Therefore, the daily loss limit to the incremental price movement is a factor of 80. On the $10K Swing Trading Combine, this is a factor of 400. This provides me with more breathing room in terms of stop loss distance and this allows me to be less sensitive to very short term price fluctuations. In short, I don't have to focus intently on scalping but rather trading shorter term momentum until I can build that profit cushion to trade potential daily swings while having multiple weekly risk limit factors at my disposal.

Before we go any further, I have to admit that my risk management was a little wonky. When I completed Stage 1 and Stage 2 of the Swing Trading Combine, I didn't fully exercise proper position sizing. In this Combine, you can trade up to five micro lots at one time. With some trades, I scaled in at one micro lot at a time. Once I had a profit cushion, I added another micro lot. For the sake of not taking too long with this Combine, I did just jump right up to trading five micro lots for higher probability directional trades. These are not trades where I would go to fade a sell off or anything. I would be looking at structural breaks that indicate selling pressure has exhausted. 

While I don't have an example of this setup from the top of my head, I do think it's important to stick to proper risk management now that I am trading in a funded account. I would hate to let my hard work luck go to waste and have to go back to the Combine stage. Now that I'm starting out, I'm going to stick with trading one micro lot at a time until I have a profit cushion to scale up.

Before I conclude this post, I'll talk a bit about my setup. I have made some revisions since my previous posts, especially when it comes to the use of volume charts.

TSTrader Platform

When I was doing the Day Trading Combine, I relied heavily on the volume charts. I explained that a bar will complete after every n-contracts have been filled. I essentially went up on the parameters until I can visually see key levels. As you can see, I'm still doing this with MES and MNQ. Unlike what I previously did, the volume charts aren't my main charts.

My main chart is still time-based as I rely on the 15-minute and hourly time frames to identify key levels just like what I previously did with the Day Trading Combine.

Instead of being fixated on the volume charts for taking actual entries, I use them now as references to identify price behavior on a micro level. As a result, you can see that I'm using 2,000 and 1,000 contracts respectively instead of going up to 5,000 and 6,000 contracts. If I'm looking to enter on a key hourly level, I would attempt to join the bid when I see weakness on pull back over on my volume chart. This way, I would be able to further optimize my entry slightly.

Unless I'm foolishly mistaken, I believe that the volume charts are also quite useful since they essentially present time of sales data in a visual format. If I reduce the parameters to something like 100 contracts, a new bar would form when 100 contracts have been filled on the time of sales. Instead of watching a "tape" showing where bigger traders have gotten their fills, you can monitor the volume charts. They essentially tell you the same thing in a visual format. Here's the translation, if I'm not mistaken:

  • The bar placement shows where the last n contracts were filled and what price they were filled at.

  • The bar size provides an indication of how much the last n contracts influenced price. I've never relied on the DOM much since this isn't available in retail FX trading. Instead, volume charts help me utilize filled trade data to predict price movements.

  • The speed of bar formation provides a lot of information as well. If time of sales is showing a huge inflow of large orders, the volume chart would essentially be painting new bars at a very rapid pace. By simply observing the speed of visual bar formations, this gives off the presence of large orders.

Instead of jumping directly into a funded account, I opted for Topstep's Pro account option. This should help me ease into the transaction. I'll be sure to provide an update on my futures trading journey alongside FX.