2020-05-17 Raffaele

Week 2 recap on 150K challenge step by step.

Challenge vs Trader 1:0

In the second week we started with pnl back to 0, which you might think it’s ok.. but not so ok as we had a scary sword of Damocles over our heads: the damn trailing max drawdown!

As you might know by now, the max drawdown allowed by Topsteptrader is trailing, and because we brought the account in profit of about 2000$ the original max drawdown for the challenge is reduced to about -2500$.

Keeping in mind that trading with 1 contract doesn’t make a whole lot of sense, and 3 is already too much, the plan is to trade with 2 contracts, so every point =100$ of risk; therefore our whole risk is 25 points!

..and I thought Topsteptrader was looking for good traders, not wizards! Anyway..

Below here is how the market moved this week, I circled in the days where we struggled, but for more details Will is posting a report of his trades on his website.

Reset.

Volatility in ES this week picked up a fair bit: the average rotation is about 10 points, cutting the story short: at a point risk lowered further and Will decided to opt for a reset of the challenge.

Now that’s all good and well: pay a small price, reset the challenge, move on! I’d rather have a fixed drawdown!

The issue that I personally have with the whole reset system is what I define: gamifying trading!

It happened to me and I’m sure to sooo many others: it becomes too easy to hit the reset button (which is very efficient and fast but never cheap) and the trader subconsciously falls into a pattern of taking irresponsible risks.

“After all the only objective here is to obtain funding right?” Not really.

The objective is to use the challenge to learn more about trading, about ourselves, and about becoming a consistently profitable trader!

And rule #1 always was and for ever will be: manage risk properly!

Instead the trader here keeps pushing the risk (are you still wondering why the challenge allows up to 15 contracts?) and pay the resets until he has that good run was hoping for (it’s a bad sign when “hope” gets involved) and passes the phase 1. All fine and well.

Then he does the same for phase 2 (yes the reset is available also in phase 2).

Brilliant! Now the trader is funded.

Too bad.

Too bad the trader has built in a whole set of habits that will no doubt bring him to lose control of his risk plan, and lose his capitalized account (I cannot type “funded ac***” because Topsteptrader holds the trademark for that…but this is a story for another time).

You don’t believe me uh? It happened to me; I’m confident it happened to many others. (p.s. it would be great if you could share your story! email me!)

Back to our challenge step by step.

But you don’t need to trade the challenge alone anymore!

Learn from my mistakes!

I am truly grateful that Will has decided to take onboard the challenge, and yes he is struggling a tiny bit as well, so?

What’s more valuable than learning from a great trader working his way through a difficult, volatile, news driven market?!

Last week I posted the valuable lessons from week 1 recap.

Check out about how Will works in his trading room.

Weekly analysis by Will.

Sunday’s video, available for free to all, created by Will of Retailfade, gives clarity on what happened on the market and what this might mean for the coming week: not a forecast! Stop thinking in these terms.

Be careful everyone!! Study hard, get prepared for an uncertain future.

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