Trading Objectives & Rules

Overview of Topstep Risk Mechanics

Topstep enforces operational rules designed to mimic professional prop desk constraints. While the evaluation eliminates complex multi-phase hurdles, subtle mechanics governing the End-of-Day (EOD) Maximum Loss Limit (MLL), drawdown freezing, and post-payout floor adjustments directly impact account survival.

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Evaluation vs Express Funded Rules Comparison

Rule Parameter	Trading Combine (Evaluation)	Express Funded Account (XFA)
Drawdown Calculation	End-of-Day (4:00 PM CT) realized balance	End-of-Day (4:00 PM CT) realized balance
Drawdown Ceiling Freeze	Freezes at initial starting balance ($0 line)	Freezes at starting balance; locks at $0 on 1st payout
Intraday Peak Trailing	None (Intraday spikes do not move floor)	None (Intraday spikes do not move floor)
Consistency Rule	50% Rule (Best day < 50% of target)	Replaced by payout path criteria (Standard vs Consistency)
Daily Loss Limit (DLL)	None required (Optional personal lock)	Enforced on select tiers / risk manager intervention
Session Flat Deadline	Mandatory flat by 3:10 PM CT	Mandatory flat by 3:10 PM CT
Weekend / Overnight Holding	Strictly Prohibited	Strictly Prohibited
Maximum Active Accounts	Unlimited Combine accounts	Maximum 5 active Express Funded Accounts

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1. End-of-Day (EOD) Trailing Drawdown Mechanics

Unlike intraday trailing models that adjust tick-by-tick against unrealized high-water marks, Topstep's MLL recalculates exclusively at the 4:00 PM CT market close.

Mathematical Formulation

MLL Threshold(t) = max(MLL Threshold(t-1), Realized EOD Balance(t) - MLL Dollar Amount)

Intraday Peak Immunity Scenario

1. Starting Point: $50,000 account with $2,000 MLL. Initial liquidation floor is $48,000.
2. Intraday Action: You enter an NQ long. Open floating profit peaks at +$3,500 (floating equity: $53,500).
3. Market Retracement: Volatility causes the market to give back gains. You close the trade at +$600 profit.
4. EOD Calculation: Account balance closes at $50,600.
5. New MLL Floor: The floor moves up to:

$50,600 - $2,000 = $48,600

The intraday peak of $53,500 is completely ignored. Under an intraday trailing firm (such as Apex), the floor would have spiked to $51,000, severely trapping the trader.

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2. Threshold Freeze at Starting Balance ($0 Threshold Lock)

The trailing mechanism does not trail infinitely. It permanently caps when your realized account balance reaches:

Balance Floor Freeze = Starting Balance + Max Loss Limit

• $50,000 Account ($2,000 MLL): Trails until balance reaches $52,000. At that point, the MLL permanently freezes at $50,000.
• $100,000 Account ($3,000 MLL): Trails until balance reaches $103,000. Freezes at $100,000.
• $150,000 Account ($4,500 MLL): Trails until balance reaches $154,500. Freezes at $150,000.

Once the freeze occurs, all subsequent profits create pure drawdown buffer. If your $50K account climbs to $56,000, your loss floor remains at $50,000, giving you a full $6,000 loss buffer.

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3. The Post-Payout MLL Reset Trap

In the Express Funded Account (XFA), requesting a withdrawal fundamentally alters your risk boundary.

[XFA Balance: $54,000] ----> Requests $2,000 Payout ----> [Remaining Balance: $52,000]
                                                                     |
                      MLL Instantly Locked at $50,000 <--------------+
                                     |
               Remaining Loss Cushion: Exactly $2,000

1. Before First Payout: Your MLL trails up and freezes at the starting balance.
2. Instant Floor Lock: The moment you click request payout, your MLL is permanently locked at $50,000 ($0 profit baseline).
3. Cushion Reduction: If you have $53,000 in your account and withdraw $2,000, your balance drops to $51,000. Because your floor is locked at $50,000, your remaining loss cushion shrinks from $3,000 down to $1,000.
4. Best Practice: Never withdraw down to the bare starting balance floor. Maintain at least a $1,500 to $2,000 profit buffer above $0 to avoid an accidental liquidation on standard market noise.

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4. The 50% Consistency Target Math

Topstep enforces a 50% consistency requirement during the Trading Combine:

Highest Single Day Realized Profit / Total Accumulated Net Profit <= 0.50

• If you reach the $3,000 profit target on a $50K account, no single day can exceed $1,500.
• If Day 1 nets $2,100, your total target dynamically expands to:

Adjusted Target = $2,100 / 0.50 = $4,200

• You must continue executing disciplined trades until net profits reach $4,200, ensuring your best day accounts for no more than 50% of total gains.

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5. Mandatory 3:10 PM CT Daily Flat Rule

All CME futures positions and active orders must be completely flattened before 3:10 PM CT (Monday through Friday):

• Automated Liquidation: Systems auto-liquidate positions remaining open at 3:10 PM CT.
• Settlement Break: The CME daily maintenance halt occurs from 4:00 PM to 5:00 PM CT. No positions can be held through this break.
• Market Holidays: On scheduled holiday early-close sessions, the flat rule advances to 10 minutes prior to the announced market close.

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6. Prohibited Conduct & Account Stacking Limits

Topstep's compliance framework actively monitors for exploitative trading patterns:

1. Multi-Account Bracket Trading: Opening opposing positions (e.g. Long NQ on Account 1, Short NQ on Account 2) to capture news spikes is strictly prohibited and results in immediate forfeiture of all accounts.
2. Account Stacking Limit: Traders may hold a maximum of 5 active Express Funded Accounts at any one time.
3. CME Exchange Lock Limits: Trading within 2% of an exchange-mandated limit-up or limit-down halt is prohibited due to simulated liquidity disconnections.
4. Account Inactivity: An Express Funded Account must record at least one executed trade every 30 calendar days; failure to do so results in account closure.