Hi everyone, sorry to reply on such an old post, but I found it just now and I couldnt resist.
( the administrators will decide whether to make of it a new topic or not).
I am a professional trader. The market I trade is exotic and quite positional, this means I have time to waste.
As an "hobby" I started to look at those type of business models, which I call " fake prop house".
Specifically I tried Pulsar ( only once) and Topstep. The model is quite similar, but I reckon , Topstep has a much better marketing and actually provides you with a lot more services (the radio, the chat, etc.)
With topsep even if you are a japanese housewife trading in your pigiamas from home, you feel like you are in the pit with the real traders.
The truth about them I reckon lies in the middle.
If you are a new comer , you are a junior etc, Topstep is a very good way to start. They oblige you to respect rules and risk limits and that is very healthy.
If you lose, if you need to practice and keep hitting the stoploss limit, at least you are not making it with your real account. Dont say it's better to open a free simulated account, that implies no psychological pressure: you dont pay to trade and you have no one monitoring you, it will quickly became a joke.
In that sense , Topstep is saving people a lot of money.
Combine objectives are not very simple, so only a minority succeed. That happens also in real trading. I reckon they are quite honest on that part.
Where I dont think they are honest is somewhere else.
First of all, they make you believe that if you pass the Combine you will be funded and that you will be trading the same amount of money ( and risk parameters) you worked with in the Combine: that is not true.
If you pass the Combine , you will have to go for another sort of " Combine", which is called live preparation period, where they use even tighter limits. The limits I reckon could be appropriate for minidow, snp or euro, but surely not for gold an crude. Also the had number of consecutive negative trade per day , etc, etc. Technically it doesnt make sense, but it is a long discussion , which I m not gonna take here.
The other limit which is meaningful, is that your max drawdown is 2000 USD. From that you can understand that you wont be trading a 150k USD acccount , no matter what. You wont be trading even a 30k USD account. You will be trading a leveraged 10k account probably, with a 2k usd total stoploss.
Another point lies in education. You can take ( paying) their ITD course, which honestly it is more a psychology class than everything, or again pay for private coaching or pay to attend some webinars.
They are obviously not that much interested in educating their traders for one simple reason: because to them they are customers not traders.
The numbers.
I want to precise I had to go thru the Combine a few times to pass it. I managed to pass it twice ( last time I finished ydy). For me it's a game, to be clear, I am a former futures broker and I trade for living since sept 2007.
Topstep I reckon collects roughly 200ish combine subscribers per month, at 190 usd each ( lets say 200 USD per subscriber) .
To this you had , classes, courses, webinars, etc, etc.
I wud say one trader per month goes live, this means their risk per month is probably 5% of the income : 2000 USD risk vs roughly 40000 income. It's a good trade.
Out of the live trades, which in total could be around 30ish considering when they started, probably some go back and forth from the simulator, some actually make little gain and a few others ( 3-4?) actually make money for them and for Topstep on regular basis. I presume they get commission rebates on all executed trades.
it is a very good business model i think
So to recap: Topstep is a good gym to learn, but it's little more than that.
If you are not a professional trader, it's a good start to learn: you will save your own money for sure.
If you are a professional trader or if you just came out of University and want to try join a prop house, that is not your best choice, because it is not a prop house!