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TopstepTrader Funded Traders Trading Plan Futures Risk Management

How a Funded Trader Takes Out Big Money While Still Building His Account

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Philipp B. from Austria has been trading with Topstep for nearly three years. Most traders specialize in one or two products, but not Philipp—he's traded everything from Equities and Gold, to Euro FX and Crude Oil. This isn't an approach  we would recommend for everyone, but it certainly seems to work for Philipp, who made a big withdrawal in June, and continues to consistently build his account each month. 

How does Philipp find success across so many products? We examined some of his daily trading reports to find out.

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Trade Forex?

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He Avoids Over-trading

Over his past 40 trading days, Philipp averaged about 5 trades per day. On a quarter of those days he made only 1 or 2 trades. Despite trading many products, he does not exhibit wild variability in the number of trades he makes each session.  

This is the sign of a trader who is patient and selective with their entries. In retail trading, there is no guarantee that making more trades will result in better profitability—in fact, the opposite is true in many cases.

It can be tempting, especially when you are down money, to start "revenge" trading in a misguided attempt to get back in the black. But more often than not, this just means jumping into sub-par setups that are bound to get you into trouble. 

Always take what the market is giving you, and don't get greedy.

Average Winners Larger Than Average Losers

Like nearly all successful traders, Philipp's average winning day is greater than his average losing day. You can't stay profitable in the long run if you're the type of trader that blows a whole week or month of P&L on a single disastrous trade.

Philipp's average winning day is about 132% the magnitude of his average losing day. This is one area where we would like to see some improvement.  Generally, we prefer our traders to have risk-to-reward ratios of 1:2 or higher. Thankfully, Philipp has a great eye for picking winners—53% of his trades resulted in a profit.

Improving your win percentage is extremely difficult, and proportions significantly higher than 50% will be hard to sustain. That is why we are always looking for opportunities with asymmetric risk (i.e. trades that offer large upsides relative to their downsides).  

Manages Profits Effectively 

Lastly, Philipp has made wise decisions when it comes to managing the balance of his Funded Account. Money exists to be spent (obviously)—and when you a accumulate a large, positive balance, the thought of transferring it all to your checking account can be enticing. 

But there are definitely drawbacks to draining a significant portion of your account. You'll have less breathing room, and in general, you'll be more likely to run into trouble with certain risk parameters. 

Last month, Philipp withdrew 27% of his high account value, which left him plenty of room to execute his strategies without altering his style. The end goal of all of this is to make money—but if you want to make even more down the road, you must always be building the equity in your account. 

Even Warren Buffet wouldn't have gotten very far if he took out half his money every time his account reached $2,000. 

If you enjoyed reading about Philipp, subscribe to our YouTube channel for the latest interviews with other Topstep funded traders. 

Posted by TopstepTrader on July 01, 2019
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