If you are an aspiring trader looking to make a career in the financial markets, you might have come across the Topstep Trading Combine® program. The program is designed to help traders prove their skills and earn a funded account to trade futures. One of the critical aspects of the program is the Topstep Scaling Plan. In this article, we will discuss what the scaling plan is, how it works, and why it is essential for your trading success.
What is the Topstep Scaling Plan?
The Topstep Scaling Plan is a risk management tool that helps traders build their equity consistently without taking undue risk [1]. The scaling plan is in place to ease traders into the live market environment gradually. It is an essential part of the Trading Combine® program, which consists of two steps. In Step 1, traders have to prove that they can profit by meeting a profit objective without breaking any rules and trading a minimum number of days. Once they pass Step 1, they move on to Step 2, where their account is evaluated against the scaling plan at the end of each trading day [3].
How does the Topstep Scaling Plan work?
The Topstep Scaling Plan works by gradually increasing a trader’s buying power as they demonstrate consistent profitability and risk management skills. During Step 2 of the Trading Combine®, traders start with a $50,000 simulated account and a $5,000 daily loss limit. The scaling plan starts with a 20% buying power increase for every $2,000 in profits earned above the initial $5,000 loss limit [1]. For example, if a trader earns $2,000 in profits, their buying power increases by 20% to $60,000. If they earn another $2,000 in profits, their buying power increases by another 20% to $72,000, and so on.
However, the scaling plan is not just about profits. Traders must also demonstrate good risk management skills to progress through the program. The scaling plan includes a daily loss limit, which is the maximum amount a trader can lose in a single trading day. If a trader hits their daily loss limit, they are disqualified from the program. The daily loss limit starts at $5,000 and increases by $1,000 for every $50,000 in profits earned above the initial $5,000 loss limit [1]. For example, if a trader earns $50,000 in profits, their daily loss limit increases to $6,000.
Why is the Topstep Scaling Plan important?
The Topstep Scaling Plan is essential for several reasons. First, it helps traders build their equity consistently without taking undue risk. By gradually increasing buying power as traders demonstrate consistent profitability and risk management skills, the scaling plan ensures that traders do not blow up their accounts by taking on too much risk too soon [2].
Second, the scaling plan helps traders develop good risk management habits. By setting a daily loss limit and gradually increasing it as traders earn profits, the scaling plan encourages traders to focus on risk management and avoid overtrading or revenge trading after a losing day [1].
Finally, the scaling plan is an essential part of the Trading Combine® program, which provides traders with a path to earning a funded account to trade futures. By demonstrating consistent profitability and risk management skills in the Trading Combine®, traders can earn a funded account with Topstep and start trading futures with real money.
Conclusion
The Topstep Scaling Plan is a critical tool for traders looking to build their equity consistently and develop good risk management habits. By gradually increasing buying power as traders demonstrate consistent profitability and risk management skills, the scaling plan ensures that traders do not blow up their accounts by taking on too much risk too soon. If you are an aspiring trader looking to make a career in the financial markets, the Topstep Trading Combine® program and the scaling plan can provide you with a path to earning a funded account to trade futures.
Sources:
1. https://help.futures.topstep.com/hc/en-us/articles/360000140787-What-is-the-Scaling-Plan-
2. https://www.topstep.com/blog/the-scaling-plan-got-a-makeover/
3. https://help.futures.topstep.com/hc/en-us/articles/220389528-What-is-the-scaling-plan-